Iran’s proposed state budget for the coming year points to a 3.7 percent decline in revenues in rial terms, as US sanctions continue to bite. The budget bill — proposed by president Hassan Rouhani on Tuesday, but yet to be approved by parliament — forecasts 2,086tn rials in revenues for the next Iranian fiscal year — down from the 2,161tn rials forecast for mid-March when the financial year ends. “This budget is drafted based on the impact of sanctions while the economy will definitely shrink next year,” said one economic analyst. “The government has not only taken the current sanctions into consideration but is preparing for tougher sanctions to come.”
In the budget bill, the government forecasts tax earnings of 1,535tn and oil, gas and electricity sales of 1,426tn rials, but economic stagnation is expected to hit tax revenues while the decline in global oil prices is likely add to the pressure. Mr. Rouhani said that sanctions have had “negative impacts on the economy”, but added that “the US will surely fail”. “The main intention of the US is to make Iran’s [political] system kneel down,” Mr. Rouhani told the members of parliament on Tuesday.
“The US intends to make the Iranian nation lose hope in their future . . . and make the system look inefficient.” Iran’s economy has struggled since US president Donald Trump pulled out of the 2015 nuclear accord in May and re-imposed sanctions, including restrictions on oil sales — the country’s lifeline The rial, the national currency, has depreciated by more than 50 percent this year while year-on-year food prices have increased by about 60 percent, according to the Central Bank of Iran.
The total budget amounts to 4,786tn rials ($113.9bn according to the official parity rate against the US dollar and $43.5bn based on the open market rate) for the next Iranian year. This includes income from sectors which are doubted to be fulfilled such as privatization of some state-run companies. A deficit of 1,120tn rials is forecast but analysts believe the figure could rise much higher. The Islamic republic insists on its foreign and defense policies despite rising disgruntlement over high living costs and complaints that the government of Mr Rouhani has not been able to meet promises of reforms and better relations with other countries.
The price of some basic foodstuffs has almost doubled in recent weeks, fuelling public anger that the government has little control over prices and leading to protests by factory workers, laborers and the retired.