Iran’s president Ebrahim Raisi has signalled the country should not rely on any lifting of US economic sanctions next year as he outlined a budget funded by higher taxes on the wealthy and a modest rise in crude sales.
Iran’s crude exports are projected to reach around 1.2m barrels per day and fetch more than $12bn in the next fiscal year, a small increase from the current fiscal year ending in March, according to MPs who attended the presentation. Crude sales are less than half what they were in 2017 before US sanctions.
However, the government expects tax receipts to rise by 62 per cent due to a projected 8 per cent GDP growth and higher taxes on imports and new levies on those who own expensive houses and cars.
The draft budget, which needs to be approved by the legislative body before March, is expected to total IR15,052tr, or a little less than $50bn based on Sunday’s unofficial currency exchange rate.
Raisi on Sunday implicitly criticised his predecessor Hassan Rouhani for betting on a revival of the 2015 nuclear accord and a lifting of sanctions. “There was a big mistake before, which caused a lot of pain when the economy was tied up to the aliens’ [decisions],” he said on the parliament’s floor. “A lot can be done by relying on the country’s numerous capacities, in particular the workforce and its invaluable [natural] resources.”
Analysts say that while the government is facing public wrath for economic hardships, it believes the economy has weathered its most difficult years. This is partly thanks to Iran’s diversified economy and non-oil exports to regional countries by quasi state-run sectors such as the petrochemical, steel and cement industries.
“The budget bill — in particular projected oil sales — shows the government believes the US sanctions won’t be lifted next year and they have come to terms with that,” an Iranian analyst said. “They perhaps know that the projected tax income cannot be met due to economic difficulties and continuation of sanctions, either, but they think they can handle that.”
Vienna talks between Tehran, UK, France, Germany, Russia and China over the resurrection of the 2015 nuclear deal are stalling. The accord, that had led the west to lift sanctions in exchange for Tehran curbing its atomic ambitions, received a near-fatal blow when the US withdrew from it under Donald Trump in 2018. US President Joe Biden is willing to return to the agreement provided Iran rolls back its enrichment of uranium from levels experts say are alarming. But Tehran has demanded “guarantees” no other US president would abandon a new deal.
The Islamic regime is feeling emboldened partly because economic growth has resumed over the past year after contracting since 2018, when Washington imposed the toughest restrictions on crude exports and access to petrodollars.
On Sunday Raisi, who is believed to be in line with the supreme leader Ayatollah Ali Khamenei as well as the Revolutionary Guards, told parliamentarians that he aimed for economic stability, a single-digit inflation rate down from the current 44.4 per cent and 8 per cent GDP growth next year – up from 6.2 per cent this year.
He vowed to stop borrowing from the Central Bank in order to curb the inflation and rein in budget deficit expected to amount to about $14bn this year.
“Everybody knows that people’s dining cloths have shrunk” (as a result of people eating less), said Masoud Mir-Kazemi, deputy president for budget affairs, over the weekend. “If the government and parliament care about the poor, it is necessary for them not to project a budget deficit for next year and consider it as religiously forbidden.”
Raisi outlines higher taxes and little hope for nuclear deal in draft budget
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