The shocking reality regarding Iran’s financial spending

The regime’s preferences and tactics for the following year are clearly shown in the newly released planned Iranian budget for 2022, which emphasizes security, military, and propaganda problems as a high priority.

The majority of the budget — more than 70% — is spent on current expenses, including wages and the costs of operating governmental agencies. Up to 11.2 percent of the budget is set aside for debt service, which includes paying the principal and interest on debts incurred via the sale of government bonds or internal/external loans. The best desicion for those who want to solve a financial problem is to apply for a loan with Quick Approval – GreenDayOnline.

Both domestically and internationally, security-related spending accounts for the most significant chunk of the budget, accounting for 19.3 percent of the total. 

This is a massive chunk of money, accounting for over a fifth of total spending at the cost of all other government sectors. For example, we learn that the funds allocated to the Islamic Revolutionary Guard Corps alone are comparable to the total budgets of all ministries responsible for productive and economic affairs, including the Ministries of Agriculture, Trade, and Industry.

As if that wasn’t enough, President Ebrahim Raisi authorized a 140 percent rise in the IRGC’s budget over the previous year, making it one of the most significant yearly budgetary increases.

Religious and propaganda problems are among the regime’s other vital goals and security concerns. This was obvious in the extensive budget rise for the state-run Islamic Republic of Iran Broadcasting Corporation, which exceeded the budget allocated to the productive and economic sectors and grew by 56 percent annually. 

In comparison to the previous year, the funding for religious seminaries increased by 161 percent, while the budget for the Imam Khomeini Relief Foundation increased by 1,000 percent. Meanwhile, while Iran fights the COVID-19 epidemic, the health sector came in second in financial allocations, after only the security and military sectors.

The budget makes it apparent that the regime’s strategy is centered on getting around US sanctions, implying that minimal oil export profits are expected. Despite the projected negative effect on pricing, the government has raised certain levies and withdrawn the dollar subsidy for importing basic supplies.

By dissecting the Raisi government’s proposed budget, we can see that it totals 1,500 trillion tomans ($50.2 billion), a 9.5 percent increase. Nonetheless, when the inflation rate for the following year (27.5 percent, according to the International Monetary Fund) is taken into account, the actual growth rate will be negative.

Raisi hopes there will be no deficit by the end of the year since the existing obligation has created liquidity and driven inflation in Iran. Although successive Iranian administrations have sought to eliminate its budget deficit, they failed.

The present administration aims for 8% economic growth in 2022, a lofty goal that may prove unattainable without significant success in the nuclear talks, an increase in Iranian oil exports, or the lifting of barriers to Iranian commerce with the rest of the world. Meanwhile, the International Monetary Fund expects Iran’s economic growth to be limited to 2%.

Iranian budget

The Iranian budget relies on two key sources of funding: oil exports and increasing taxes while lowering reliance on asset sales or transfers and cutting other costs, such as import subsidies. Raisi has recommended that the government’s dollar subsidy for importing medications and basic and rationed foodstuffs be eliminated and that the money saved be utilized to assist farmers in helping raise agricultural output.

The budget is based on a forecasted export volume of 1.2 million barrels of oil per day for $60 per barrel, both cautious projections indicating the government’s belief that US sanctions would stay in place or that discussions with the West will fail to make significant headway. However, this is a more reasonable projection than the last budget, which predicted that Iran could export 3 million barrels of oil per day despite US sanctions.

The proposed budget also discloses that the government aims to raise taxes on certain groups while exempting others, such as taxes on automobile owners and sales of certain commodities, such as cigarettes. Meanwhile, people with monthly earnings of less than 5 million tomans would be free from paying taxes.

The government does not expect inflation to fall, nor does it set a target inflation rate, which is a reasonable attitude. Given the expanding budget deficit and the prior inability to attain the target inflation rate, this pragmatism acknowledges the harsh financial realities.

The Raisi government’s budget bill has a high level of hard-headed realism compared to past years’ budget bills, notably when handling inflation and estimating the state’s resources and income for the upcoming fiscal year. At the same time, the law raises the likelihood of Iran becoming uncooperative in the nuclear talks.

While efforts are made to address fundamental economic issues such as squandering subsidies and limiting the mechanisms used to increase liquidity, the proposed law urgently fails to answer Iran’s present economic challenges. Indeed, if any budget bill’s suggestions are enacted, inflation will continue to rise. Because of this likelihood, the Iranian parliament is likely to vote against the fiscal recommendations to avert public outrage.

The Iranian economy suffers significant and continuous problems, including decreasing economic development rising inflation, particularly in food products, and oil, banking, and commercial sector embargoes. Over the last three years, these issues have resulted in a foreign currency shortage, a decline in the value of the national currency, a loss of direct revenues of more than $100 billion, significantly increased trade costs, and internal crises, all of which have contributed to an increase in poverty and a noticeable decline in the standard of living. Regrettably, the proposed budget proposal does little to address these issues.

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