Analysis by PMOI/MEK
Iran, August 27, 2021—Since the mullahs’ regime seized power in Iran following the 1979 revolution, the country has been on a path of negative growth and economic decline. The regime has been plundering the nation's wealth and resources, devastating industrial production and growth as a result, all to further its own objectives.
The regime's economic bankruptcy has reached a point that the regime's media and economic experts are saying that compensating for the annual fiscal budget deficit has become extremely difficult and even impossible, given that the economy relies heavily on oil and tax revenues.
The governor of former regime president Hassan Rouhani set the budget on oil sales of more than 2 million barrels per day for 2021, while economists at the time predicted that this would be impossible.
"The monthly performance of the 2021 budget has been very poor, especially in oil revenues. We are far from the forecasted figures. According to available but unofficial statistics, Iran's oil exports during this period have been around 600,000 to 650,000 barrels per day (bpd), still far from the forecasted 2.3 million bpd," according to an August 23 report by the Shargh daily.
"The budget performance of 2021 in the first five months of Persian calendar year (from late March to this day) is far from the approved revenue and expenditure expectations. The country’s total budget stands at around 22,530 trillion rials (about $83.5 billion), of which 486 trillion rials (about $18 billion) should have been obtained in the first five months of this [Persian calendar] year. However, only 225 trillion rials (about $8.4 billion) of the 2021 budget revenue of has been realized. In other words, 46 percent of the five-month budget revenue and 18 percent of the total budget revenue have been realized.
The total revenue collected from oil sales was predicted to be 3,950 trillion rials (about $ 14.629 billion), which should have been 150 trillion rials (about $5.5 billion) in the first five months, but to date, only 23 trillion rials (about $ 851.851 million) of the revenue has been obtained from selling oil. In other words, eight percent of the revenue for the first five months and three percent of the total revenue for the year came from this source," according to an August 17 report by the state-run Mehr news agency.
The state-run Kar-va-karegar daily also wrote in an August 22 article titled "Budget deficit will reach 300 trillion rials (about $11.11 billion|) by the end of this year" quoting Mohammad Reza Poor Ebrahimi, head of the parliament's economic commission: "Measures should be taken to compensate for this deficit and prevent its consequences.”
As always, the only method left for the bankrupt government to generate income is to place even more pressure on the people through taxes, raising prices and printing unsupported banknotes, which renders devastating inflationary burden, leading to increasing poverty and the collapse of the economy.
"To compensate for the budget deficit, we must move to sustainable resources. Unsustainable resources, in addition to taking money out of peoples’ pockets and increasing the Gini coefficient, all contribute to income inequality and make the poor poorer and the rich richer. Therefore, it bears no results," said Masoud Mir Kazemi, head of Plan and Budget Organization according to the Kar-va-karegar daily on August 22.
Meanwhile, government-linked institutions, which are supposed to bear the main burden of taxes and provide a portion of the budget, are evading taxes, and more importantly, institutions owned by Iranian regime supreme leader Ali Khamenei and IRGC’s economic empires are exempt from paying taxes.
Sustainable funding is required in all developed countries, but the necessary preparations should be made. An economy floating in an inefficient and corrupt cycle is not able to provide sustainable financial resources. The basic requirement for sustainable financing is progress in production, which is the most stable source of financing in any country, while production in the country is destroyed and the country's resources and wealth are looted.
Media and government experts are highlighting the negative impact of sanctions on the economy and the availability of the budgeted amount. However, sanctions do not play a decisive role in the budget or the current deteriorating economic situation.
"Iran's modest production growth comparing to its potential, high inflation, and the instability of production growth cannot be traced back to sanctions. Its domestic roots stem from long periods of economic mismanagement, relative price distortion, rent-seeking, a weak and underdeveloped financial system," according to an article published in the Jahan-e San’at daily.
"Our analysis also clearly shows that sanctions can only be blamed for a relatively small part of the variance in production growth, and that the reason for Iran's low and unstable growth should be sought elsewhere," according to an August 22 report by the Kar-va-karegar daily.
Assuming that the sanctions on oil sales are removed in the future, it will not have a positive impact on Iran’s economy due to its utterly corrupt nature.
"What is certain is that a corrupt structure has been established in our country's economy, and that this corruption is certainly structured. A significant part of this corruption is directed from within the government. Therefore, this issue cannot be attributed only to the considerations of the country's economic functions or sanctions,” said Iranian economist Hossein Raghfar on August 22. “On the other hand, these developments have nothing to do with nuclear deal, at least in the current situation. These are merely excuses for groups that seek to take advantage of such opportunities and place pressure on the country's economy," he added, according to an August 22 report by the Arman daily.
From the misgovernment of yesterday to the scandalous demagoguery of today, this economy in Iran has no future but devastation and destruction.
