Iranian Government Spokesman: Subsidy Payments Will Continue in 2016

Despite numerous criticisms from officials in Hassan Rouhani's government regarding the targeted subsidy plan, the spokesman for the eleventh government announced that this law will also be implemented in 2016. According to Mehr News Agency, Mohammad Baqer Nobakht stated on Tuesday, September 15, "The implementation of the targeted subsidy law does not necessarily mean that energy prices will increase; we can continue with existing resources, but the distribution method of these resources must change." Cash subsidy payments began during Mahmoud Ahmadinejad's second term as president, and despite widespread criticism from Rouhani's officials, these payments continue. Rouhani's government has started to remove high-income individuals from the list of subsidy recipients, and reports indicate that two million people have been removed from this list so far. Announcement of a 'different' budget for 2016 The Iranian government spokesman also announced on Tuesday that the budget for 2016 has been drafted in a 'different' manner from previous years, stating that this budget has no provisions and that 'at most' 30% of it is dependent on oil sales. According to IRNA, Nobakht said, "In 2016, we took a further step in operational budgeting, and the budget is prepared based on performance." 'Operational budgeting' is a budgeting method accompanied by an annual program in which the budget of executive agencies is allocated based on their performance. Nobakht's statements regarding the reduction of the budget's reliance on oil come while the Iranian government had previously announced that oil revenues constituted only 33% of the 2015 budget, while this figure was 50% the year before. The government spokesman also reported that the figures for next year's budget will be 'considered based on resources and expenditures.' He predicted that the general resources of next year's budget would increase by 15% compared to 2015 to 213 trillion tomans, and the development budget would increase by more than 27% to 38 trillion tomans. According to Nobakht, based on another scenario, development credits in next year's budget will grow by 36% compared to the development credits of 2015. Nobakht's statements about the increase in the development budget come while he had reported on September 9 that only 6.8 trillion tomans of about 43 trillion tomans of the 2015 development budget had been paid. This allocation means that in the first half of this year, only 15.8% of the development budget was allocated to development projects. On August 2, Nobakht had also predicted that in the first half of 2015, only 53% of the country's budget would be 'realized' and stated that the government would manage 'with half of the projected budget.' Iranian government officials hope that with the lifting of sanctions next year, a better economic situation awaits the country. The Iranian government spokesman also reported that in the next year's budget bill, economic growth of 1.4% and an inflation rate of 10 to 11% are predicted. The Central Bank has announced Iran's economic growth rate for 2014 as positive 3%. However, Eshaq Jahangiri, the first vice president, stated on September 9 that the 3% economic growth of 2014 did not continue into 2015. The Statistical Center of Iran reported the average inflation rate for the 12 months ending in August as 13.8%.