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Budgeting Process to Be Adjusted
Domestic Economy

Budgeting Process to Be Adjusted

The government plans to amend the current budgeting process and instead, provide a detailed projection of all estimated income and expenses based on forecasted sales revenue for each fiscal year, Vice President for Parliamentary Affairs Majid Ansari said Sunday.

"In other words, the administration aims to pursue an operating budget policy because the current budgeting process has many shortcomings," FNA quoted Ansari as saying.  

Economists believe that the traditional budget formulation procedures have only resulted in a sharp increase in government expenditures compared to the yearly expansion of national budgets. Civil construction spending -- one of the key segments of every budget call – has suffered the most as a result of the subsequent resource shortage.

"Two years ago, for instance, government spending accounted for almost 80 percent of the budget, and if the current trends continue, expenditures will devour the budget in the next 3-4 years," Ansari warned.  

"Sooner or later, we must reform the national budget formula and change it into an operating budget," the former lawmaker asserted. "Look at the most recent budget bills and you'll see that every year there has been a new set of regulations and directives introduced in the bill, and all of these have only violated the general uniformity of the budget so that no one, be it the officials or the public, would know if those unnecessary regulations will again be included in next year's budget or not."

Ansari said that the government's economic team has found a solution to the problem. "We separated those parts of the budget that are governed by permanent law and sent the new bill to the parliament for examination." For the next fiscal year, he added, the operating budget would be applied to a specific number of government agencies and departments.

Huge Gov't Debt

Part of the government's plan of action to exit recession, published in June by the Rouhani administration's economic team, explains a process through which the government aims to pay off its debt to the contractors as well as to the banking system.

"We want to assign semi-finished projects to the private sector because the civil construction budget alone cannot meet the current needs of construction sector," Ansari said, pointing to the large amount of government debt. "The Energy Ministry, for example, owes contractors around 230,000 billion rials, which is equal to half of the civil construction budget for the current fiscal year (ending March 2015).

The plan of action to exit recession clarifies that the share of the National Development Fund of Iran from the oil revenue should drop significantly. However, critics argue that this is in contrast with the guidelines of resistance economy.

"The resistance economy is not a single idea, but rather a comprehensive package of economic policies that calls for reducing the share of the public budget from oil revenue, along with improving employment and equality," Ansari said, adding that the policy will not be fulfilled in the short-term.   

 

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