Iranian MPs Approve Budget Financial Measures

Members of parliament in their latest open session on Saturday reviewed the details of the fiscal 2018-19 budget law and approved measures concerning finance, government resources and bonds, among other things.

As approved by 152 of MPs from the total of 227 present, the administration of President Hassan Rouhani has been authorized to draw $350 million from the National Development Fund of Iran.

The resources of the sovereign wealth fund are to be spent on completing a massive agriculture project to irrigate 46,000 hectares in the southeastern Sistan-Baluchestan Province, reports ICANA, the legislature's news portal.

The funds will be allocated as loans with interest rates complying with those defined in the NDFI statute.

MPs overwhelmingly approved the cap devised for the government to use foreign aid or financial facilities with 163 votes. The administration will therefore be allowed to obtain up to $5 billion in aid from international financial institutions.

Another portion of the approved budget law passed by 167 MPs pertains to the $30 billion ceiling set for the administration to attract foreign finance loans.

As part of reviewing the income of the new budget, MPs also named the foreign banks from which the government is allowed to attract facilities from.

A total of 168 lawmakers passed the government's proposed measure that says that "in order to facilitate the absorption of approved facilities, the government is allowed to employ services rendered by development banks, namely the Islamic Development Bank, the Asian Infrastructure Investment Bank and the ECO Trade and Development Bank.

The measure allowing banks to continue for another year their Central Bank of Iran-run scheme aimed at reducing the volume of non-performing loans by forgiving any fine and penalty on loans when the receiver returns the original amount was approved by 173 lawmakers.

Islamic Bonds

With the approval of 155 lawmakers, the government was allowed to issue up to 20 trillion rials ($437.5 million) in Treasury bonds for clearing its outstanding debts to real and legal persons in the cooperatives and private sectors with the liabilities of the aforementioned persons to ministries and state-owned organizations.

MPs also allowed the administration to issue up to 95 trillion rials ($2.07 billion) in Treasury bonds with maturity periods of up to three years to be then handed over to creditors.

Next, parliamentarians ratified a measure setting a limit on how much participatory bonds the administration is allowed to publish for its development projects.

A total of 151 MPs permitted the government to issue up to 260 trillion rials ($5.68 billion) of Islamic financial instruments in the form of rial or foreign exchange bonds for completing its ongoing development projects.

A majority of lawmakers passed a budget measure that allows "state-owned companies, firms affiliated with ministries and state-owned organizations, and universities and higher education institutions in addition to research institutions and science and technology parks to issue up to 45 trillion rials ($985 million) in Islamic financial bonds with the approval of their board of trustees".

A total of 134 lawmakers also put their stamp of approval on the provision permitting the government to issue up to 10 trillion rials ($219 million) in Treasury bonds to continue the flow of Treasury payments.

A measure allowing the Oil Ministry to issue Islamic bonds worth up to $3 billion in rial or foreign exchange after the Cabinet's approval was passed with 152 votes in favor. The measure is aimed at repaying the original amount and interests on matured rial and foreign exchange bonds, and matured guarantees and bank loans in addition to clearing matured liabilities to oil and gas contractors.

After garnering votes from 142 MPs, another measure of the budget allowed municipalities across the country and their affiliated organizations to issue Islamic bonds up to a ceiling of 55 trillion rials ($1.2 billion) with their own guarantees after getting the green light from the Interior Ministry.

Bonds remaining unsold as part of that measure are allowed to be handed over to creditors after gaining the approval of the municipality and the Management and Planning Organization.

As approved by 143 lawmakers, any bonds published in the fiscal 2018-19 will be exempt from taxes.

Back to the Drawing Board

However, another measure describing how the government is to divest its assets and properties was sent back to the Majlis Joint Commission.

The commission is a parliamentary body responsible for reviewing the budget bill and the five-year economic development plans proposed by the government before their final ratification.

After a lawmaker warned that an article of the measure is lacking on Saturday, Parliament Speaker Ali Larijani accepted the notice and said the measure has issues concerning its writing as it effectively leaves no resources for the state-owned property divestiture scheme in its current form.

That led to 133 lawmakers agreeing to return the measure to the Majlis Joint Commission.

President Rouhani initially presented the budget bill to the parliament on Dec. 10 but when the amended version was tabled by the commission, 120 lawmakers voted against the outlines of the proposed budget for the first time in the history of the Islamic Republic.

Larijani then gave a deadline of 72 hours to the commission to revise the bill and present it to the chamber. Saturday's gathering marked the fourth open session of parliamentarians to discuss the details of the budget bill.