Iran's Crisis Budget

On December 8, President Hassan Rouhani presented a $43 billion budget to parliament for the upcoming fiscal year, which starts in March 2020. Writing for The Iran Primer, Henry Rome asks: What challenges does Rouhani face?

This year’s budget is the first since the U.S. “maximum pressure” campaign kicked into high gear in May 2019. The cancellation of sanctions waivers that month drove oil exports – Iran’s most important source of revenue – down to less than 500,000 barrels per day, an 80 percent drop from a year prior. Rouhani’s challenge was to design a budget with significantly lower oil revenues while preserving the social spending that Iranians expect and the defense spending that the military demands. “This is a budget to resist sanctions ... with the least possible dependence on oil,” Rouhani told lawmakers. “This budget announces to the world that despite sanctions we can manage the country.”

For the government, striking a balance is critical to ensuring political and economic stability. The protests in November 2019 demonstrated the stakes. An estimated 200,000 protesters took to the streets in more than 100 cities and towns. Security forces killed at least 300 people; the protests were the deadliest since the 1979 revolution. They were sparked by the abrupt increase in the price of gasoline and the introduction of a fuel rationing system, steps designed to improve the government’s balance sheet before finalizing the budget.

Parliament is required to mark up the bill and suggest changes. But lawmakers are essentially being presented with a fait accompli. In an unusual move, the budget had already been reviewed by the Supreme Council for Economic Coordination, which includes the heads of the three branches of government; it reports to Supreme Leader Ali Khamenei. Given the council’s intervention, the parliament had limited room for maneuver.

Read the full article from The Iran Primer