Budget betrays Iran’s financial crisis
At the end of each year, the Iranian government proposes a budget bill in the country’s Parliament (Majlis). Carefully examining Iran’s budget is critical because the nuances of the bill can inform policy analysts, scholars and politicians not only about the Islamic Republic’s current financial and economic status, but also its prospective missions and specific objectives.
Iran’s proposed budget for this year is intriguing for several reasons, and is distinct from those of prior years. To begin with, the Iranian authorities have emphasized that the current bill is designed to significantly assist the ordinary people by increasing the minimum wage, creating jobs, raising the employment rate, and resolving people’s economic problems. But, from a realistic point of view, such promises are impossible to fulfill.
The proposed budget for 2019 is just 45 percent of the country’s budget for the previous year. This is unprecedented in the history of the Islamic Republic. The budget bill that was proposed by President Hassan Rouhani and passed in 2018 was approximately $104 billion. The current budget bill is roughly $47.5 billion.
The main reason for such a decline is the decision of US President Donald Trump to pull out of the Iran nuclear deal, and to renew sanctions against the Islamic Republic. Although the Iranian leaders dismiss the move as not impacting the nation, the sanctions have put significant pressure on Iran’s economy, specifically its energy and banking sectors. According to the International Monetary Fund, Iran’s economy is officially in recession.
In addition, a significant portion of Iran’s budget relies on the export of oil. According to the budget bill, the regime is estimating it will export nearly 1.5 million barrels per day at $54 per barrel. This presents two important problems. First, the Islamic Republic is less likely to gain this revenue because Tehran’s oil export market is declining and the regime is incapable of trading with US dollar. This will lead to a significant budget deficit. Secondly, while the Iranian leaders, particularly Ayatollah Ali Khamenei, repeatedly emphasize that the nation has a resilient economy independent of oil sales, the current budget bill shows that the government has not made any tangible advances in fulfilling such promises.
It appears the only institution that has seen a noticeable increase in its budget is the
Islamic Revolutionary Guard Corps (IRGC). Increasing the IRGC’s budget while cutting other crucial programs will not resolve the people’s economic difficulties. Although Iran has an educated youth population, almost 30 percent of them cannot find jobs. In some provinces, the unemployment rate is over 60 percent.
In a nutshell, Iran’s proposed budget reveals the economic crisis that Tehran is facing. The increase in the IRGC’s funding, while many other sectors have witnessed cuts, points to the regime’s determination to prioritize its revolutionary principles over its citizens’ needs.