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Rouhani’s bad news budget

The Rouhani administration’s proposed budget for the coming Iranian year is set to be contractionary in real terms and could lead to a credit crunch.

With the recent wave of protests in Iran igniting debate over the government's budget bill for the next Iranian year (beginning March 20), it is important to understand how President Hassan Rouhani's administration has been approaching the matter.

In the bill Rouhani submitted to parliament Dec. 10, the government’s general budget is set at $103 billion, 6.1% higher than the previous budget in rial terms. The general budget excludes the state-owned enterprises, which are included in the much larger total budget. Given a projected inflation rate of at least 10% over the coming year, the general budget is set to be contractionary in real terms.

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