Iran: Weak and Strong Points of the 1382 Budget Bill

In order to discuss the national Budget Bill of the country, the followings should be taken into consideration.

1. Government companies, banks and profit making institutes affiliated to the government are using 64% of the national budget. They can hardly be controlled and supervised by Islamic Consultative Assembly delegates ICA because of their great numbers and their wide scope.

Although Article 4 of the Third Development Plan emphasizes on the changing of the structure of government companies and transforming them to holding companies, no measure has been taken so far. In the event of occurring such changes on the structure of these companies, the ICA would be able to investigate and supervise the budget and performance of approximately 50 companies affiliated to the government. Furthermore, in this way billions of rials of the investments relating to the companies such as banks, insurance companies and other profit making entities affiliated to the government whose their operations do not fall under the regulations on public auditing, stay in ambiguity and are abandoned.

The principle of client-oriented banks are usually ignored because there is no rival here to compete with and the reports indicate loss sustainability of these investments.

2. In the 1382 Budget Bill, the current and development national expenses were regulated first and then the actual incomes were estimated, however, in the budgeting policy this is the other way around. For example, first the section related to the expenses has been prepared and then some income sources have been provided to justify those expenses. It is available to avoid the budget deficit by actual estimations of resources and consumption to elaborate on this, there are some examples.

1. Tax payable by state-run companies during 1380 ( March 2001 to March 2002) was half in comparison with 1382 (March 2003 to March 2004)which meaning that an excess of twice and double has been calculated.
2. It appears that if all ministers cooperate with one another in selling the government companies stocks the figure of estimation revenues seem more realistic and possible.
3. Estimation of a foreign currency revenue which is being earned through oil sale to the tune of 123135 billion rials on the basis of exporting 1.8 million barrel/ day and at the price of 23 dollars/ barrel has to be pondered about. It is recommended that the sum of 19 dollars per barrel be estimated and the income surplus to this amount be deposited in the forex reserve fund.

1. As per the Article 60 of the Third Development Plan, the purpose of having a forex reserve fund is promoting the on-time use of this fund for plans and infra-structural projects which will result in reinforcing the economic structure, while the forex resources existing in this fund will also enhance our national credibility in the international arena. Therefore, frequent withdrawal from this fund to be used in consumption and non-infrastructural affaires and also continuos resort to them is not a proper method.
2. For a developing country like Iran which has decided to develop itself, a country in which economizing in the expenses should be considered as a principal and a country which should take best advantage from the least resources, it is not a proper method to prepare a budget in such way. Taking into consideration some of budget items, we realize that certain expenses have been anticipated which lack sufficient justifications. Below you can find some of these expenses which have been brought in detail.

1. Since so many years ago, Imam Khomeini International Airport Project has been under construction and it is not clear when to be completed. We only know that any minister who takes office in the Ministry of Roads and Transportation, promises to inaugurate the first phase of this project however, after a few years, he leaves his chair without any success. No body knows that when this national and even transnational project will be completed?
2. Another project, which was almost commenced in the beginning of revolution but still takes cash and non-cash aids from the people for its construction during the Friday prayers is Tehran Mosalla Project (Prayer Grounds).
3. According to the estimation made by the informed sources, the revenues of IRIB (Islamic Republic of Iran’s Broadcasting) are earned through commercial advertisements and also a huge amount is paid to IRIB as routine funds, however an exact amount has been allocated to IRIB Organization for its development projects. Furthermore, this aid has been allocated in a situation where unfortunately the Investigation Board of the Islamic Consultative Assembly do not have any precise information about the resources and consumptions of this important organization due to the non-cooperation of IRIB with the investigation Board of ICA.
4. No justification for paying subsidy to the Islamic Azad University could be acceptable, because this university is operating just like an independent Island and is totally out of the control and supervision of the Ministry of Science, Research and Technology. The delegates and the parliament have no documentary information about its resources and consumption and the said university does not act responsible for its performance against the parliament. Perhaps, if the delegates did have clear information about this university, they could step forward to solve its problems in a better way and could even allocate more funds to it.
5. Paying the considerable amount to Basij Foundation, however an exact amount are being paid to Armed Forces and Ministry of Defense. Of course we confirm the role of the foundation of Basij in defending the revolution and gathering the interested forces and we support this foundation but we object the government for not including the funds required by the Basij in the budget of the Armed Forces or the Ministry of Defense.
6. Freedom to import cigarettes is another important issue which has been anticipated in the Budget Bill of 1382. This issue is important because firstly, freedom of importing cigarettes is contrary to our previous policies which prohibited smoking of cigarette in public places and also the related advertisements. But it seems that now we have decided to propagate it legally and freely. Secondly, smoking cigarette is a preliminary step of the youth toward addiction to narcotics and unfortunately in this way distribution and consumption of narcotics are being increased day by day.
7. According to the authorities of the Ministry of Health and Treatment, almost 108 unfinished hospitals are still waiting for completion however that six new hospitals are to be constructed. In this way we are wasting the resources.
8. Government is to push the subsidies towards low income strata in order to improve their living conditions however, these subsidies are not goal-oriented, and because of existing no certain regulations in this respect, the huge resources of subsidiaries are spent for the middle-high income strata of the society. In fact, the government spends too much while its objectives are not realized.

Anticipation of 22 by-laws and 7 decrees in the 1382 Budget bill is also one of its weak points. First, the purpose of dividing the "Bill on Preparing Part of Government Financial Regulations" was to reduce the volume of Budget Bill. Second, lawmaking should be carried out in a manner that the least interpretation will be required thereafter and also use of ambiguous and vague expressions and words be avoided. Third, the time period which the Cabinet spends each year for preparation and ratification of about 29 by-laws and instructions is a real waste and usually results in situations where the Budget Bill is communicated to the executive organizations in early summer, while the parliament’s intention is not to lose the working quarter of spring season.

9. Anticipation of the huge amount for the state cultural heritage to protect thousands of years of historic background is not sufficient at all. If we pay more attention to the development of Iran’s tourism industry. In this way a considerable forex revenue will be earned by our country.
10. Some of the positive points of the 1382 Budget Bill are as follows:

• Creating new capacities by utilizing foreign resources.
• Payment of part of government’s debts.
• Allocation of the considerable amount to construction of main roads, freeways and development of railway network.
• Insuring all the uninsured individuals.
• Attracting the private sector to participate in economic activities.
• Limiting the current credits.
• Entrusting great authorities and powers to the authorities in provinces.