Rouhani administration faces no budget deficit despite unfulfilled income target

Iran Daily – An assessment of the Iranian government’s financial condition during March 21-December 20, 2017, shows that although the Rouhani administration has failed to acquire more than $8.1 billion in predicted monetary resources, its figures are not indicative of a budget deficit.

The government’s revenues during a fiscal year (starting mid-March) depends on three main public sources: 1. Taxes, 2. Revenues generated from exports of oil and its byproducts and 3. The handing over of financial properties mostly in the form of issuing bonds. For the year to mid-March 2018, the government had predicted a revenue of $70.61 billion from the public resources and had planned its budget accordingly.

It was stipulated in the approved budget bill for the year to March 2018 that the government would earn $35.51 billion from taxes as well as its other income sources, $24.28 billion by exporting oil and its byproducts and $10.81 billion by handing over financial properties. Therefore, the government approved to earn $26.85 billion from taxes and its other income sources, $18.36 billion from selling oil and its byproducts in foreign markets and $10.95 billion from conceding its properties during the nine-month period to December 20, 2017.

A report by the Central Bank of Iran on the government’s performance during March 21-December 20, 2017, indicates that out of its total predicted income, the Rouhani administration only managed to earn $19.44 billion from taxes and $13.06 billion by exporting oil and its byproducts, showing deficits of $7.34 billion and $5.3 billion, respectively. This is while, as per the income pertaining to the handing over of the properties, a surplus of $4.08 billion was acquired, indicating that the government had extensively issued bonds.

As per the government’s major expenditures, there are two main expenses: 1. Paying wages and salaries and 2. Allocating development budgets. For the year to mid-March 2018, the Rouhani administration approved $51.79 billion for its current expenditures, $14.48 billion for allocating development budgets and $4.28 billion for owning financial properties.

Thus, the government should have spent $39.18 billion on its current expenditures, $11.02 on development budgets and more than $3.26 billion on possessing financial properties during mid-March-mid-December, 2017. This comes as the Rouhani administration’s performance during the same duration indicates that it has spent only $33.36 billion on its current expenditures, which is $6.12 billion less than the approved amount.

In addition, as far as the development budgets are concerned, during the nine-month period to December 20, the government’s allocated amount is $4.69 billion less than the approved figure, standing at $6.12 billion. However, the amount spent on possessing properties in this period almost equals the approved figure of $4.4 billion.

In general, out of the total $70.61 billion worth of financial resources predicted for the year to mid-March 2018, some $53.26 billion should have been acquired during the nine-month period to December 20, 2017.

However, the government’s performance in this period indicates that only $44.69 billion materialized, showing a deficit of $8.57 billion compared to the predicted amount. On the other hand, to cover the $70.61-billion expenditures, the government should have allocated $53.26 billion, whereas, it has only spent $44.08 billion. On the whole, these figures indicate that in the same duration, the government failed to cover $9.38 billion of the expenses due to its failure to acquire the targeted financial resources.

Nevertheless, although the government failed to generate its target income during mid-March-mid-December, 2017, it did not face a budget deficit. This comes as Iranian statesmen have repeatedly announced that the government will not face a budget deficit in the year to March 2018.