Iran Economy News Iran: 2021-22 Budget Bill and Economic Crisis

Iran: 2021-22 Budget Bill and Economic Crisis

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Iran is going through its worst economic crisis. A devaluation of the countrys national currencyskyrocketing prices, low incomes, severe economic sanctions, and government mismanagement have overwhelmed Iran’s society. In the meantime, many officials accuse each other of the calamity and warn of mirage of the 2021-22 budget.   

On November 17, Irans deputy Vice-President Eshaq Jahangiri warned the parliament about the new 2021-22 budget, saying, The Parliament (Majlis) is issuing new commitments for next year’s budget that cannot be met with even ten times the current budget. We cannot increase the country’s resources through imagination and fiction. 

Not even showing respect for the Majlis Speaker Mohammad Bagher Ghalibaf, he alluded to the fact that the latter needed education in financial matters before entering budget problems.  

Infighting by Iranian Officials Due to Massive Pressure

Increasing Taxes, Like Ancient Monarchs

For years, Iranian officials used tax increases, printing unsupported banknotes, and taking advantage of the exchange rate increases to compensate for their budget deficit and handle the economic crisis.

However, these methods are not responsive all the time and have been viewed by skepticism within the government because any increase in state taxes from any sector will inevitably increase inflation and increase prices in other sectors. 

“In these difficult times when the government is facing a lack of oil resources and heavy U.S. sanctions, it is not possible to increase customs duties and not face the consequences in society, Jahangiri emphasized and issued a warning, Some say we should increase customs resources. Such calculations increase the price of all goods in the country.

No doubt the countrys economic crisis is the responsibility of the Supreme Leader Ali Khamenei and President Hassan Rouhani as the highest accountable officials. The countrys currency has started to devalue since 2012, and a brief review of Irancrises since the beginning of 2011 shows the acceleration of instability and the loss of control over the country’s problems. 

Peyman Molavi, Secretary of the Iranian Association of Economists, believes that to bring back the value of the countrys currency is as hard as moving mountains 

The devaluation of the countrys currency has started since 2012. If we want to go back to those years, we need to have an economic growth above 8 percent and $150 billion of investment,” he told Eghtesad Pouya website on November 17. 

The increase in liquidity must be prevented, and the budget deficit must be resolvedEven if sanctions were lifted and the lack of trade with foreign countries resolved, it would still take six years to reach the economic status of 2012. There is no short-term solution to restore the value of the national currency, Molavi added. 

One should, however, not forget that hundreds of billions of dollars of oil revenues in the time of former President Mahmoud Ahmadinejad did not have a more brilliant result for the Iranian people.

A Look at Iran’s 2020-2021 Budget

One should also remember that the protests back in January 2018, due to the economic situation of the country, broke out when the sanctions were not yet so severe, and the U.S. was still part of the 2015 Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA).

Therefore, the leading solution for Irans economy may not be economic first. The fact that the Islamic Republic’s officials in all factions have plundered the countrys wealth for more than 41 years.

To ensure their government’s survival, they spent Iran’s national resources on terrorism and proxy wars abroad, and domestic suppression has hardly any miracle solutions for the economy. In this respect, the people whose share of their natural wealth was merely poverty and misery see protests and strikes as the sole solution to take back their inherent rights.

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