The Tale of Two Government Budgets

Hamid Ahadi, Rooz Online:

Three days are left for President Ahmadinejad's controversial annual budget to be submitted to the Majlis (Iran's parliament). The efforts to resolve the differences between government managers and MPs have not lead to a final conclusion and the Majlis leader has suggested preparing two separate budgets for the country's economy in emergency situations, such as the one that may come about should the UN Security Council decide on imposing economic sanctions on Iran.

A Majlis MP has told Rooz that Iran's next year budget seems to be the work of a magician which neither the experts nor the senior cabinet ministers have been able to fathom. They have openly said that they do not understand the budget which is full of ambiguities they say. At the same time a group of MPs tried to gather support to stop a review of the budget altogether, an act that was overruled by the Majlis speaker. READ MORE

After much wrangling, the opposing factions in the Majlis have agreed to cut the government’s budget by some $10 billion, as was suggested by a bi-partisan committee. Another decision was to reduce the government-proposed oil price of $40 per barrel to $34.5 on which the budget was premised. Morteza Momayez, member of the committee responsible for reviewing the proposed budget told Rooz that the oil price cut is a preventative measure to reduce not only the government's expenses but also the inflation weight on Iran's fiscal year's budget and empower Iran's foreign exchange accounts and private sector.

"Dangerous" is the word that the Majlis Research Committee on the budget has used to explain Ahmadinejad's budget. Economic experts have warned of the negative consequences of this year's budget that will considerably increase the Iran’s current inflation rate of 14%.

A parliamentary reporter has told Rooz that the surprising and obvious interference of Haddad Adel, Iran's Majlis speaker in the details of the budget review as well as his persistence in increasing religious and Islamic institutions has been historically unprecedented. Extremely shocked by the increase in the budget of government’s business enterprises, an economic expert says two thirds of the Rials 1,800,000 billion of the government's budget is allocated to government companies and only one third belongs to government's public budget. Ahmadinejad's budget, with its special attention and kindness to his allies in the government is very clearly contradictory with his election promises where he said he would fight government financial corruption and the economic mafia.

In its report on Ahmadinejad's budget, the internal bulletin of the Management and Planning Organization has reported that the government has committed itself to provide Rials 28,080 billion this year and Rials 34,790 billion next Iranian year to new and ongoing construction projects. (A dollar is worth approximately Rials 8,000 in the Iranian official market.)