Pronouncements vs Statistics Plague Government Budget
Despite earlier announcements by government officials that next year’s budget would be anti-inflationary and that the development credit allocations would not go beyond last year’s figures, in his most recent trip to the Ardebil President Ahmadinejad again repeated the same senseless promise that he had made on his trip to the province of South Khorasan last week.
On his visit to South Khorasan, Ahmadinejad promised to double the province’s development budget in the upcoming year. He repeated the same promise on his visit to Ardebil: “One of the government’s most important decisions is to double the province’s development budget for next year.”
Several government officials, including Ahmadinejad’s executive deputy, have blamed the lack of funds for the President’s failure to implement many of the promises that he has made during his provincial visits, a record for any president in Iran’s history. Hence, it seems highly unlikely for the administration to cut provincial budgets. It is thus unclear how the President intends to cut the budget if he intends to double spending in certain provinces and not cut spending in any other.
Last month, Iran’s Central Bank issued several official statements warning about the negative impact of expansionary monetary policies on inflation. In the short period of time since the inauguration of the bank’s new governor, Mazaheri, the bank has issued at least four statements warning about inflation and its consequences.
According to figures released by the central bank, the amount of money pumped in to circulation in the past two years equal the total amount of money in circulation previous to that increase. In other words, more money has been added to the economy in the past two years than all the previous years combined – or, as one economist puts it humorously, more money has been added to circulation since the Achamenian Empire, over 2,000 years ago!
According to prominent economist Saeed Leilaz, under the current circumstances, the government has no option other than to suppress internal dissent and escalate foreign tensions, because, “If everything is calm, then they have to explain to the public why they have failed to raise living conditions after spending all this money, and making all these visits to provinces. During his trip to Ardebil, Mr. Ahmadinejad promised that he would double that province’s development budget. My question is did the government not announce that the current 1387 budget would be a shrinking budget, equaling that of the 1386 budget? If the statements are true, then doubling Ardebil’s budget means cutting another province’s budget by half! So either another province will suffer, or the promise is merely a slogan. These are not just my predictions. I am using the promises and the statistics provided by the government itself. If everything is calm and going well in the country – as Mr. Ahmadinejad’s officials repeatedly pronounce - then administration officials must provide answers to these questions and cannot censor the people and the press.”