Title: Budget Priorities: Iran’s New Economic Strategy Puts Household Support at the Forefront
A Shift in Economic Focus
The Iranian government is finalizing the national budget bill for the upcoming Persian calendar year (starting March 2025), with a pronounced emphasis on social welfare. The draft bill is scheduled for initial review by the cabinet in the Iranian month of Azar (November-December), with a final version slated for submission to the Islamic Consultative Assembly (Parliament) by the end of that month, adhering to the standard legal procedure.
Core Pillars of the New Budget
This year’s budget formulation is centered on two key directives from the President, marking a significant policy shift:
- Revising the exchange rate for essential goods.
- Channeling resultant revenues into a new electronic coupon system.
These pillars are designed to directly address household economic pressures, moving beyond traditional budget concerns like managing deficits.
Navigating the Exchange Rate Dilemma
A primary challenge is the recalibration of the official exchange rate used for importing essential goods. The Plan and Budget Organization is undertaking this review amidst competing pressures. On one hand, rising inflation and increased import costs necessitate an adjustment. On the other, there is considerable concern that any change could directly impact consumer prices and place an additional burden on low-income families. The final decision on maintaining or altering the current rate remains a critical and unresolved issue.
Directing Resources to Household Support
In a clear departure from previous years, the government has mandated that any additional revenue generated from a potential increase in the essential goods exchange rate must be entirely allocated to the new electronic coupon scheme. This directive ensures that these funds will be used for direct household support rather than for covering the budget deficit, underscoring a commitment to preserving citizens’ purchasing power.
The Electronic Coupon System: A New Approach to Subsidies
The rollout of the electronic coupon system is a cornerstone of the government’s economic agenda. After a successful pilot phase, the program is set to be fully implemented at the start of the next Persian year, partially replacing the existing direct cash subsidy.
Concurrently, the government is continuing its policy of refining the subsidy roster by phasing out high-income households. To date, approximately 6 million individuals have been removed from the cash subsidy list, a process that will continue into the next year to better target state support.
Balancing Economic Priorities
As the budget deadline approaches, the Plan and Budget Organization faces the complex task of balancing inflation control, sustainable financing, and social welfare. The outcome of these decisions will significantly influence the country’s economic direction in the second year of its seventh development plan, highlighting a budget that is more focused than ever on the livelihood of its citizens.