Friday, February 03, 2006

The Largest Budget in Iran’s History

Hamid Ahadi, Rooz Online:
Iran’s budget has unexpectedly and for the first time in the country’s history received a 50% increase, a radical change that economic experts describe as “disastrous. Majlis (Iran’s parliament) MPs believe that even this humongous amount of money will not suffice Ahmadinejad’s election promises to Iranians. They are certain that Ahmadinejad’s actual budget will be very different from the one that will be passed by the Majlis and the Guardians Council.

It is anticipated that the country’s current budget for 2005 and 2006 fiscal years (Iran's) will be about 220,000 billion and 34,000 billion Rials respectively. These figures show that in less than a year, the size of the country’s current budget has sharply risen by 54% which is the result of the president’s unrealistic promises for salary hike, loans, credits and different subsidiaries in the past six months.

An economic expert believes that Ahmadinejad’s government which came to power on promises of improving the living condition of Iranians has no other survival option but to be generous in allocating more money. READ MORE

Dr. Nader Etebari, a university professor says that there is no doubt that the government sector will not be able to endure such an annual budget that Ahmadinejad’s government has radically increased it merely to show his good will.

Mohsen Safaiee Farahani, former deputy Minister of Finance stresses that the $12 billion budget allocation to different plans will lead to huge development projects in the country, but only for a short while and in less than a year, development will stop. He adds that although the government’s executive agencies will not be able to sustain their expenses and keep up with the anticipated budget, it will have positive impact on the structure of the economy.

Farahani, a former spokesman of Majlis Budget Committee describes the 42% budget increase as disastrous and says no government in Iran’s history had been so bold to do this. He adds that this means that the uncontrolled growth is unsustainable and that it really shows that the government’s dependence on oil will increase even more.

He also pointed out that Ahmadinejad’s proposed budget will gradually eliminate the support for foreign exchange surplus mechanism. Based on Khatami’s budget, the government had a 5-year plan to manage its budget, independent of oil revenues. With this large money allocation, government agencies and religious lobbyist are competing aggressively for more budgets.

Feeling the heat, the Expediency Council Strategic Centre, chaired by veteran political Hashemi Rafsanjani is holding a one-day seminar to study and review Ahmadinejad’s proposed budget.

Rooz reporter reports that these days the Majlis is the battleground for lobbyists to review Ahmadinejad’s ambitious budget. Experts believe that the budget challenge will turn into a bigger conflict than the one witnessed for selecting cabinet ministers. Under these circumstances, the Majlis and the Guardian Council have no other option but to resist the grandiose ideas of the government.