Raisi signals priorities in draft budget with 240% hike in IRGC funding

For the first time since taking office, Iranian President Ebrahim Raisi, who is closely affiliated with Iran's leader Ali Khamenei, has submitted a draft budget for the upcoming fiscal year (FY) -- a document that reveals his priorities.

In the 2022–23 draft budget, the Raisi administration has increased the funds allocated to the Islamic Revolutionary Guard Corps (IRGC) by 240% -- a significant increase that goes far beyond the previous upward trend.

The budget for the new fiscal year, which begins March 21, is prepared by the administration and presented to the Majles (Iran's parliament), which has to approve it in its final form.

The Majles is expected to vote on the budget by the end of 2021.

Though details are modified and altered before the final version is approved, the draft budget is always quite telling in terms of the government's priorities and policies.

The draft budget for FY 2022-2023, submitted to the Majles on Sunday (December 12), has drastic differences from draft budgets presented to the Majles under former president Hassan Rouhani.

Lion's share earmarked for IRGC

In its draft budget, the Raisi administration has significantly increased the funds allocated to the IRGC, showing an increase of 240% in the IRGC budget for next year.

Last year, there was a 58% increase in the IRGC's budget, compared to the previous year -- part of an upward trend that appears to be accelerating.

Over the past decade, the IRGC and, to a much lesser extent, the Artesh (Iran's conventional armed forces) have been allocated the lion's share of the annual budget, with significant increases each year.

They are awarded these funds even as Iran teeters on the brink of bankruptcy, and the public has been grappling with severe economic hardships.

In the draft budget, funding for the Islamic Republic of Iran Broadcasting (IRIB) -- the regime's main propaganda machine, which is directly under Khamenei -- also is projected to increase by 56%, compared to last year.

Iran has proposed the draft budget with the assumption that sanctions imposed in 2018 will still be in place.

Observers note that despite its dire need for sanctions relief, and although it is actively negotiating for the sanctions to be lifted, the Iranian regime still does not appear to be doing what is needed to see a rollback of sanctions.

Heavier burden on Iranian public

Iran's Statistical Centre has estimated the inflation rate for the 30-day period ending on November 21 at 44%.

For the upcoming fiscal year, the government is counting taxes as one of its main revenue sources, projecting a 62% increase in tax income in the draft budget.

This figure includes both taxes from items that are not currently taxed but will be in the new year, as well as a sharp increase in current tax rates.

For instance, older cars at lower values will be taxed.

Retirement age will increase by two years next year. There will be a ceiling on residential water consumption, and surpassing that amount will result in a bill that is 15% heftier per cubic metre.

According to the IRGC-affiliated Tasnim News Agency, Planning and Budget Organisation officials have said they will allocate $5 billion to the country's defence apparatus -- and this is not even the full IRGC budget for next year.

Meanwhile, per the draft budget, the subsidised dollar, capped at 42,000 IRR (compared to the current free market rate upward of 300,000 IRR), which is used for importing essential goods, will be taken away in the new year.

All purchases will then be made at the free market price.

Iran plans to cut oil output and prioritise defence spending in its FY 2022–2023 draft budget. Iranian news agencies reported that the draft, presented Sunday, projects gross domestic product (GDP) growth of 8%.

Iran plans to produce 1.2 million barrels of oil per day at a projected price of $60 a barrel. That is down from 2.3 million barrels per day at a price of $40 a barrel, leaving revenues of $26.3 billion against $33.5 billion in the last budget.

Industry experts say the estimate is too high, given that Iran currently sells about 600,000 barrels a day.

The budget will not be tied to the results of negotiations over Iran's nuclear programme that resumed in Vienna this week, officials said last week.