President Rouhani has drafted the budget bill for the next fiscal year 1397 (March 2018-March 2019) to the parliament on December 10th 2017, a document he called a blueprint for generating employment, eliminating poverty and promoting equality. The total amount of resources in the budget bill stands at 11.94 quadrillion Rials which is 4 percent higher than budget law for the current year in terms of value. In addition, the total amount of general revenues in the budget bill stands at 4.24 quadrillion Rials, 3.7 percent higher than the budget law for the current year. The proposed budget for governmental companies, organizations and banks increased from 8 quadrillion Rials to 8.13 quadrillion Rials which shows about 2 percent increase.
The most important assumptions in each year’s budget are the official exchange rate of Dollar and the forecasted oil price. According to the proposed budget, the official Dollar exchange rate is around 35,000 Rials and the average oil price has been forecasted around 55 Dollar per barrel. The official Dollar exchange rate had been assumed equal to 33,000 Rials and the average oil price had been estimated to be around 50 Dollar per barrel in the current year’s budget law.
The general revenues in the budget bill divided into three important parts: tax revenue, oil revenue and bonds issued by the government. The total amount of tax revenue has been predicted to be around 1,934 trillion Rials which shows more than 11 percent increase comparing current year’s budget law. The total amount of oil revenue has been predicted to be around 1,065 trillion Rials which shows more than 10 percent decline comparing current year’s budget law, the main reason of the mentioned decline is because of increase in the share of The National Development Fund from exporting oil which will increase from 20 percent to 32 percent. The total amount of revenue from bond issuance has been predicted to be 680 trillion Rials which shows more than 26 percent increase comparing current year’s budget law.
The most significant change in the structure of the budget is dividing private cost into two separate parts: current cost and capital expenditure. In addition, the 3.7 percent growth which has predicted for both expenditures and resources implies a contractionary fiscal policy for the upcoming year.
To conclude, according to the growth rate of predicted revenues, the estimated inflation rate for the upcoming year is about 15 percent and it is predicted that the amount of treasury bills will increase more than 18 percent. Considering the fact that salaries of current employees and also retired people are the main parts of public expenditures, and it is not deniable and therefore the government has to cover that anyway, the failure in ascertaining each part of revenues, will lead to the budget deficit.