Domestic Economy
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Acute Deficiencies in Iran’s Budgetary System

Public employees’ compensation accounts for the lion’s share of government expenditure followed by its consumer purchases, as well as rents and financial frictions.Public employees’ compensation accounts for the lion’s share of government expenditure followed by its consumer purchases, as well as rents and financial frictions.

Budget deficit, the mismatch between the government’s spending commitments and what it is projected to earn in oil revenues, taxes and other sources of income, has been a way of life for Iranian governments for most years since the early 2000s.
Oil revenues depend on global prices, production and exports, which hinge on the economic and political state of the global economy. Hence, the government’s predictions about its oil earnings are usually inaccurate. 
Tax revenues and expenditure are generally influenced by government decisions, though.
Ever since 2001, the first year of the Islamic Republic of Iran’s Third Five-Year Development Plan, the share of the government’s operating budget has overtaken that of capital expenditure. The gap grew alarmingly in favor of operating budget when oil revenues flooded the country between 2005 and 2013 under former president, Mahmoud Ahmadinejad. 

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