Why Iran must shake up its approach to state-owned enterprise

Al-Monitor | : A year ago, President Hassan Rouhani’s budget proposal for the next Iranian year (beginning March 21) sparked a heated internet debate among Iranians. The main cause of their anger was the lavish funds allocated to certain state agencies and institutions. However, what was left unnoticed and indeed in need of much more public attention was the draft budget’s section on state-owned enterprises.

A litany of problems in Iran are thought to be the byproducts of budget decisions, including high liquidity growth, abnormal bank interest rates, costly business activity, money laundering, capital flight and smuggling of goods, to name a few.

With that in mind, in the forthcoming Iranian fiscal year, the state budget will total 17,032 trillion rials ($405.5 billion). Of that amount, state-owned enterprises are expected to garner around 12,747 trillion rials ($303.5 billion), while the government’s general budget will total considerably less, at 4,786 trillion rials ($114 billion). Although the bulk of Iran’s state budgets is routinely allocated to state-owned enterprises, the books of such enterprises are not scrutinized by parliamentarians, either due to a lack of time, or perhaps due to media outlets focusing more on the government’s general budget.

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