Iran’s parliament on Jan. 22 approved the general outlines of the government’s budget bill for 1402, the next Iranian year beginning on Mar. 21, 2023. Though lawmakers can still amend some of the details, the 169 votes in favor—against 54 nays and seven abstentions—can be understood as a vote of confidence on a document that many experts view as flawed. 

While presenting the bill to the parliament, President Ebrahim Raisi argued that his government has sought to improve the livelihoods of ordinary Iranians and reduce inflation. However, it is clear that many shortcomings will prolong the current inflationary climate.

General assessment

The Raisi administration projects a 46% rise in its revenues, which appears unrealistic in virtually every dimension.

Gearing to generate 58% more tax revenues compared to the current Iranian year is certainly counterproductive in an economy where businesses and citizens alike are suffering from a loss of purchasing power due to rampant inflation. Though officials have announced that new forms of taxation will be introduced—including a wealth tax—it will be an uphill battle to realize the projected revenues.

The foreseen 58% increase in petroleum export revenues also seems unrealistic, at least for as long as western sanctions remain in place. The projection is based on anticipated crude exports of 1.3M barrels per day, which appears achievable based on the...