In the last days of the Persian Year of 1401 (mid-March 2023), Iranian regime president Ebrahim Raisi claimed his government “doesn’t have any budget deficit until the end of the year.” But in reality, his 2022-2023 budget bill had a huge 4.6 quadrillion rials deficit or $8.8 billion.
While many regime experts considered this budget deficit “unprecedented,” it seems that the real number is much higher.
On May 21, Rahim Mombeini, deputy head of the Planning and Budget Organization, announced that “The actual budget deficit last year was roughly 7.9 quadrillion rials.”
Mombeini’s comments further revealed the regime’s bankruptcy and Raisi’s failure in “consolidating the system” as the Supreme Leader, Ali Khamenei, had hoped for. The situation has reached a point where Khamenei’s handpicked MPs attack Raisi’s incompetence.
On May 7, MP Moin-ol-din Saidi said, “The revolutionary Majlis [parliament] believes that Raisi’s administration cannot overcome super challenges and its economic team’s actions are undefendable.”
On May 20, Keyhan daily, known as Khamenei’s mouthpiece, admitted that “Raisi’s government hasn’t helped people,” adding that “The housing prices continue to soar, and people are under pressure as the prices of consumer goods continue to skyrocket in a fluctuating market.”
Mombeini’s recognition of the critical situation and the magnitude of the economic collapse implies a perilous trajectory ahead. The regime’s response of further burdening the people by raising the prices of energy is a worrisome development. This move will only exacerbate the already skyrocketing prices, pushing the situation towards even greater danger.
Since a surge in fuel prices triggered the November 2019 uprising, it is difficult to fathom why Khamenei and Raisi would willingly venture down this treacherous path once more. However, the harsh reality of the budget deficit cannot be concealed. The pressing need to address this deficit poses a challenging dilemma for the regime as they grapple with finding alternative solutions while avoiding a repeat of past unrest.
In this regard, Mahmoud Khaghani, the Former Director General of the Ministry of Oil, had warned that “Inevitably, the fuel price will change, and the President’s administration is laying the groundwork for this change. However, engaging in this dangerous game of fuel price adjustments carries significant risks and potential consequences.”
It is noteworthy that Raisi has deliberately chosen to pursue the policy of increasing taxes, aiming to achieve a staggering 62 percent increase compared to the current budget. As reported by the official IRNA News Agency, the projected revenue from taxes for the upcoming period are expected to reach approximately 5,270 trillion rials. This substantial growth in revenue stands in stark contrast to the estimated tax revenues of around 3,250 trillion rials for the current year’s budget.
Per the budget’s draft, Iranians earning 50 million rials or more are now liable to pay taxes. The regime’s proposed ten percent increase in the salary base falls short of addressing the soaring inflation rate plaguing the country. Iran’s state-run media reports an official inflation rate of approximately 50 percent. However, with the salary adjustments, many Iranians would fall within the 50 million rials income bracket, consequently subjecting them to tax obligations.
All the while, most of Iran’s 2022-2023 budget is allocated to the regime’s military entities, including the Revolutionary Guards (IRGC), Army, and Basij militia. These institutions fall under the control of Khamenei, who also oversees state TV and other related entities.
Increasing fuel prices or taxes can seriously backfire and ignite a new round of anti-regime protests, with severe results for the crisis-riddled regime. On May 22, the state-run Bahan News warned that “We should await protests coming back to streets and any incident can cause a social explosion and turn to another revolt.”
