Iran private sector proposes suggestions to amend 2021-22 fiscal budget

Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has proposed eight practical suggestions to amend the budget bill for fiscal March 2021-22.

19 December 2020
ID : 22686
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Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has proposed eight practical suggestions to amend the budget bill for fiscal March 2021-22.

The headquarters of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) in Tehran. Photo: IRAN CHAMBER NEWSROOM

Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has proposed eight practical suggestions to amend the budget bill for fiscal March 2021-22.

The ICCIMA which is the main private sector advocacy group in Iran in a report provided by its research center said that private businesses are concerned about the impact of budget on macroeconomic variables and their work environment.

Echoing the views of a cross-section of experts, the chamber said the new budget is imbued with overestimation of revenues and called for cutting government spending. 

"Due to risks arising from [inability] to realize projected revenues and the government's lack of flexibly in [reducing] its expenses, there are concerns over the macroeconomic impact of next budget on economic stability," reads a statement published by the ICCIMA research center.

If the projected income is not realized and government spending not reduced, the chamber said, it would not be far-fetched to again see higher forex rates, ballooning inflation and increase in interest rates.   

Overreliance on financial resources of the National Development Fund of Iran (the sovereign wealth fund), steep increase on revenues from taxing private enterprise and ambiguities about forex policies and spending for state-run companies are major concerns, the chamber said. 

In the next budget, the government wants to borrow   €2.8 billion from the sovereign wealth fund. It also expects to generate 2,000 trillion rials ($8 billion) from oil and gas export a projection seen by many as ambitious and unrealistic given the economic siege imposed by the United States.  

Total tax earnings in fiscal 2021-22 has been set at 2,515 trillion rials ($9.6b). This includes 591 trillion rials ($2b) from tax on legal entities, 491 trillion rials ($1.8b) income tax, 238 trillion rials ($915m) wealth tax, 235 trillion rials ($903m) tax on imports and 957 trillion rials ($3.68b) tax on goods and services. 

The ICCIMA also took issue with the government decision to allocate 1,600 trillion rials ($6.4b) to state-owned companies. The chamber criticizes the ambiguous manner through which state companies spend money, calling for a detailed public report on their financial performance. 

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