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TEHRAN – Every year after the government submits the draft of the national budget bill for the next year to the Iranian parliament (Majlis), the parliament’s budget review committee immediately begins assessing general outlines of the bill including the incomes and the expenses.

After the mentioned assessments, the details of the bill will be subject to review so that by the yearend a refined version of the bill would be prepared and approved to be used as the base guideline for the country’s monetary framework in the next fiscal year.

The budget bill

Considering the country’s special economic conditions in recent years, the Iranian parliament has mostly rejected the primary drafts of the budget bill and required the government to make some amendments. This year too, in early February, the parliament rejected the general outlines of the primary draft of the budget bill for the next Iranian calendar year 1400 (which begins on March 21).

The proposed bill, first submitted to Majlis in early December 2020, amounted to about 24.357 quadrillion rials (about $579.928 billion at the official rate of 42,000 rials), with a 20-percent rise from the current year’s approved budget.

The bill estimated the government’s budget at 9.298 quadrillion rials (about $221.38 billion), with an increase of 47 percent from the figure of the current year. It envisaged 3.175 quadrillion rials (about $75.595 billion) of incomes, while 6.37 quadrillion rials (about $151.666 billion) of expenses.

Revenues from exporting oil, gas, and gas condensate were estimated at 1.99 quadrillion rials (about $47.3 billion), up 323 percent from 454.9 trillion rials (about $10.83 billion), approved in the current year’s budget.

The bill was mainly criticized for being unrealistic about the oil revenues and the government expenses. The budget review committee urged the government to reform the bill and submit it to the parliament again.

The amendments

Therefore, in the reformed bill the government proposed to reduce its expenses by 400 trillion rials (about $9.5 billion) to prevent the need for increasing tax incomes.

It also reduced the National Development Fund (NDF) resources and increased the ceiling of the incomes from publishing treasury bonds by 530 trillion rials (about $12.6 billion).

“The most important factor in the amendment was the discussion of the subsided foreign currency and the amount of oil revenues; the oil revenues in the amended bill were not changed, and the subsidized foreign currency would still be allocated for essential goods like medicine and crops” Mojgan Khanlou, spokeswoman of the Parliament Budget Committee said.

After making the necessary amendments, the government resubmitted the bill to the parliament, and this time Majlis approved the amendments of the national budget bill in mid-February.

After approval

After approving the general outlines, the budget review committee would hold several sessions for reviewing the details of the bill.

The first session of the budget review committee was held on February 20 in which the parliament determined the share of NDF from the country’s oil and gas export revenues in the newly amended budget bill.

Majlis continued to review the details of the national budget bill for the year 1400, in an open session on Sunday, February 28. This review session was mainly focused on the expense aspects of the national budget bill.

During the session, the MPs came up with some decisions regarding the various aspects of the bill including the resources allocated for the renovation of the country’s electricity network, the resources allocated for the Defense Ministry, and the obligations of the Oil Ministry regarding oil and gas condensate exports.

MPs instructed the Oil Ministry to submit a monthly report on the amount of exports of crude oil, gas condensate, and major oil and gas products to the parliament’s Planning, Budget, and Energy committees and also to the Supreme Audit Court of Iran.

The government is also obliged to deposit the surplus oil and gas revenues – from the exports of more than one million barrels per day (bpd) – to the country’s foreign exchange reserve account.

It was also agreed that the Ministry of Defense and Armed Forces Logistics would be allowed to use up to 300 trillion rials (about $7.1 billion) equivalent of crude oil and gas condensate on the condition of processing it in the refineries run by the private sector.

The decision has been made to promote the contribution of the private sector in the country’s oil and gas sector.

The Defense Ministry is constructed to process the allocated share of crude oil and gas condensate only in those refineries which have increased their processing capacity in recent years.

As for the Energy Ministry, the MPs allocated the ministry 300 trillion rials (about $7.1 billion) for renovating the country’s electricity infrastructures. The mentioned funds are going to be mainly spent on renovating the country’s power plants and worn-out electricity network sections.

The allocated money, however, should be supplied only from the sale of government assets, bonds, and privatization of government-owned companies. This allocation is also considered as payment for a part of the government debts to the power plants owned by the private sector.

In the few weeks remaining to the end of the current Iranian calendar year, more sessions would probably be held for further assessing the details of the national budget bill to make sure that the country would begin the new year on solid economic ground.

EF/MA

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