Iran Economy NewsHow State-owned Companies Are Devouring Iranian Economy

How State-owned Companies Are Devouring Iranian Economy


Over the past four decades, state-owned companies have devoured 70 percent of Iran’s total budget. Nonetheless, despite their ability to cover the entire budget deficit, the profits are absorbed by corrupt government institutes and officials.

In Iran, state-owned companies are a huge source of the government’s assets. While these companies receive more than two-thirds of the total budget, rulers deliberately overlook the profits of these valuable sources that are able to resolve part of the country’s economic problems. For many years, the status of state-owned corporations’ annual returns and profits are vague, which has dampened the public’s attention and MPs from this major source of income in the country’s public budget.

State-Owned Companies Alone Can Compensate All Budget Deficit

Government-linked economic experts estimate the government can compensate all the country’s budget deficit by using profits of state-owned corporations. This would make it possible to save all revenue of selling crude oil and natural-gas condensate in the country’s National Development Fund. In addition, the government can spend all the income of taxes for national civil affairs. However, all these figures and stats are abstract due to the hidden corruption in the public’s budget and other avenues that influential sides use to line their pockets.

Iran’s Budget Is Still in the Air

Notably, Iran’s annual budget is divided into parts; first, the public budget assigned to the current expenditure of the country like operations of development or transportation, and second, the budget allocated to companies, government-linked banks, and other institutions affiliated to the government.

70 Percent of Budget Bill Hasn’t been Scrutinized for Decades

Corporate budgeting has consistently accounted for 70 percent of the country’s total budget over the past 40 years. However, a few members of the parliament have thoroughly scrutinized companies’ budgets before being approved. In this regard, the Iranian parliament initially examines the public budget for a long period, but when it comes to the state-run companies’ budget, they pass the bill in minutes and with very little scrutiny. Long negligence over the government-corporate assets resulted in wasting a huge amount of the country’s wealth. Of course, officials and their relatives never neglected this uncountable property.

Corruption in Iran Exposed Again 

The Budget of the State-Owned Companies Equals to the Value of Tehran’s Stock Exchange

The value of Tehran’s Stock Exchange is estimated at little more than 15 billion rials [almost $1,153 billion]. Significantly, the annual budget of the hundreds of government-run companies that are active in all economic fields is approximately the same value. Undoubtedly, a normal state can certainly provide all the budget expenditure by using the profits of these corporations. Furthermore, it would be able to annually pay parts of these profits to the people.

Despite the Iranian government owning huge properties in the form of firms, companies, banks, and institutes; but it always suffers from massive budget deficits. The people also witness officials attempting to tie the country’s fate to exporting oil or to offset their economic mismanagement by rising taxes and at the expense of poor people. On the other hand, the government pursues to cure dire economic conditions by reducing the value of the national currency or selling the administration’s properties, which results in the creation of public debts.

However, Iran’s budget planning needs to fundamentally change and, of course, this is the result of 40-year mismanagement by different sides of the governing system.

Budget Planning in Accordance with Corruption and Nepotism

Turbulence in balance sheets of the Central Bank and other Iranian banks is one of many economic problems that the country faces. This problem is a direct result of the terrible designing of the budget by the country’s planning and budget organization for decades. According to experts’ remarks, it is possible that state-run companies provide the public budget by using their huge profits. However, this matter is available on conditions including transparency and ending vast inadequacies made by corruption and nepotism.

Endless Corruption in Iran

Now, while the Iranian government experiences the impact of maximum economic pressures, it should make tough decisions. However, it is a genuine dilemma before officials about opting for the continuation of the current corrupt system that spells more pressure on poor people who struggle hard to make ends meet; or acquiesce to calls for being transparent with the people and the international financing system.

It is previously evident that Iranian authorities have no potential to counter the vast corruption and nepotism that have grown by themselves and under their supervision during all these years. In addition, they cannot explore the amount of mind-blowing expenditure they spend on funding ethnic conflicts and supporting terrorist entities in the region. Insofar as the leader of Lebanese Hezbollah Hassan Nasrallah admitted that all needs of this “party” are provided by the Islamic Republic. The government also cannot be transparent over the costs of oppressive apparatus as well as the nuclear bomb-making programs that left the country under the toughest sanctions.

Iran’s Mysterious State-Owned Companies

Contrary to the term “state-owned,” these companies are absolutely unaccountable, and no oversight employs them. In fact, these corporations are suffering from rivalry among the powerful parts of the political elite. Their hierarchy is set based on nepotism and then rulers’ vows, as well as these firms, are truly a field for economic competition among different political sides.

In such circumstances, no one knows what practically happens inside these mysterious companies. And if someone sheds light on the matter, they will discover untold stories of ongoing infighting in the governing system, including the manner of appointing managers, the amount of power hidden players wield, and ultimately whether these companies are serving the country or parts of the government against national interests?

Was FATF Able to End the Opaque Economic Situation in Iran?

In late 2019, Iranian President Hassan Rouhani tried to tie the fate of Iran’s economy to joining the Financial Action Task Force (FATF). In this context, FATF in parallel with discussion over the 2020-21 budget bill constituted the core of power competition in the country among officials and during parliament sessions. Regardless of the Iranian government sponsoring terrorism in the region and across the globe, the ayatollahs showed they cannot join the inter-governmental body because of vast corruption and non-transparency engulfing the country’s companies and facilities.

With or Without FATF Approval, Iran’s Economic Crisis Won’t Be Resolved

Therefore, opposite to claims raised by Rouhani’s allies describing joining the FATF as an extraordinary opportunity to rescue the country from collapse, the reality is that more than disruption in banking communications with the global banking system, the country is suffering from a corrupt system and mismanagement. However, Iran’s theocracy could not refrain from “exporting the revolution” that sank the country in intense problems. Just as they cannot renounce their nuclear bomb-making projects that led the international community to impose restrictions on Iran, in addition to reimposing the U.S. sanctions.

In conclusion, as the Iranian government bears economic pressures, of course, at the expense of the people, but the main problem is not foreign sanctions or restrictions. In fact, this corrupt system that relies on nepotism and wide mismanagement that is institutionalized among the ayatollahs and their relatives is cancer that places the country’s economy on the brink of absolute collapse. Notably, the Iranian people emphasized they are suffering from embezzlements, fraud, and plundering directed by the shareholders of political power. In this regard, people’s slogans are very meaningful. “One less embezzlement can resolve our [economic] problem,” or “The people are poor but the Ayatollah [referring to the supreme leader Ali Khamenei] lives like the Lord,” citizens chant frequently.

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