March 13, 2017
By Roshanak Asteraki
At a meeting on 28 February 2017, the head of Iran’s plan and budget organization, Mohammad Baqer Nobakht, spoke in great detail about top priorities of the 2017-18 annual budget, elaborating on the challenge facing the government in its effort to rationalize public expenditure in various sectors.
According to Nobakht, the largest increase has been in the military-defence budget which was raised by $5.2bn in 2014, and again by $9.8bn in the current year. Allocations for education, research, medicine, healthcare and welfare programmes, in order of priority for the state, came at a distant second.
Citing reports on the government’s performance between 2014 and 2017, Nobakht highlighted three main reasons behind the current budgetary crisis. He stated that the country’s massive bureaucratic machine, government subsidies, and commitment to purchase farm products as well as unfinished construction projects were to blame.
Meanwhile, President Hassan Rouhani’s government has made little effort to complete numerous unfinished projects inherited from former president, Mahmoud Ahmadinejad, and his administration. These massive money-pits have been one of the key causes of the country’s ailing economy.
Ahmadinejad’s government left over 1,074 projects unfinished in the construction sector alone. Dana News Agency reported in November 2016, that there were over 37,000 unfinished projects nationwide, all awaiting either approval or further funding. They included construction of 46 highway belt systems, roadworks and bridges, 33 theatres, cinemas, parks and libraries, 30 massive dams and waterways projects, 27 hospitals, and 23 sport stadiums as well as 15 railway systems.
Despite the increased expenditure in medical services, healthcare and social welfare, no significant improvement can be detected in those areas. The same report lists medicine-healthcare and education-research among the top three sectors to receive budgetary boost under Rouhani’s government. However, according to a report by Iran’s central bank released in February 2017, education and healthcare sectors showed the highest inflation rates of 11% and 17% respectively, during the previous month. Clearly, the increased budget has not improved the quality of education and healthcare services; quite the contrary, it has driven up prices and lowered quality of care and service.
The rosy picture that Rouhani and his government paint for their economic and social achievements stands in stark contrast to the bitter truth. The majority of people in Iran struggle to make ends meet. Soon after winning the presidential election, Rouhani promised to tackle the country’s ailing economy in 100 days. But in four years of his administration, the situation has gone from bad to worse.
Government subsidies were meant to provide relief to the poor. However, Nobakht and others believe that the financial aid that many Iranians currently receive in the form of monthly cash deposits in their accounts has actually exasperated the problem. According to a report by the research arm of the Majlis (Iran’s parliament), those cash subsidies have not improved the living conditions of poor people because incomes have not kept up with the rising cost of living and the inflation rate. Poverty has become rampant in the country.
Rouhani’s government is not even able to pay workers their meagre salaries that have not been adjusted to the inflation rate. Demonstrations by workers demanding their back pay are common occurrences in today’s Iran, and a number of protest marches have been staged by workers around the country in the past few weeks. According to reports, many teachers have not been paid since the start of this school year in October 2016. Many city workers in Ahvaz, capital of south-western Khuzestan province, have not been paid in four months, and a number of retired military personnel joined a protest in support of workers and teachers.
The Iranian people are fed up with the current economic chaos, incompetent management and rampant corruption that has brought the country to the brink of disaster. As the upcoming May presidential election approaches, unions, workers and ordinary people are taking to the street to protest the current state of affairs and make their voices heard.