On Sunday, October 22, Iranian regime president Massoud Pezeshkian presented the budget bill for the upcoming year to parliament. While introducing the bill, he highlighted certain aspects but avoided addressing its main issue: the financial crisis and the substantial budget deficit. Two days earlier, on October 20, at the “Export Conference,” he vaguely mentioned the “budget imbalance” without specifying any figures, lamenting, “A debtor government has created imbalances in the banks and funds… which we keep trying to hide.” Pezeshkian did the same when presenting the budget bill, attempting to downplay this issue. However, the deficit is too significant to be concealed. According to government economic experts, it is “one of the fundamental challenges of Iran’s economy” and “continues to grow” (Arman-e Emrooz, October 22).
Abdolnasser Hemmati, the Minister of Economy in Pezeshkian’s government, stated that the budget deficit is 8.5 quadrillion rials. However, the actual figure is much higher. According to a report by Jahan-e Sanat newspaper on October 22, “It appears that with the integration of targeted subsidy expenses into the government’s general budget, the deficit could already exceed 40%.” On October 15, Arman-e Emrooz newspaper estimated the real deficit to be “1.5 quadrillion rials in debt and 6 quadrillion rials in deficit.”
Farheekhtegan newspaper reported on October 23 that the actual budget deficit is 80% higher, stating, “The operational balance for 2025, including extra-budgetary items and reallocations to the general budget, shows a deficit of 18.05 quadrillion rials.”
In simple terms, the government borrows from the banking system to balance its income and expenses. Banks, in turn, try to offset their own imbalances by increasing money creation, leading to a staggering liquidity level of 90 quadrillion rials. The immediate effect of this excessive liquidity, without corresponding production, has been economic instability and inflation exceeding 50% for seven consecutive years, draining the resources of the Iranian people. Moreover, “the government is forced to borrow more from the Central Bank and the banking system to control the inflationary effects” (Arman-e Emrooz, October 22). This vicious cycle persists, driving the country deeper into economic bankruptcy.
This vicious cycle is not entirely spontaneous; it is primarily driven by the interests of influential groups within the government. Government newspapers admit, “One of the main reasons for the banks’ imbalance is the granting of non-productive and inefficient loans. In recent years, many banks, either to support certain sectors [i.e., ruling elite factions] or due to political and economic pressures, have granted loans to companies and projects that did not lead to economic returns. In many cases, these loans could not be repaid. This situation has left banks burdened with a massive amount of non-performing assets, resulting in imbalances in their accounts. Consequently, banks have had to seek new funding by borrowing from the Central Bank, leading to inflation and increased government debt” (Arman-e Emrooz, October 22).
Thus, it becomes evident once again that the 40% budget deficit results from the entirely corrupt structure of governance and widespread corruption, which continuously imposes crushing pressure on over 80 million Iranians, breaking their resilience more each day.