Mayor Pirouz Hanachi submitted Tehran Municipality’s budget for the next fiscal year (March 2021-22) to Tehran City Council on Sunday.
“The budget is set in two sections: the main budget is 476.87 trillion rials [$2 billion] and the complementary section’s budget is at 22.74 trillion rials [$96 million], which is designed to carry out 32 special projects,” Hanachi was quoted as saying by ISNA.
Municipalities of different districts and counties, development of public transport bus services and expansion of Tehran’s subway network to the city of Parand in Robat Karim County, southwest of the capital, as well as increasing payments to municipal pensioners have received special funding in the budget bill.
“Since Feb. 21, 2020, Tehran Municipality became embroiled with the coronavirus crisis; it was among the very first organizations, after the Health Ministry, which was directly affected by the virus outbreak and suffered the most eventually. A large share of revenues did not materialize last [fiscal] year. At present, only 30% of the nominal capacity of public transportation are in service. Many of the sports facilities belonging to the municipality were shut down and complexes designed for providing tourism services were closed or semi-active. Yet, under the circumstances, Tehran Municipality has not tapped into government funds so far,” Hanachi said.
“We hope that the government provides Tehran with funds rather than loans; financial assistance in the form of loans would not solve our problems.”
The ceiling set for Tehran Municipality’s current year budget was at 313.32 trillion rials ($1.3 billion).
“Compared with the current year’s budget [March 2020-21], the increase in the budget set for next year is insignificant,” Mohsen Hashemi, chairman of Tehran City Council, said.
“The 500-trillion-rial [$2.1 billion] budget is likely to materialize partly through the sale of municipality’s assets and properties,” he added.
Hashemi noted that next year’s spending package is in fact 380 trillion rials [$1.6 billion], indicating a 20-25% increase compared with the current year’s budget.
“The growth is in accordance with inflation, which indicates that next year’s budget is contractionary,” he said.
Latest data released by the Statistical Center of Iran have put the current average annual inflation at above 32%.
Hashemi also noted that the municipality has predicted a 25% rise in salaries in line with the decision of the Majlis Joint Commission—a parliamentary body responsible for reviewing the budget bill as well as five-year economic development plans.
The members of Tehran City Council will review the budget bill and put it to a vote.
Tehran’s Problems Galore
After winning the capital city’s mayoral race in late 2018, Hanachi set out the policy of levying proportional public charges for the services offered by the municipality, including duties on renovation of real-estates and commercial properties.
Tehran’s mayor believes that the main challenge facing city managers is the small share of sustainable revenues in the budget and that by diversifying the municipality resources, which are now limited to revenues from the value added tax, it is possible to increase the share of sustainable incomes.
“The creation of an integrated urban management to advance Tehran's affairs” was another challenging topic on the mayor's agenda.
Information transparency will be the centerpiece of the capital city’s new ordinance, he stressed, adding that studies that will be carried out by the municipality will be made available to the public.
“All stages of securing construction permits will be carried out online, he said.
Hanachi said all considerations, including the negative and positive effects of urban projects in the short-, medium- and long-term, will be fleshed out for people under “Future Appendix”.
In 2017, the municipality unveiled a first-of-its-kind website, Shafaf.tehran.ir, which offered viewers an overview of its major contracts, particularly those worth over 10 billion rials ($42,000) as well as the details of the city’s current fiscal spending package. Later, it offered specifics of all its contracts worth over 2.5 billion rials ($10,500).
The website also features information on municipality’s executives, including their education and experience, university degrees, alma mater, their previous position and the type of their employment contracts.
Call for Biggest Share of Gov’t Budget
Tehran Province has called for revising the current system of allocating provincial budget, so that factors like the provinces' population and living costs are taken into account.
"Tehran Province accounts for more than half of the government's tax revenues, this is while barely 2.5% of the sum are spent on the province as budgetary resources," Gholamreza Abbas Pasha, deputy governor of Tehran Province, was quoted as saying by IRNA earlier in 2020.
"We believe that Tehran Province's budget should be addressed at the national level, because the province is providing services to the whole country," he added.
The province accounts for 18% of Iran's population. Hence, Tehran Province will make a significant progress in development projects and infrastructures, if budgetary funds are distributed proportionately.
By materializing 106% of tax revenues set in last fiscal year’s budget, Tehran Province accounted for 56% of the country’s 1,410 trillion rials ($6 billion) tax income.
This is while the government has set Tehran Province’s expenditure at 9,440 billion rials ($40 million) for the current fiscal year (March 2020-21).
"Residents have the right to receive funds in accordance with their contribution [to the government's revenues]," Pasha added.
According to Shahram Edalati, the deputy head of Tehran's Plan and Budget Organization, the province has received nearly 60% of the funds set in the current fiscal year.
"The fact of the matter is that much of the province's problems have been tackled with the help of private sector investors,” Pasha said.
Attracting private investments should be considered an achievement for Tehran Province officials. Experience from other developing countries shows that successful cities require indigenous and private capital accumulation centered on a potentially competitive industry.
Accounting for One-Fifth of Iran’s GDP
Tehran Province accounted for 22.1% or more than one-fifth of Iran’s gross domestic product in the fiscal 2019-20.
The value of Tehran’s output stood at 7,400 trillion rials ($31 billion) in the last fiscal year to grab the lion’s share of Iran's GDP.
Real estate was the most productive economic sector in Tehran, accounting for one-fifth of the province’s GDP.
The industrial sector accounted for 15.1% of Tehran’s total production.
According to a report by the Persian-language daily Donya-e-Eqtesad, citing the Statistical Center of Iran, Khuzestan was the second biggest economy among Iranian provinces during the period under review as it made up 14.8% of Iran's GDP, despite a 1.6% decrease it registered compared with the year before.
Tehran and Khuzestan constituted more than one-third of Iran's production in the fiscal 2019-20.
Tehran, Khuzestan, Bushehr, Isfahan, Khorasan Razavi, Fars, East Azarbaijan, Mazandaran, Alborz and Kerman provinces accounted for more than 70% of Iran’s total GDP in the year ending March 2020.
North Khorasan and South Khorasan had the smallest share in Iran’s GDP. They accounted for 1% of the country’s GDP together.
As the biggest economy, Tehran’s share in GDP is 50 times bigger than South Khorasan's, Iran’s smallest economy.
Foreign Investment at $29m Since March
Tehran Province has attracted $29 million in foreign investment since the beginning of the current Iranian year (March 20, 2020).
“Since the year ending March 2016 to Dec. 20, 2020, Tehran Province absorbed $6 billion in foreign investment for 192 projects in different fields from 20 countries, including the UK, Norway, France, China, Afghanistan and Taiwan,” Fereydoun Ataie, an official with Tehran Governorate, was quoted as saying by IRNA.
“Before the year ending March 2016, a total of 105 foreign investment projects had received permits in the province. Eighty-two projects are now ongoing, of which 15 have been ratified in the current year,” he added.
Ranking Among World's Most Expensive Cities
The Economist Intelligence Unit’s latest Cost of Living report, which compared the cost of living in 133 cities, shows Tehran ranks 106th among most expensive cities in the world.
The ranking has climbed 14 places, meaning the cost of living has increased in the Iranian capital compared to other cities under review.
Hong Kong, Singapore and Osaka are joint leaders on the EIU's 2020 Worldwide Cost of Living Survey.
The Japanese city of Osaka has replaced Paris, making all-Asian trio the top three most expensive cities in the world.
The biannual survey, which evaluates the cost of over 160 goods and services in 133 cities around the world, has been carried out for more than 30 years.
