News : Economy

Iran’s 2020–21 Budget Is a Genuine Dilemma

Evidence clarifies that the next year's budget bill has been drafted on tax-based revenues. In the next year's budget, the amount of tax revenue estimated at best is between 160-175 trillion tomans.

On December 8, the administration of Iranian President Hassan Rouhani published the 2020-2021 budget bill, triggering a new round of infighting among Iranian officials.

Significantly, Rouhani’s allies and opponents agree that resources, which the budget relies on, are abstract and the government has no genuine plan to compensate for the huge deficit. Today, the budget deficit is only one of the Iranian government’s crises.

Various factions also concur that the Rouhani administration intends to address its economic problems at the expense of ordinary people. This matter raises concerns among the political elite over igniting a new round of protests. Therefore, the Iranian media outlets are filled with finger-pointing and warnings about the future.

Desperation Among Rouhani’s Advocates Over Next Year’s Budget Bills

“The 2020-21 budget is the most unrealistic bill ever offered. Closing the budget based on exporting one million crude oil barrels per day, is unrealistic. Planners of the budget are also aware of this matter. This budget bill will make some segments of the society even poorer,” said Hossein Raghfar, an economic expert and Rouhani advocate, on December 26.

The reality is for many years, the budget deficit sank Iran into fundamental challenges and “the people don’t see a bright future,” Raghfar added. In this regard, economic experts foresee “the continuation of the status quo will render even worse economic conditions.” For instance, Raghfar shows his concern about upcoming protests. “… the experience of the November protests should lead the government to grasp [the reality of the current conditions] and change its failed procedure over the past three decades,” the state-run website Entekhab published on December 26.

How Do Khamenei’s Proponents Deal with the 2020-21 Budget Bill?

On the other hand, the “principlists” also are voicing concerns about the consequences of next year’s budget bill. They bluntly emphasize that the 2020-21 budget plan is ”absolutely unjust” and has been blueprinted “without considering the people’s livelihoods” and especially the vast poverty across the entire country.

“The analysis shows that the 2020-21 budget bill will empty the country’s entire exchange reserves. In this regard, the Islamic Republic will face numerous crises and public dissatisfaction in the future,” the state-run website Siasat-e Ruz published on December 25. Siasat-e Ruz also warned about the stage of social intolerance in accordance with economic pressures. “In the end, [the government] has to acquiesce the [consequences of] negotiations worse than the JCPOA [referring to the 2015 Iran nuclear deal negotiations between the P5+1 and Iran].”

Other Khamenei-affiliated media are also sounding alarms about the beginning of a new round of negotiations. In fact, they are concerned about the consequences of the budget deficit resulting in more concessions. For example, the Vatan-e Ruz website issued a warning about the ironic attempt to establish a non-petrol economy. This outlet announced on December 25 that “achieving a non-petrol economy through imposing pressures on the poor segments of the society will spell into tensions and severe sociopolitical instability.”

The state-run TV also unveiled the deeper scope of infighting over the budget bill approval. “The oil sale is unrealistic and raises the question of why [the Rouhani administration] has closed the budget plan in such a manner? ... In fact, the administration has to either borrow from the Central Bank to compensate for the budget deficit or acquiesce the United States to sell our oil… Many [officials] believe that this budget has closed to draw the government into negotiations and to acquiesce U.S. aggression,” according to a program aired on December 25.

In conclusion, Iran’s 2020-21 budget bill highlights the Iranian government’s crises that are compelling authorities to make tough decisions. In parallel with the U.S. sanctions noose tightening around Tehran’s neck, the Islamic Republic’s survival is endangered by protests. This places Iranian officials before a strong impasse.

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