Fourfold Increase in Armed Forces' Share of Iran's Oil and Gas Export Revenues

Details of the 1404 budget bill indicate that the share of the armed forces from the revenues of 'government oil and gas exports' will be 51 percent. According to the budget bill submitted by Masoud Pezeshkian, the President of Iran, to the parliament on Tuesday, November 1, the government's share of total oil and gas exports next year will be 37.5 percent, equivalent to 1200 trillion tomans. Of this amount, 561 trillion tomans, or 51 percent, is allocated to the armed forces 'to enhance the country's defense capabilities,' which has increased more than fourfold compared to the current year (134 trillion tomans). Given the significant changes in the structure of next year's budget bill and the shifting of budgetary and extra-budgetary items, it is not precisely clear what the final share of the armed forces from the total government budget will be compared to the current year and whether the increase in the armed forces' share from the government's oil budget has been accounted for in other related items or not. Radio Farda's calculations indicate that the value of the Islamic Republic's armed forces budget in 1403 is at least 17 billion dollars. Pezeshkian presented the 1404 budget bill with an emphasis on the increase in gasoline prices to the parliament. The foreign currency figures related to oil exports in next year's general budget have been calculated at the euro rate, and a notable point is the significant change in the euro exchange rate in oil sales, which has risen from 31 thousand tomans this year to over 50 thousand tomans next year. If calculated at the euro rate, the government is expected to provide 4.5 billion euros worth of oil shipments to the armed forces for export this year, and next year this figure will exceed 12 billion euros, representing a 170 percent increase compared to this year and a 310 percent increase compared to last year. The government did not specify a figure for the volume of oil exports in next year's budget bill; however, overall budget statistics indicate that it expects the total value of the country's oil and gas exports to be around three thousand trillion tomans next year, which at the mentioned exchange rate is equivalent to 60 billion euros. Of this amount, about 5 billion euros is related to gas exports and 55 billion euros to oil and petroleum product exports. The government's share of oil and gas export revenues is about 37.5 percent, plus the total income from the export of petroleum products. Last year, Iran had about 37 billion dollars (35 billion euros) in oil exports, and in the first half of this year, this figure reached 24 billion dollars. It is not clear on what basis the government expects this figure to rise to 55 billion euros next year. The oil price in next year's budget bill is also considered at 57.5 euros per barrel, which does not differ significantly from this year's budget law. However, although the budget bill does not mention the volume of oil exports, the country's crude oil production is estimated at three million and 750 thousand barrels, which is 350 thousand barrels more than the current level. From the total revenue of the country's oil and gas exports, as mentioned, 37.5 percent is the government's share. About 14.5 percent is the share of the National Oil Company, and 48 percent will be the share of the National Development Fund. Nevertheless, a clause in the 1404 budget bill specifies that 28 percent of the National Development Fund's share from oil exports will be delivered to the government as a loan; meaning that the government's share of oil revenues, whether directly or as borrowing from the National Development Fund, will reach 65.5 percent, with 14.5 percent for the National Oil Company and the remaining 20 percent deposited into the National Development Fund. The total revenues of the government's oil budget, whether from exports or domestic markets, are also set at 2100 trillion tomans for next year, which is 32 percent more than last year. Thus, 57 percent of the government's oil budget will depend on foreign markets, and 43 percent will be domestic markets.