The Plan and Budget Organization has proposed 21,120 trillion rials ($75 billion) in the March 2022-23 fiscal budget for government-controlled companies and state banks.
This is 34.4% higher compared to 15,710 trillion rials ($56b) in the current year, the Supreme Audit Court (SAC), the supervisory arm of the parliament, said.
SAC studies the draft budget for government-affiliated companies before it is in the parliament.
The ombudsman said the steep increase is because of the “increase in the prices of goods and services, higher wages and inflation”.
Spending by 377 state-run companies, for-profit organizations and government-affiliated banks is enshrined in the budget.
The banks include Bank Melli Iran, Bank Sepah, Bank Keshavarzi (Agri Bank), Bank of Industry and Mine, Export Development Bank of Iran, Post Bank of Iran, Tose'e Ta'avon Bank (Cooperatives Development Bank) and Bank Maskan –the main housing lender.
SAC did not say anything about the projected income of state-run companies in the next budget, but noted that four companies contribute 35% of the total government income from its affiliated companies.
The most profitable of these companies are Abadan Refinery Company, National Iranian Oil Company, National Iranian Gas Company and Government Trading Corporation of Iran responsible for the import and distribution of essential goods, namely food.
As per the SAC report, 60% of the budget revenue will be allocated to 10 state-run companies and banks.
Regarding the financial health of the companies, the SAC said of the 377 companies, 9 banks and 1 for-profit organization, 154 are seen as profitmaking, 199 break-even and 24 would fall in the loss-making category next year.
On the key issue of why state companies should be in the red despite lasting government support, the report pointed to the government coercion to sell their goods at lower prices, bulging payrolls, ageing machinery and equipment, failure to realize projected income, the US sanctions and compelling state banks to lend to the underperforming and mismanaged companies.
Increase in the budget of state companies comes despite repeated calls by respected economists on successive governments to improve management and leadership, downsize, cut red tape and the bloated bureaucracy, reduce spending and avoid unaffordable wage hikes.
In a report on ballooning budget deficits in the past three years, the Majlis Research Center, the influential parliamentary think tank, said the shortfall in fiscal 2018-19 –coinciding with the announcement of the new US sanctions, ump -- was 1,300 trillion rials ($4.6b).
This jumped to 1,800 trillion rials ($6.4b) a year later and the MRC estimated it will surge to 3,000 trillion rials ($10.7b) in the current fiscal year that ends in March 2022.
