Domestic Economy

Think Tank Deliberates on Government’s Budgetary Woes

MRC experts say the allocation of subsidized foreign currency will increase the monetary base and inflation rate, apart from promoting rent-seeking practices among importers and weakening domestic production
Think Tank Deliberates on Government’s Budgetary WoesThink Tank Deliberates on Government’s Budgetary Woes

With oil prices in freefall and the coronavirus spreading like wildfire, the government will get more and more worked up this year than the last, especially because of the fiscal burden imposed by sanctions and the decline in oil sales. 
In the fiscal 2019-20, the relatively smaller size of the budget deficit, the availability of foreign exchange reserves from the National Development Fund of Iran and the untapped potential of debt bonds to some degree prevented the deficit’s strong impact on the economy. 
In the current fiscal year (March 2020-21), the projected budget deficit of 1,500 trillion rials ($8.62 billion), the 960-trillion-rial ($5.5 billion) reliance of the budget on bonds and the drastic fall in oil prices and tax revenues, as well as the mounting costs of coronavirus outbreak, are bound to compound the government’s economic woes. 


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