Parliament Takes Aim at Budget-Guzzling State-Owned Companies

Loss-making government companies have not been removed from the fiscal 2022-23 budget, says parliament speaker, Mohammad Baqer Qalibaf.
He made the statement after President Ebrahim Raisi submitted the budget bill to parliament on Dec. 12.
The budget of state companies, banks and for-profit organizations has been put at 22,314 trillion rials ($74.38 billion). 
Notably, the figure is more than the general budget, that is the sum of operating budget (including revenues derived mainly from taxation and exports at the disposal of the government), which stands at 13,720 trillion rials ($45.73 billion) plus revenues earmarked for ministries and governmental institutions worth 1,332 trillion rials ($4.44 billion), which takes the total sum of the general budget to 15,052 trillion rials ($50.17 billion).
According to a report by the Supreme Audit Court of Iran, not only these loss-making companies reappear in the fiscal 2022-23 budget, they have been allocated 34% more funding compared to the current year’s budget.
The report shows seven state companies account for half of all expenses and revenues in the 2022-23 budget.
According to Hamid Pourmohammadi, the deputy head of Plan and Budget Organization, 148 loss-making state-owned companies are listed in the fiscal 2020-21 budget, 70 have reached a breakeven point and 159 turned a profit.
“Ten companies account for 93% of state-owned firms’ profit and tax … in the current [fiscal] year [ending March 20, 2022] the number of loss-making firms have declined to 69,” he told an open session of the parliament.

According to the Supreme Audit Court of Iran’s report, four companies, namely Bank Sepah, Islamic Republic of Iran Broadcasting, IranAir and Road Maintenance and Transportation Organization, accounted for more than 96% of all losses borne by state-owned companies.
“The increase in the budget of these companies indicates that their ownership transfer to the private sector, or the enactment of Article 44 of the Iranian Constitution [which calls for privatization of major state-owned companies] may slow down,” Hadi Haqshenas, an economic expert, said in an article published by Persian daily Arman-e Melli.
The ceiling set for the government’s total budget is at 36,310 trillion rials ($121 billion), about 1,056 trillion rials ($3.5 billion) short of the general budget and that of state companies, banks and for-profit organizations combined.
The parliament will now go through the details of the budget bill to make any necessary changes before it is passed into law.
The Plan and Budget Organization says the next fiscal budget has been drafted regardless of the outcome of talks in Vienna [Austria] where Iran and the world powers party to the 2015 nuclear deal [formally known as the Joint Comprehensive Plan of Action] are negotiating to revive the agreement abandoned by the US during the presidency of Donald Trump.
Government officials, particularly the head of Plan and Budget Organization, Masoud Mir Kazemi, have stressed that next year’s budget has been drafted without a deficit.
Yet, Iranian governments have had a streak of failure in matching the revenues and expenses in the budget year-on-year.
“PBO has seemingly tried to draw up the budget based on economic realities but it has not paid attention to the point that the current year’s budget is on course to run a 4,000-trillion-rial [$13.3 billion] deficit although it had envisioned the sale of 2.3 million barrels of oil per day at the price of $50 per barrel. Since oil revenues have decreased by 40-50%, the realization of a budget without deficit for next year is uncertain,” Arman-e Melli reported.
In talks with Haqshenas said one of the reasons behind the budget deficit in the last and current Iranian years is that our projected oil revenues did not materialize.  
“Any figure announced as the current year’s budget deficit will range from 3,000 to 5,000 trillion rials [$10-16.5 billion] and the next year’s budget deficit will be 50% more than that figure, assuming that the nuclear talks fail and we don’t sell oil,” he concluded.