Central Bank: Iran's Budget Deficit Reached 45 Trillion Tomans in the First 9 Months of This Year

On Sunday, February 10, the Central Bank of Iran released a report on the country's economy for the first nine months of this year, indicating an operational and capital deficit of over 45 trillion tomans during this period. This unprecedented figure comes despite the budget law for the current year predicting a budget deficit of only 24.4 trillion tomans. Such a volume of budget deficit is unprecedented in the entire history of the Islamic Republic, even for 12-month statistics. The dollar conversion rate in this year's budget law is set at 4,200 tomans. Thus, the operational and capital deficit for the first nine months of this year is estimated at approximately 10 billion and 714 million dollars based on the official dollar rate. At first glance, it may seem that U.S. oil sanctions have caused such a budget deficit, but the Central Bank's statistics show that Iran's rial revenues from oil and petroleum product sales (including domestic and foreign sales) have not only not decreased during this period but have exceeded the budget law's targets. In the first nine months of this year, Iran's oil exports amounted to over 89.4 trillion tomans, which is 17% more than the approved budget targets. The U.S. exited the JCPOA on May 8 of this year and imposed oil sanctions against Iran in November. Iran's crude oil exports decreased in the second half of last year and ultimately halved in December, according to international organizations, reaching about one million barrels per day. The Central Bank's statistics also show that Iran's oil revenues sharply fell in December. However, Iran exported more oil in the early months of this year than planned. If we consider the total oil exports for the first nine months of this year, the budget law set the oil price for the current solar year at 55 dollars, but the average price of Iran's exported oil and gas condensates has been around 70 dollars. In other words, Iran's dollar revenues from oil exports have been 27% higher than the budget law's predictions. On the other hand, if we consider the total oil exports for the first nine months of this year, the budget law set the oil price for the current solar year at 55 dollars, but the average price of Iran's exported oil and gas condensates has been around 70 dollars. In other words, Iran's dollar revenues from oil exports have been 27% higher than the budget law's predictions. However, oil prices fell sharply in late autumn, prompting OPEC and allied countries to agree to reduce production by 1.2 million barrels starting January 1. Currently, oil prices have slightly increased compared to late autumn and are around 62 dollars, but they are still lower than the average price from Farvardin to Azar. In the section of projected revenues for the government, taxes play a significant role. The government had predicted 107.5 trillion tomans in tax revenues for the first nine months of this year, but only 72% of that has been realized. The failure to achieve a large portion of tax revenues is not a phenomenon that dates back only a few months. The Central Bank's statistics show that since the beginning of this year, tax revenues, except for the month of Tir, have not been realized in any of the months of 1397. The reason for this is linked to the economic recession and the poor state of both state-owned and private companies, as well as a significant decline in the country's imports, which are subject to taxes and tariffs. According to the International Monetary Fund's estimates, Iran's GDP decreased by about 1.5% in 2018 and is expected to decrease by 3.6% this year. Recently, many reports have emerged regarding the closure of Iranian companies. Masoud Khansari, the head of the Tehran Chamber of Commerce, stated on February 3: 'There is not a week that 10 to 50 large companies in the country do not close, and not a day goes by without hundreds of workers becoming unemployed. Last year, out of 1,500 oil contracting companies, 800 companies closed.' According to customs statistics, Iran's imports in the first nine months of this year decreased by 16% and reached 32.62 billion dollars.