Politician Says Iran's Leadership Has Decided To Solve Issues With West

12/26/2021

Author: Mardo Soghom

As criticism over Iran’s proposed budget echoes in local media, a former lawmaker says the top leadership has decided to reach an agreement with the West.

Mehrdad Lahouti told Aftab News, a Tehran political website that this year’s budget is not much different from previous ones in facing a serious deficit and the country's top leadership has apparently decided to solve its issues with the West.

He was was quoted on Sunday as having said that as long as Tehran does not improve ties with the world, “we cannot be hopeful about an improvement in people’s lives.”

Meanwhile, the head of the Budget and Planning Organization, Massoud Mirkazemi has written to President Ebrahim Raisi that a 10-percent extra pay in the current budget plan cannot be met because there is no money for it.

Mirkazemi has proposed to sell assets of medical universities and the government to raise money. He has admitted that targets this year for selling government property have not been met, reducing budget revenues.

Iran has faced serious budget deficits since the United States withdrew from the Obama-era nuclear agreement known as JCPOA in 2018 and imposed sanctions that have denied tens of billions of dollars in oil revenues to the Islamic Republic.

Lahouti argued that the main sources of revenue for the proposed budget to start in March 2022 are oil exports and more taxes. The budget draft is based on the projection that Iran can export 1.2 million dollars of crude oil per day next year, but the proposition depends on lifting of US sanctions.

Tehran is currently negotiating with world powers over reviving the JCPOA, which would lift the oil sanctions, but if these talks fail or are delayed it cannot sell the expected amount of oil.

Lahouti said that in such a scenario the government has to resort to borrowing from domestic markets, but he did not mention that cash has dried out and internal capital markets cannot lend billions of dollars to the government. That means the Central Bank will resort to printing money as in past years, driving up inflation that now stands close to a 50-percent annual rate.

But the former lawmaker did highlight that the government is planning to also borrow around $5.5 billion from its foreign currency reserve fund. Information about the fund is a state secret but observers agree it has declined substantially from more than $100 billion a decade ago to perhaps less than $30 billion.

Despite the unsurmountable budgetary problems, the Raisi administration has promised 8 percent economic growth, a figure Iran has never achieved before. Lahouti said that to get to that level of growth, the country would need $65 billion in foreign investment – again a figure the Islamic Republic has not seen in its 42-year existence.

But Lahouti said he believes that the top leadership has concluded it needs to solve its problems with the West, and “that is why Iran’s negotiators are in Vienna trying to reach an agreement with the West.”

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