Government revenues outweighed its expenditures by 40 trillion rials ($153.84 million) in the last fiscal year (March 2019-20), says Mehrdad Bazrpash, the head of Supreme Audit Court of Iran, the supervisory arm of the Iranian Parliament.
Every year, SAC publishes a monitoring report on the government’s performance, which provides information on financial flows and the implementation of government programs vis-à-vis the goals and targets set in the budget law.
Bazrpash said a total of 3,700 state agencies were audited for the 2019-20 annual report.
“Up to 113.4% of the government’s revenues and 112.4% of expenditures projected in the 2019-20 Budget Law were realized and revenues outweighed expenditures by 40 trillion rials [$153.84 million]. A total of 820 trillion rials [$3.15 billion] worth of participatory bonds were issued by the government,” he was quoted as saying by the Persian-language daily Etemad.
The SAC chief noted that of all the medical professionals (physicians, pharmacists, veterinarians, etc.) who were required to use point of sale machines, only 40% or 45,000 complied with the law.
“Nearly 14,000 exporters of non-oil products failed to repatriate their earnings worth €14.8 million last [fiscal] year. The government’s net debts stood at 5,780 trillion rials [$22.23 billion] by March 20, 2019 and given the economic indicators and probable borrowings from the Central Bank of Iran, the debts are bound to remain at higher levels in the following reports of the Supreme Audit Court,” he said.
The CBI has for long mandated exporters to bring home their earnings in foreign currencies to help build up its own reserves.
According to Bazrpash, total revenues derived from the Targeted Subsidies Law amounted to 1,320 trillion rials ($5.07 billion) last year; revenues gained from higher gasoline prices introduced last year stood at 93,620 billion rials ($360.07 million).
The Targeted Subsidies Law of 2010 authorized the reduction of food and energy subsidies, and instead allowed the payment of 455,000 rials ($17.5) to each and every Iranian on a monthly basis.
A total of 820 trillion rials ($3.15 billion) worth of participatory bonds were issued by the government
“The government was expected to gain 1,810 trillion rials [$6.96 billion] from the taxation of real and legal entities in the year ending March 20, 2019, of which only 10%, i.e., 186,000 billion rials [$715.38 million], were deposited into the treasury’s account,” he said.
Latest data show the government earned upwards of 1,314 trillion rials ($5.05 billion) in tax revenues in the eight months to Nov. 20, which accounts for 64% of the sum predicted in the budget for the period.
“The value of tax exemptions stood at 1,440 trillion rials [$5.53 billion] in the year ending March 20, 2019, of which 88% were granted to real entities in Tehran, Bushehr, Khuzestan, Isfahan and Hormozgan. In other words, 26 provinces accounted for as little as 12% of the tax exemptions envisioned for real entities. About 75% of total tax exemptions for real entities were granted to Tehran, which lead to greater income inequality.”
The head of Supreme Audit Court of Iran also told the Persian daily Shargh that “the government should have allocated 50 trillion rials [$192.3 million] to the Social Security Organization of Iran and pension funds, but the monitoring report shows SSO only received 12,690 billion rials [$48.80 million] last year”.
SSO is Iran's biggest insurance company that provides coverage of wage-earners and salaried workers as well as voluntary coverage of self-employed persons.
“A total of $15 billion in subsidized foreign currency at the rate of 42,000 rials per US dollar were projected to be allocated last year. The net sum of forex allocated for imports stood at $49 billion, of which 94% were spent on the import of goods and repayment of debts to the National Development Fund of Iran. No imports were registered in exchange for $3 billion or 6.5% of the allocated forex since March 20, 2016, to November 20, 2020,” Bazrpash said.
March 20-Nov. 20 Revenues Exceed Spending by Over $1b
Government revenues during the first eight months of the current fiscal year (March 201-Nov. 20) exceeded its spending by more than $1 billion.
The Budget Law of Fiscal 2020-21 estimated 3,840 trillion rials ($14.76 billion) in revenues for the government in the eight months to Nov. 20, of which 3,340 trillion rials ($12.84 billion) have been realized, according to the head of Plan and Budget Organization, Mohammad Baqer Nobakht.
“Eight-month spending reached 3,530 trillion rials [$13.57 billion]. In fact, the government managed to economize 310 trillion rials [$1.19 billion] of the total sum it was allowed to spend,” he was quoted as saying by Fars News Agency.
Noting that the expenditure section of the budget is divided into operating expenses and capital expenditure, the official said, “OPEX saw a 35% growth during the eight months compared with the similar period of last year. A total of 1,040 trillion rials [$4 billion] were allocated to emoluments, indicating a 53% increase year-on-year. Also, 520 trillion rials [$2 billion] were paid in CAPEX [development projects], showing a 65% growth compared with last year’s same period.”
Nobakht noted that a total of 500 trillion rials ($1.92 billion) estimated in the government’s eight-month revenues did not materialize and on the side of expenditure, 310 trillion rials ($1.19 billion) were not spent, either.
“The government was forced to tap into the Central Bank of Iran’s petty cash resources to the tune of 190 trillion rials ($730.76 million), though it was allowed to use 390 trillion rials ($1.5 billion) or 3% of the budget from CBI’s petty cash resources,” he said.
The Joint Commission of the Iranian Parliament agreed in principle recently to the budget bill of the upcoming fiscal year (to start March 21) submitted by the government of President Hassan Rouhani earlier in December.
Twenty-three members of the commission voted for, 19 voted against and one abstained from voting, IRNA reported.
Majlis Joint Commission, comprising representatives of all specialized parliamentary commissions, is responsible for reviewing budget bills as well as five-year development plans proposed by the government before they are put to a vote by MPs.
“The speaker of parliament [Mohammad Baqer Qalibaf] asserted in this morning’s closed session that the government and parliament will work together to provide the needed resources [to balance next year’s budget],” Hossein Goodarzvand Chegini, a member of the commission, said.
The parliamentary approval comes after the budget bill came under fire by experts and even the research arm of Majlis for being “too optimistic” on the side of revenues.
As of Jan. 2, specialized committees will iron out the details of the budget, Chegini added.
In the fiscal 2021-22 budget, the operating budget (including revenues derived mainly from taxation and exports at the disposal of the government) has been projected to stand at 8,413 trillion rials ($32.35 billion at the market exchange rate of 260,000 rials per dollar).
Add to this, revenues earmarked for ministries and governmental institutions worth 884 trillion rials ($3.4 billion) take the total sum of the general budget to 9,298 trillion rials ($35.76 billion).
The budget of state companies, banks and for-profit organizations has been put at 15,619 trillion rials ($60 billion).
All in all, the ceiling set for the government’s total budget is at 24,357 trillion rials ($93.68 billion).
