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About 82% of the projected revenues for the 11-month period were materialized.
About 82% of the projected revenues for the 11-month period were materialized.

Iran's Budget Deficit Improves

The government earned 1.78 quadrillion rials ($47.4 billion) in revenues during the 11 months to Feb. 18, 2016, up 27% year-on-year
Tax revenues amounted to 856.4 trillion rials ($22.8 billion), indicating a 31% rise year-on-year

Iran's Budget Deficit Improves

Iran’s budget deficit for the 11 months of the last Iranian year (March 20-Feb. 18, 2016) stood at 232.9 trillion rials ($6.2 billion), showing a 23% decline compared with the similar period of a year before, the Central Bank of Iran said.
The government earned 1.78 quadrillion rials ($47.4 billion) in revenues during the period under review, up 27% year-on-year, CBI reported on its website.
The report shows 82% of the projected revenues for the 11-month period were materialized.
Revenues associated with the sales of oil, gas condensates and petrochemicals reached 597.1 trillion rials ($16 billion), 84% of what the government had expected to earn.
Hydrocarbon-related revenues went up 18.5% year-on-year, thanks to ramped up oil production following the removal of nuclear sanctions against Iran in January 2016, as part of a nuclear deal the country signed with world powers in 2015.
Tax revenues amounted to 856.4 trillion rials ($22.8 billion), indicating a 31% rise YOY.
The government of President Hassan Rouhani has been trying to increase tax revenues to reduce reliance on oil, which made the government financially vulnerable when it became subject to the nuclear sanctions. This is while the decline in crude prices during Rouhani's tenure put additional strain on government finances.   
Lack of a comprehensive economic database, widespread tax exemptions and ambiguous regulations, along with a general failure to uphold the law, have long been minimizing tax revenues in Iran.
About 60% of Iran’s economy do not pay tax, including 40% that are exempt from tax and 20% that evade tax payment. Tax evasion is estimated at 300 trillion rials ($7.7 billion) annually.
Despite the considerable increase in tax revenues, crude oil remains an inseparable part of the Iranian budget.
Iran, the third largest crude oil exporter of the Organization of Petroleum Exporter Countries, is assuming an average oil price of $50-55 a barrel in its budget following a recent OPEC deal.
OPEC members reached an agreement in Vienna last year to reduce collective output by capping it at 32.5 million barrels a day in the first half of 2017, with Saudi Arabia to shoulder nearly 40% of the burden.
Non-OPEC members, including the world’s top producer Russia, also committed to the cause by promising to cut an additional 558,000 bpd.
Iran was the only country allowed to slightly boost output, while Nigeria and Libya were granted exemptions because of internal conflicts that have hampered oil production.
Based on the deal, Tehran was allowed to boost output to 3.8 million barrels per day, around 90,000 bpd higher than its October production figure.
Despite the improvement in income/spending balance, the huge deficit is still taking toll on the economy, notably Iran’s underdeveloped infrastructures.
The CBI figures indicate only 185.9 trillion rials ($5 billion) were earmarked for infrastructure development during the 11-month period, which accounts for 35% of the amount projected in the budget bill. Infrastructure investment during the period under review fell 12% compared with last year’s corresponding period.
In fact, this has been the case in the past three years, as the government only met 58%, 68% and 39% of its projected development spending during the fiscal March 2015-16, March 2014-15 and March 2013-14 respectively.
Early March, the Iranian Parliament finalized an 11.5-quadrillion-rial ($306.6 billion) budget for the current year (started March 21). The budget included 3.88 quadrillion rials ($106 billion) earmarked as “general revenues”, in addition to a whopping 8 quadrillion rials ($213 billion) to fund state companies, institutions and banks.

 

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