Leader's Proposed Reforms in the 98 Budget and Their Connection to Military Objectives

Behrouz Namati, spokesman for the Iranian Parliament's presiding board, announced on Wednesday, December 21, that "the submission of the 98 budget bill to Parliament has been postponed until after the implementation of the reforms proposed by the Leader of the Islamic Republic." A day earlier, Hassan Rouhani, the President of Iran, stated that Ayatollah Ali Khamenei had provided "guidelines" regarding the budget bill after a meeting of the heads of the three branches of government. According to him, the heads of the branches discussed how to operationalize and implement these guidelines. There has not been much news regarding the details of these "guidelines" or the reasons for the Leader's intervention in the drafting of the new budget figures, but reports from domestic media and statements from a member of Parliament suggest that the Leader's "guidelines" relate to withdrawing amounts from the "National Development Fund" and spending them for military purposes. After the announcement of the "reforms proposed by the Leader in the 98 budget," domestic media only noted that "reports indicate that these reforms will occur within the ceiling of public budget resources, focusing on amending the share of the National Development Fund." On Thursday, Mohammad Hosseini, a representative from Tafresh and a member of the Planning and Budget Commission, told Mehr News Agency: "There is a provision in the sixth development plan that states defense budgets should have a more reasonable growth. However, this year, the growth of the defense budget is less than what was intended in the sixth plan." He added: "According to the sixth plan, a percentage of the resources from the National Development Fund should be allocated to the defense budget, which has not been anticipated in the 98 budget; these issues will be resolved in the Joint Commission." The National Development Fund was established in 2010 to save a portion of the revenues from oil and gas sales, gas condensates, and petroleum products. The most important mission of Iran's National Development Fund is to convert part of the oil and gas revenues into "lasting wealth, productive assets, and economic growth capital." This fund was supposed to become the financial backbone of the country to cope with difficult conditions and ensure intergenerational justice, but last year it was reported that Ali Khamenei had given the green light to withdraw $4 billion from the National Development Fund for military purposes, state media, and several construction projects. This is while military budgets and state media should normally be funded from the country's general budget. Last year, $2.5 billion of this amount was allocated for military purposes, and military expert Hossein Aryan stated in an interview with Radio Farda that this budget was withdrawn to cover the costs of the war in Syria. Various figures have been published regarding the balance of Iran's National Development Fund, and at times no statistics have been provided on this amount. Various reports have also been published regarding the percentage of energy export revenues that are deposited into this fund. The daily Donya-e-Eqtesad reported in its latest issue on Thursday, December 22, that "according to budget laws, the government is obliged to deposit 34% of oil sales revenues into the fund next year. This figure was considered zero due to income contraction in the budget, but apparently, the minimum share of the fund next year should be 20%." Fereydoun Khavand, an economic analyst and professor of economics, raised the question regarding the Leader's intervention in withdrawing resources from this fund: based on which law has the management authority of the "National Development Fund" been assigned to the will of the Leader of the Islamic Republic? He states that perhaps the only legal source justifying this authority is Article 110 of the Islamic Republic's Constitution, which states that determining the general policies of the Islamic Republic of Iran is among the duties and powers of the Leader after consulting with the Expediency Discernment Council. He adds that nowhere in the fund's charter are military expenses and other items seen in the Joint Commission's resolution included in the fund's expenditures. Even in subsection one of section six regarding the fund's expenditures, it is emphasized that "using the fund's resources for current credits and acquiring capital assets (developmental) and repaying government debts in any form is prohibited." While the announcement of withdrawals from the National Development Fund for military expenses with Ali Khamenei's permission was openly reported in the media last year, similar news has not yet been explicitly announced this year.