EghtesadOnline: Iran’s budget deficit for the three quarters of the current fiscal year (March 20-December 20, 2016) amounted to 268.9 trillion rials ($7 billion), according to the latest data released by the Central Bank of Iran.
Revenues associated with the sales of oil, gas condensates and petrochemicals reached 421.9 trillion ($11.1 billion) during the period, 70.6% of what the government expected to earn.
Tax revenues reached 655 trillion ($17.2 billion) while the government had predicted 785.1 trillion rials ($20.6 billion) in tax income.
The government cut down spending associated with the expenditures of ministries and their affiliated bodies by 216.2 trillion ($5.7 billion), according to Financial Tribune.
Investment in development projects was also drastically cut during the period. About 158 trillion rials ($4 billion) were invested in development projects, roughly a third of what the government had intended to spend on development projects across the country.
The government only met 58%, 68% and 39% of its projected development spending during March 2015-16, March 2014-15 and March 2013-14 respectively.
A 10.85-quadrillion-rial ($280.6 billion) budget bill was proposed by President Hassan Rouhani early December. State companies, banks and organizations will get 7.56 quadrillion rials ($195.5 billion) to finance their operations, up from 6.83 quadrillion rials ($176.6 billion) last year.
In the next year’s budget bill, 511 trillion rials ($13.2 billion) are associated with the revenues of ministries and state institutions while 3.2 quadrillion rials ($82.7 billion) are placed under “public resources”, which include government expenditures. The two categories combined have seen a 10.6% rise compared to the current year’s budget.
The government owns the majority stake in Iran’s economy, the main reason behind low productivity and high costs.
More than two-thirds of the revenues projected for next year are extended to ministries and their affiliated companies and organizations. And the administration is unable to reduce most of this.
The government has projected a stronger US dollar and a higher price for crude oil in the March 2017-18 budget bill. It set the greenback’s exchange rate at 33,000 rials, up from last year’s 29,970 rials, and still far lower than the 38,490-rial/dollar in Tehran’s markets on Sunday.
OPEC’s third largest crude oil exporter is assuming an average oil price of $50 a barrel following the recent OPEC deal.
Members of the Organization of Petroleum Exporting Countries reached an agreement in Vienna last year to reduce collective output by capping it at 32.5 million barrels a day in the first half of 2017, with Saudi Arabia to shoulder nearly 40% of the burden.
Non-OPEC members, including the world’s top producer Russia, also committed to the cause by promising to cut an additional 558,000 bpd.
Iran was the only country allowed to slightly boost output, while Nigeria and Libya were granted exemptions because of internal conflicts that have hampered oil production.
Based on the deal, Tehran was allowed to boost output to 3.8 million barrels per day, around 90,000 bpd higher than its October production figure.
Taxes are projected to rise 1,130 trillion rials ($29.6 billion), up from last year’s 1,010 trillion rials ($26.5 billion). And with the $50 crude and 33,000-rial rate for the US dollar, the administration expects 1,100 trillion ($28.9 billion) rials from oil exports, including the export of natural gas and condensates.