President Hassan Rohani says the draft budget will mitigate the effects of “cruel” US measures against Iran which will “fail to bring the country to its knees.” Iran’s ‘general budget’ as usual is balanced, at IR4,786trn ($82.5bn at the budget exchange rate of $1=IR58,000; around $43.5bn at the current market rate). This compares to the latest official spending estimate of IR3,700trn for the current 2018-19 Iranian year (ending 20 March). With inflation running at 40%, this implies an 8% real terms spending cut (see table).
Although nominally balanced, the budget will no doubt end with a deficit which has to be funded by borrowing from the Central Bank of Iran (CBI) or through the sale of Islamic or other bonds. For 2019-20, government borrowing, including bond issuance and divesting shares of government-owned firms, is projected to raise IR510 trn, or around 11% of the total budget resources, down from 19% in the current budget. (CONTINUED - 1013 WORDS)
