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Next Year’s Budget Expansionary
Economy, Domestic Economy

Next Year’s Budget Expansionary

The government will increase its spending in next year's budget [new Iranian fiscal year starts March 20, 2016], says Economy Minister Ali Tayebnia. Most of the increase will come from capital expenditures and the rise in operating expenditures has been kept to a minimum, according to the minister.
The government is preparing the budget bill for submission to the parliament for final approval.
Fears of a slowdown in economic activity due to weak consumer demand are prompting the government to hike fiscal spending, as Iran's small private sector continues to languish from years of economic upheaval.
Tayebnia hopes that a boost in capital spending will trickle down to private contractors and revive their businesses.
The government has already had the Central Bank of Iran cut reserve requirements in a bid to boost lending, which has contracted in recent years due to a crisis in the banking system.
Tayebnia did not say if the government would run a deficit in next year's budget. With oil revenues slashed and likely to remain low, and the ongoing glut in global crude supply, the government will be hard pressed to fund its expenses.
The administration hopes may be pinned on the upcoming release of at least $30 billion of Iran's frozen assets, as part of the nuclear deal between Tehran and world powers.

 

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