The detailed text of Iran’s new budget bill (which started on March 21) was released by the Iranian government on Monday, March 31. It not only highlights the massive share of oil revenues and national budget allocated to the military and security forces but also facilitates these institutions’ acquisition of state assets.
For several years, a portion of Iran’s oil exports has been allocated to military forces, particularly the Islamic Revolutionary Guard Corps (IRGC), under the “Strengthening National Defense” program. However, this year, not only has the military’s oil share increased significantly, but government budget expenditures to finance them have also grown. Additionally, the authorization for direct crude oil deliveries has expanded to include other institutions and projects, such as Iran’s nuclear program.
Furthermore, the budget law text indicates that the government has allowed IRGC-affiliated institutions, such as the Khatam al-Anbiya Construction Headquarters, as well as organizations under the control of Iranian regime’s Supreme Leader Ali Khamenei, including the “Execution of Imam Khomeini’s Order” (EIKO), to settle government debts through the transfer of state assets.
The Military’s Oil Share
The government of Masoud Pezeshkian, the President of Iran’s regime, has planned for daily oil exports of 1.85 million barrels this year. One-third of this amount (valued at $12.4 billion) will be directly allocated to the armed forces and their special military projects. This figure is three times higher than last year.
The remaining exported oil (along with all exported gas) will be shared among the government budget, the National Development Fund, and the National Iranian Oil Company, totaling $33.5 billion.
Another crucial point is that the government has set the exchange rate for the oil given to the armed forces at approximately 600,000 rials per euro, while the euro’s current free market rate in Iran is 1,140,000 rials.
This creates a massive financial advantage for the military, allowing them to sell oil and generate significant profits by exchanging the revenue at free market rates.
Moreover, the military has priority in selling oil. Any decline in Iran’s oil exports will primarily impact the non-military sector. If the armed forces fail to export the oil they receive, the government must compensate them with equivalent cash payments.
While Masoud Pezeshkian has planned for daily oil exports of 1.85 million barrels for the current fiscal year, data from commodity intelligence firm Kpler indicates that Iran’s daily oil offloading at Chinese ports—its only customer—was about 1.34 million barrels in the first three months of this year. This is down from an average of 1.5 million barrels per day last year.
Meanwhile, the administration of U.S. President Donald Trump launched a “maximum pressure” campaign aimed at reducing Iran’s oil exports to zero. Several oil tanker tracking firms and energy consultancy companies had previously predicted that Iran’s oil exports could drop by about 500,000 barrels per day in the coming months.
The decline in Iran’s oil exports to China comes as the government has also granted direct oil export rights (from the state’s share) to five other entities and projects, including “nuclear energy projects.”
Given that Iran’s regime has no new nuclear power plant construction projects planned for this year, the allocated funds are likely to be used for nuclear activities unrelated to electricity generation, such as uranium enrichment, a highly sensitive part of Iran’s nuclear program.
Another point is that, in addition to revenue from direct oil sales under the so-called “Strengthening National Defense” program, Iran’s military and security forces receive a 10% share of the government’s general budget for paying military personnel salaries.
Transfer of State Assets to the Military
In the absence of transparency in the economic activities of the IRGC and institutions controlled by the regime’s Supreme Leader, Ali Khamenei, unofficial reports suggest that these entities dominate nearly half of Iran’s shadow economy.
Over the past two decades, a significant portion of the government’s privatization initiatives has deviated from its original goal of transferring assets to the genuine private sector. Instead, state-owned assets have been handed over at deeply discounted prices to the IRGC and entities under Khamenei’s control.
Organizations under the IRGC and Khamenei’s leadership have extensive involvement in Iran’s construction and infrastructure projects.
The exact amount of government debt owed to the IRGC and entities under the Supreme Leader’s office for construction projects remains unclear. However, Iran’s 2025 budget law (effective from March 21, 2025) explicitly names the IRGC-affiliated Khatam al-Anbiya Construction Headquarters and the Execution of Imam Khomeini’s Order (EIKO), which operates under Khamenei. These institutions are allowed to claim up to $2 billion worth of state assets in exchange for government debt sum equivalent to roughly 13% of the government’s total asset sales plan for this year.
Given the weakened and marginalized state of Iran’s private sector, it is expected that once again, institutions under the IRGC and the Supreme Leader’s office will dominate the acquisition of state assets during the privatization process, just as they have in the past.
