According to Khabar Online, the 1406 budget is being compiled in a situation where Iran’s economy is facing unprecedented uncertainties. On the one hand, there is the possibility of the continuation of the war, economic blockade, and the limitation of foreign exchange earnings, and on the other hand, the possibility of an agreement and reducing the pressure of sanctions cannot be ignored. These two perspectives create completely different requirements for economic policy; In such a way that budgeting based on only one of them can face the government with a crisis of resources and expenses in the middle of the year.
In an interview with Khabar Online, three economic analysts, while criticizing the lack of a clear picture of the future scenarios of the economy in the budget circular, have emphasized the need to formulate a multi-scenario budget, be realistic in forecasting incomes, and prioritize the livelihood of households.
The 1406 budget has been drafted in a situation where Iran’s economic prospects are more uncertain than ever. During the past 18 months, the country has experienced two wars, months of siege and embargo, and a series of economic disputes, and now it is not clear what political and economic conditions it will face next year. In such a situation, the government cannot determine the resources and expenses of the next year simply by assuming the continuation of the existing conditions or optimistic about the agreement and lifting of the sanctions.
In an interview with Khabaronline, three economic analysts believe that the 1406 budget should be adjusted based on different scenarios; This means that on the one hand, the government should be prepared for the continuation of war, siege and resource limitation, and on the other hand, if an agreement is reached and economic opening is established, it should have a specific plan to rebuild infrastructure, increase production and improve the livelihood of households.
Not all desirable goals can be included in the budget
Emphasizing that the budget should be adjusted according to the actual capacity of the country’s resources, Mohammad Reza Abdullahi believes that the government cannot pursue all desirable economic goals at the same time, without specifying the priorities and resources for their realization.
According to this economic expert, the increase in the government’s current and construction costs requires providing more revenues from taxes, oil sales, or borrowing, and in a situation where resources are limited, the expansion of expenditures can lead to budget deficits and inflation. He believes that the simultaneous emphasis on improving livelihoods, maintaining employment, increasing production and economic stability, without setting priorities, does not fit with the financial realities of the country.
Abdullahi also warns against the uncertainty of the budget circular about the conditions of next year. According to him, on the one hand, there is some optimism about reaching an agreement and ending the war and blockade in policy-making, and on the other hand, the possibility of the continuation of the current situation is also raised; While these two scenarios have completely different requirements.
This analyst’s suggestion is to formulate a budget with several different ceilings and according to the state of resources, so that the government can manage its expenses and priorities in any situation.
Forecasting oil revenues assuming normal conditions is not realistic
Mohammad Taghi Fayazi also believes that although the budget circular in identifying the main problems of Iran’s economy, including inflation, sanctions, limited foreign exchange resources, banks’ disharmony and infrastructure wear and tear, presents a relatively correct picture, but the main issue is how to provide resources and provide practical solutions.
According to him, the budget can help curb inflation when it does not face a deficit, and real financial resources should be considered for the reconstruction of infrastructure. Referring to the country’s economic conditions, this expert emphasizes that oil revenues should be estimated based on the actual performance of recent months, not assuming that oil sales return to normal conditions.
Also, referring to the negative growth of 10% of the economy in the first quarter of the year, Fayazi does not consider the significant increase in tax revenues to be very realistic if the current situation continues; Because the stagnation of business activities and the reduction of their profitability limit the capacity of increasing tax revenues.
From his point of view, the government should include the two main scenarios of the continuation of the current situation and the cessation of war and sanctions in the budget and consider appropriate resources and expenditures for each.
Livelihood support should not be a victim of budget deficits
Referring to the experience of the past years in the unrealistic forecast of oil revenues, Mohammad Hossein Memarian says that one of the serious problems of budgeting in Iran is the gap between budget assumptions and economic realities. In the years of the tightening of sanctions, oil revenues were predicted in some budgets with the assumption of significant oil sales, but in practice the expected resources did not materialize and the government had to resort to alternative solutions throughout the year to cover costs.
This macroeconomic analyst emphasizes that the possibility of the continuation of the blockade or even the occurrence of new aggression should be reflected in the forecast of oil revenues and other government resources. According to him, the 1406 budget should cover at least two scenarios of the continuation of the war and siege and the end of the war and sanctions, so that the government does not face the crisis of regulating resources and expenses again in the middle of the year.
Along with the realism in predicting resources, the architects consider the support of vulnerable households to be one of the main priorities of the budget. Referring to the increase in prices, especially in the food sector, he believes that the government should foresee the necessary resources for the continuation of subsistence support and goods in the next year from the beginning.
The total view of these three economists shows that the issue of the 1406 budget is not only about forecasting revenues and regulating government expenses; Rather, the government should have a plan for both situations when the future of Iran’s economy is between two different paths. A budget that is based on uncertain revenues, unrealized resources, and multiple goals without priority may face a deficit and executive crisis before the end of the year. From this point of view, realism in resources, determining spending priorities and protecting the livelihood of households will be the three main requirements of next year’s budget.
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