The 2023 Budget and the Deadly Mistake of Raisi’s Government
The 2023 budget and the deadly mistake of Raisi’s government: According to Iran Gate, in the two weeks since the 2023 budget bill was presented to the parliament, many economists and economic analysts have strongly criticized the government’s budgeting policies. However, almost all economic schools of thought in Iran agree on the extremely dangerous nature of one aspect: the government’s estimate of oil revenue for the coming year.
The most significant criticism that has always been directed at Iran’s budgeting system is the government’s lack of realism regarding revenues and expenses. In other words, governments have always overestimated their income for the coming year and declared expenses in a way that is even below the minimum expected cost.
Of course, the extent of this imbalance in budgeting has varied in intensity across different governments. However, naturally, such unrealistic and overly optimistic forecasts not only fail to achieve the desired results but also lead to successive deficits and ultimately exacerbate inflation.
Budgeting in a Parallel World
Ebrahim Raisi’s government is no exception to the rule of overly optimistic governments. In fact, to be more precise, the thirteenth cabinet is the epitome of all the wishful thinking observed in previous governments.
The current state of Iran’s economy clearly signals to any amateur observer that the government must urgently address the incomplete and disastrous budget it has presented to the parliament. Otherwise, Raisi’s ineffective economic team should prepare for days far more difficult than today.
The prerequisite for this is for the government to come down to the ground where humans live. In other words, as long as the government sets next year’s budget based on a parallel global context that suits its preferences, the situation will remain unchanged.
What is the Main Fault of the Government?
As mentioned, among the numerous mistakes in the 2023 budget bill, none is as large and catastrophic as the miscalculation of oil revenue for 2023. The government expects to sell 14 million barrels of oil daily, even though during the current year, with fewer political and international crises and ongoing nuclear negotiations, it achieved less than half of that amount. The reasoning behind such a fanciful forecast is unclear to anyone.
It should not be forgotten that the events of the past four months in Iran and the capitals of Europe and America have permanently altered the Islamic Republic of Iran’s relations with the world. This change is accompanied by increased sanctions and political and economic pressures on the thirteenth government. Oil sales have never been separate from political developments and are entirely influenced by international relations.
Now, how the thirteenth government expects to sell more than two and a half times this year’s oil under intensified sanctions and stalled negotiations is truly unclear. On the other hand, one must not overlook China’s new stance towards Iran and Beijing’s game with the Western world and cooperation with the Arab states of the Persian Gulf. China, which has been Iran’s largest oil buyer, is well aware that increased global pressure on the Islamic Republic will significantly complicate oil purchases.
Pricing Oil with the Shoosh and Molavi Model
Among Raisi’s government’s strategic errors in budget planning is the prediction of oil prices. The $85 rate for the coming year, especially when reputable global analysts predict much lower figures, is another example of Raisi’s government’s optimism.
Even if such a rate is achieved, it is impossible to sell Iran’s oil at this price. Iran’s oil customers demand heavy discounts, and the Islamic Republic has no choice but to accept their terms. Thus, in reality, Iran’s oil is sold at least 15% below the market price, and Raisi’s budget forecast is nothing more than a fantasy.
The sum of these devastating errors can have a clear meaning, which is the continuation of record-breaking inflation rates in 2023 and increased living pressures on the people.