On January 22, the Majlis (parliament) approved the draft of the 2023 budget bill proposed by regime president Ebrahim Raisi, despite a 4,760-trillion-rial (approx. $105 billion) deficit. There is still a procedure to approve the budget expenditure. It usually takes two months after the approval of the totality of the budget bill by the Majlis.
Previously, MP Mohsen Pirhadi said the proposed budget has an income-expenditure gap of 4,760 trillion rials. The figure is the result of the difference of 14,540 trillion rials in the expenditure part from 9,780 trillion rials in revenue.
The budget bill also explicitly mentions this income-expenditure gap, which is a 58 percent year-over-year increase.
If the current situation persists, the inflation rate next year will be above 40 percent, Pirhadi warns.
Vague oil revenue
The government bill considers the export of 1.4 million barrels of oil per day at an average of $85 per barrel and the exchange rate of 230,000 rials per dollar. It is worth mentioning that the figure calculated above is assuming that each dollar is equal to 450,000 rials, which is approximately the current price of the dollar in the exchange market.
Therefore, according to the budget bill, the government will earn about $43.43 billion from oil exports next year.
If the situation of oil sales in the next year is similar to this year, it is unlikely that these oil revenues will be realized, and earning a such income should be considered optimistic.
From the beginning of his administration, Ebrahim Raisi claimed to control inflation. But according to the new report of the Statistics Centre of Iran, inflation in January this year has reached over 51 percent compared to the same month last year.
The next year’s budget bill of 51,090 trillion rials has increased by about 40 percent compared to the current year. This figure includes 21,640 trillion rials of the public budget and the remaining 30,970 trillion rials for state-owned companies and banks.
Preliminary evaluations show that next year’s budget faces the same problems that have been plaguing the economy in recent years: Incomes that will probably not be realized and expenses that burden the Iranian government and economy year after year.
The operating balance deficit of next year’s budget has increased by 58 percent compared to this year.
Unpaid wages, growing poverty, rising taxes
Salaries of government employees and retirees will increase by an average of 20 percent. Meanwhile, the inflation rate fluctuates at around 40 percent and above.
In other words, the salary of government employees and pensioners will increase by less than half of the inflation rate, and their purchasing power will be reduced. Recently, with the publication of the 2022 poverty monitoring report, the Ministry of Welfare announced that the average monthly poverty line for a family of four in Iran is 77 million rials.
But the reality is much worse. Recently, Faramarz Tofighi, the head of the wage committee for the Center of Islamic Labor Councils, announced that the relative poverty line of families in Iran had reached 182.9 million rials. He described Iran’s labor community as a patient who lives with 10 percent of his heart.
The total tax revenues predicted in the next year’s budget bill are about 8,390 trillion rials, which shows a nearly 58-percent growth compared to this year’s budget bill.
Based on this calculation, the government will earn 42.3 percent of its public resources from tax revenues.
The biggest tax pressure in the coming year will be on companies and legal entities. The tax share of legal entities in the next year’s budget bill is 2,960 trillion rials, which has increased by 122 percent compared to this year.
The environment will continue to suffer
The lowest share of the budget among the 10 basic issues is the share of “Environmental Affairs” with 0.2 percent of the total budget, which has not changed compared to this year.
The examination of the process of changes in Iran’s ecosystem by experts has determined that if the current trend persists, within the next 10 years, a major part of Iran’s ecosystem will be destroyed.
However, the regime not only does not allocate any budget for this but also has no plans to restore Iran’s environment.