Iran’s budget deficit came in bigger than expected in the first half of the current year (March 21-Sept. 22) to reach 372.3 trillion rials ($2.65 billion), latest data released by the Central Bank of Iran show.
The shortfall was larger than the budget law’s forecast of 164.3 trillion rials ($1.17 billion) for the six-month period while it is 105.5% more compared with the deficit of the preceding year’s corresponding period.
This is while in fiscal 2017-18, the deficit came in 28.8% smaller than the year before.
To cover the deficit, the government sold 65.5% more bonds—a total of 419.3 trillion rials ($2.99 billion)—in H1 compared with last year's first half.
The government’s overall revenues during the period amounted to 356.5 trillion rials ($2.54 billion), indicating a decline of 3.8%, while its spending hit 728.8 trillion rials ($5.2 billion) to register a 32.1% growth year-on-year.
Revenues associated with the sales of oil and petroleum products were more than the projected budgetary figure of 514.7 trillion rials ($3.67 billion) to reached 630.6 trillion rials ($4.5 billion), indicating a 41.2% rise YOY.
The budget law estimate of revenues from the sale of oil and petroleum products for the whole year is 1,010.1 trillion rials ($7.21 billion).
The government spent 266.4 trillion rials (about $ 1.9 billion) on development projects in the six-month period, which shows a 240.5% growth YOY, yet lower than the target of 316 trillion rials ($2.25 billion)in the budget law for H1.
As per the budget law, the government is expected to spend a total of 620 trillion rials ($4.42 billion) on development projects this year.
16.8% Rise in Tax Revenues
Tax revenues were estimated to reach 724 trillion rials ($5.17 billion) in H1, but they amounted to 503.4 trillion ($3.59 billion) to register a 16.8% increase YOY. The budget law estimate of tax revenues for the whole year is 1,420.8 trillion rials ($10.14 billion).
The government’s tax revenues consist of returns from direct and indirect taxation. Direct taxes include three groups of “tax on legal entities”, “income tax” and “wealth tax”.
Overall, direct tax revenues stood at 227.6 trillion rials ($1.62 billion) during the six months, registering a decline of 1.9% over last year’s similar period.
Direct tax consists of “tax on legal entities”, “income tax” and “wealth tax”. Tax on legal entities yielded 122.2 trillion rials ($872.85 million) for the government–12.9% down YOY.
The H1 target in the budget law for tax on legal entities was 207.1 trillion rials ($1.47 billion).
The government collected 88 trillion rials ($628.57 million) from income tax and 17.4 trillion rials ($124.28 million) from wealth tax, which show a respective rise of 11.9% and 33.7% YOY.
Indirect taxes, including “tax on imports” and “tax on goods and services”, reached 275.9 trillion rials ($1.97 billion), indicating a 38.4% rise YOY.
Import Tax Income Sees 27.7% Growth
The central bank report also shows tax on imports generated 73.9 trillion rials ($527.85 million), 79.6% more than the year before while tax on goods and services earned the government 201.9 trillion rials ($1.44 billion), up 27.7 % YOY.
According to the Islamic Republic of Iran's Customs Administration, a total of 16.22 million tons of non-oil goods worth $22.18 billion were imported into Iran, down by more than 9% in weight and 12% in value over last year’s similar period.
The average price of each ton of exported commodities hovered around $408, up close to 17% compared with last year’s same period.
The imports mainly included auto parts ($978 million accounting for more than 4% of total imports), rice ($964 million accounting for more than 4% of total imports), field corn ($961 million accounting for more than 4% of total imports), soybeans ($705 million accounting for more than 3% of total imports) and graphite electrodes used in furnaces ($287 million accounting for more than 1% of total imports).
Major exporters to Iran during the period included China with $5.5 billion (25% of the value of Iran’s total exports), the UAE with $3.15 billion (14% of the value of Iran’s total imports), South Korea with $1.43 billion (more than 6% of the value of Iran’s total imports), India with $1.37 billion (more than 6% of the value of Iran’s total imports) and Germany with $1.17 billion (more than 5% of the value of Iran’s total imports).
H1 imports from all these countries have declined compared with the similar period of last year. Imports from China dropped by 4%, while those from the UAE fell by 30%, South Korea by 17%, India by more than 2% and imports from Germany declined by 14%.
Value added tax, which is a subcategory of tax on goods and services, increased by 19.8% to reach 128.7 trillion rials ($919.28 million).
29.7% Increase in Earnings From Cigarette Tax
The government earned 2.5 trillion rials ($17.85 million) from cigarette tax in H1, which indicates a rise of 29.7% YOY.
Revenues from cigarette tax, another subcategory of tax on goods and services of indirect taxes, were estimated to hover around 2.7 trillion rials ($19.28 million) in the six months under review.
The target in the budget law for the current year’s revenues from cigarette tax is 5.3 trillion rials ($37.85 million).
Departure Tax Earns 174% More
During the first half of the current fiscal year, the government earned 5.2 trillion rials ($37.14 million) from departure tax, which it charges outbound tourists. The figure indicates a rise of 174% compared with the same period of last year.
Revenues from departure tax were estimated to hover around 4.1 trillion rials ($29.28 million) in H1. The target in the budget law for the entire current year’s revenues from departure tax is at 8 trillion rials ($57.14 million).
Departure tax has increased almost threefold compared with last year’s rate to reach 2.2 million rials ($15.7) with the exception of religious trips, which remained the same as last year’s fee—375,000 rials ($2.68) for air travel and 125,000 rials (around 90 cents) for road travel.
