The 2023 Budget: Raisi’s New Masterpiece
Preserving People’s Purchasing Power with an Inflationary Budget
The 2023 Budget: Raisi’s New Masterpiece. According to Iran Gate, Tasnim News Agency has made a strange claim, releasing information about the 2023 budget. According to this, the salaries of government employees will increase by 20%, covering about 40% of the current national inflation.
According to a report published by Tasnim regarding the 2023 budget, the total budget has surpassed 5 quadrillion tomans. Apparently, the government’s general budget share is about 2 quadrillion tomans, while companies have been allocated a share of 3 quadrillion tomans.
Analysis of Tasnim’s Claims
If Tasnim’s claims about the statistics and figures of the next year’s budget are accurate, it must be said that the thirteenth government has presented a much larger and more bloated budget compared to last year. In other words, the more than 1.4 quadrillion toman increase in the total budget signifies unfavorable conditions and a rapid increase in liquidity. If this budget is approved, we should expect an even greater intensification of inflation.
Another figure released regarding the 2023 budget is the 20% increase in government employees’ salaries. Of course, this must be approved by the parliament, but such a proposal from a government that increased the minimum wage by nearly 60% last year is very surprising and unexpected. In reality, the government is experimenting, and after witnessing the consequences of last year’s poor decision, it is now making a decision reminiscent of falling off the other side of the roof.
Salary Increase: A Soured Dish
Considering that annual inflation is approaching 50%, the government has decided to increase its employees’ salaries by 20%. No economist would recommend a 50% salary increase in such circumstances, but how they arrived at the 20% figure is questionable, as this only covers 40% of the annual inflation, which has not yet reflected the inflationary effects of currency price spikes.
Taxes and the Government’s Pride in Increasing Pressure on the People
One of the thirteenth government’s prides is collecting unprecedented taxes from businesses and people throughout 2022. Economists emphasize the need to increase the tax share of government revenues, but almost no economist recommends imposing such pressure, especially when industries are shut down and unemployment rates are soaring. However, due to reduced oil revenues this year and a significant budget deficit, the government has resorted to heavy and often unjustified tax collection from the people.
Now, if Tasnim’s claim is correct, the government intends to consider a revenue of 700 trillion tomans from tax collection for 2023. This amount does not include revenues from customs duties, which apparently amount to 120 trillion tomans, totaling 820 trillion tomans.
These numbers indicate the government’s determination to increase pressure on businesses and society. In reality, the government intends to transfer the pressure it endures due to increased sanctions and restricted oil exports onto the people, who are actually seeking to establish connections with the world and remove these obstacles. In truth, the government is transferring the cost it should bear for its ideological policies onto the people to at least pay its employees’ minimum wages.
Exchange Rate: A Never-Ending Challenge
In the years following the U.S. exit from the JCPOA, setting the exchange rate in the budget has always been one of the challenges for Hassan Rouhani’s government and now Ebrahim Raisi’s. In this regard, Hassan Rouhani also made significant mistakes in setting the 4,200 toman rate for the government dollar. However, Raisi repeatedly criticized this policy during the 2020 elections and promised to eliminate this price. But now, leaked budget news suggests setting a 23,000 toman rate for the government dollar, primarily used for importing essential goods.
This policy, which has always meant fueling corruption and rent-seeking among a group of influential people, can lead to a major disaster this time, given the unprecedented rise in the dollar price and the 44,000 toman rate registered in the free market. Recently, Mohammad Reza Farzin, the new Central Bank Governor, also made strange remarks about stabilizing the exchange rate in the Nima market.
Now, these remarks, along with the budget news for 2023, show that the thirteenth government also intends to follow the exact same model of setting the government exchange rate, which will undoubtedly be a basis for intensifying and strengthening corruption rings in Iran’s economy.
What is more painful is that these actions are carried out under the label of supporting people’s purchasing power, but in the end, not only will purchasing power not be preserved, but in addition to intensifying corruption, the government will be forced to resort to Central Bank resources, leading to increased inflation and the collapse of ordinary people’s purchasing power.
Another report and analysis titled ‘A Disaster Called the 2023 Budget’ has been published in Iran Gate.
