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The Iranian government has a history of failing to meet the capital expenditure mandated in the budget.
The Iranian government has a history of failing to meet the capital expenditure mandated in the budget.

Under a Third of Development Budget Realized Last Year

If the current approach persists, the government will have no funds for capital expenditure

Under a Third of Development Budget Realized Last Year

Out of 340 trillion rials ($7.9 billion) allocated to capital expenditure in the budget law for last year (ended March 20, 2017), less than 100 trillion rials ($2.32 billion) or 29.4% were realized, the secretary of Iran Road Construction Association, Ali Azad told IRNA.

The Iranian government has a history of failing to meet the capital expenditure mandated in the budget. In fact, the government only met 58%, 68% and 39% of its projected development spending during 2015-16, 2014-15 and 2013-14 respectively.

“Over the years, the government and the parliament have focused on committing resources to meet all but 100% of the operating budget rather than the capital budget,” director general of the Supreme Audit Court of Iran, Adel Azar, said in November.

“A total of 87% of the budget are used as operating expenditure of governmental entities against their rapidly shrinking capital budget,” he added. According to Azar, capital expenditure accounted for 25% of the budget in the fiscal 2011-12 compared to 13% last year, while the share of operating budget increased by 87% last year from 74% in the fiscal 2011-12.

“If the current approach persists, we’ll have to put an end to capital expenditure budget altogether. The government issues bonds, sells oil and shares of public companies only to finance its operational spending,” he said. The official said there are 27 development projects in Iran, which will take more than 41 years to complete, 44 projects requiring between 31 and 40 years, 284 projects to take between 21 and 30 years, 658 projects will last for between 11 and 20 years and 755 projects lack a timeline.

“For these projects to become operational, as much as 5,080 trillion rials ($115 billion) are needed at the national level and 490 trillion rials ($11 billion) at the provincial level,” he said.

According to Mohammad Nahavandian, deputy president for economic affairs, about 700 trillion rials ($15.8 billion), in addition to investments by the private sector, have been earmarked to complete development project in Iran as per the budget bill of the next fiscal (March 2017-18).

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