Pezeshkian Submits 1404 Budget Bill to Parliament Emphasizing Gasoline Price Increase

The President of the Islamic Republic of Iran presented the 1404 national budget bill to the Islamic Consultative Assembly and defended its provisions, emphasizing the increase in gasoline prices. On Tuesday, November 1, Masoud Pezeshkian reiterated his support for reducing fuel subsidies in the future and announced further withdrawals from the National Development Fund. He also stated that 'given the regional conditions, it has been ensured in the budget provisions that strengthening the defense capabilities is taken into account.' The President did not provide details regarding the budget allocation for the 'strengthening defense capabilities' section. Mr. Pezeshkian mentioned that he has tried to adhere to 'justice-oriented' principles in drafting this budget but added, 'My point is not that we want to eliminate discrimination all at once, but we have tried to move in that direction.' According to domestic media, the 1404 budget in terms of resources and expenditures amounts to approximately 118 million and 966 thousand billion rials, and the public budget has reached about 6400 trillion tomans. Mohammad Baqer Qalibaf, the Speaker of the Islamic Consultative Assembly, also announced that the general outlines of the 1404 budget bill would be reviewed in the public session on Tuesday, November 8. The financing mechanism for the armed forces of the Islamic Republic is so complex and opaque, particularly due to the activities and non-transparent revenues of the Islamic Revolutionary Guard Corps, that accurately calculating the government's military expenses is nearly impossible; however, Radio Farda's calculations indicate that the Iranian government allocated at least 17 billion dollars officially for its armed forces in the year 1403. In another part of his statements in the public assembly, Masoud Pezeshkian expressed his belief that 'reform in the currency system and fuel subsidies is essential' and emphasized that 'another existing challenge is the reform of energy subsidies.' He added, 'Gasoline consumption this year is 40 percent higher than in 1998. Today, the cost of producing gasoline, excluding oil prices, is about eight thousand tomans.' According to this Iranian official, 'This year, about 90 trillion tomans, and if the trend continues next year, 130 trillion tomans must be spent on gasoline imports, and each liter of imported gasoline costs between 30 and 40 thousand tomans. Reforming this trend requires the participation of all sectors of society so that we can correct this imbalance in favor of the underprivileged.' On the same day, Hamid Pour Mohammadi, the Vice President and Head of the Planning and Budget Organization, in a press conference supporting the President's remarks, stated, 'If excessive gasoline consumption continues, we will have to cut from the salaries of employees, wheat, etc., to pay for gasoline.' The President of the Islamic Republic of Iran recently stated that 'there is no logic in buying gasoline at free dollar rates and selling it to the people with subsidies.' The repeated statements by Masoud Pezeshkian on this matter indicate the necessity of increasing gasoline prices, a topic that also occurred in Aban 1398, leading to widespread public protests and a bloody crackdown by the Islamic Republic. Although officials of the Islamic Republic have reported gasoline imports over the past two years, there are no official statistics regarding the volume and price of these imports. Mr. Pezeshkian's remarks about the need for an increase in gasoline prices come at a time when his oil minister announced on September 1 that currently, there are no pricing solutions to address gasoline imbalances. Masoud Pezeshkian himself, during the first debate of the second round of presidential elections against Saeed Jalili, stated regarding reports of a potential increase in gasoline prices if he won, 'I will not raise gasoline prices without the people's consent, and I declare this firmly.' In another part of his statements on Tuesday, the President of the Islamic Republic of Iran announced that 'we had problems paying wheat farmers due to budget shortages,' and that he had to discuss withdrawals from the fund with the Supreme Leader, 'the problem was solved, and payments are being made today.' Two weeks earlier, Abdolnaser Hemmati, the Minister of Economy and Finance of Iran, announced that the budget for the year 1403 faced a deficit, and to compensate for this budget deficit, withdrawals from the National Development Fund were made with permission from Ali Khamenei, the Supreme Leader of the Islamic Republic. Meanwhile, previously, Mehdi Ghazanfari, the head of the National Development Fund, criticized the repeated withdrawals from this fund, stating that the parliament approves budgets beyond the country's currency capabilities, forcing the government to withdraw from the National Development Fund to cover the budget deficit. Additionally, the Research Center of the Parliament published a report last year indicating that the thirteenth government not only did not pay its 25 trillion tomans debt to the National Development Fund in 1401 but also, with permission to withdraw 20 percent of the resources from this fund in 1402, added about 170 trillion tomans to this debt. While the National Development Fund was supposed to lend more to the private sector, the public sector has made the most withdrawals from this fund, with over 101 billion dollars withdrawn by various governments from a total of 160.8 billion dollars in resources of this fund. On Tuesday, Mr. Pezeshkian also stated that 'for the first time this year, all extra-budgetary resources and expenditures of the Targeted Subsidy Organization have been included within the budget ceiling.' Pezeshkian's reference indicates the government's efforts for greater discipline in budget expenditures and to prevent various institutions from encroaching on budgetary resources. The shortage of resources for targeted subsidies and the increase in 'extra-budgetary' expenditures from this source have caused problems for the government in the first half of this year. Previously, the Minister of Economy also referred to 'the resource shortage resulting from the Targeted Subsidy Law' and stated that the government faced a significant deficit in the 1403 budget. Abdolnaser Hemmati stated on Tuesday, October 17, in a public session of the Islamic Consultative Assembly that the budget shortfall was supposed to be compensated from the targeted subsidies, but this section also faced a significant deficit, leading to a portion of the public budget being allocated to targeted subsidies in the first half of this year.