By Alireza Ramezani for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.
Iranian MPs move to hand control over bond market to Central Bank
The Iranian parliament has called for a pause in issuing government bonds on capital markets, accusing the government of President Hassan Rouhani of using the bond market mechanism to shift debt to future administrations.
Rouhani’s financial team began issuing Islamic treasury bills, among other bonds, in February 2015 in an effort to pay off part of Iran’s 5,120 trillion rials ($158.3 billion) in accumulated debt. Critics argue that the administration is actually not paying off debt through this approach, but is only postponing repayment.
“The government is in a debt spiral, building debt on debt,” Speaker Ali Larijani said at a recent parliamentary session, according to a Feb. 7 report in Iran’s leading economic newspaper, Donya-e Eqtesad. The conservative speaker said he believes the bond market is not a reliable instrument for addressing budget deficits, calling instead for the administration to curb “overspending.”
The proposed budget bill for the Iranian calendar year beginning March 21 is still being discussed in parliament. It is to be approved in a few weeks. Despite the moderate bent of the parliament, a number of lawmakers, including the speaker, have criticized the budget for overspending. Larijani said in a surprising comment that almost two-thirds of the next year’s spending is excessive.
Pro-Rouhani experts see these criticisms as politically motivated. Hassan Khoshpour, former manager of the Management and Planning Organization, wrote Feb. 7 in Donya-e Eqtesad that there have always been issues with budget planning and that overspending and deficits are nothing new.
Trying to ascertain why parliamentarians are therefore blaming the Rouhani administration for what are essentially long-standing issues, he concluded that interference by lawmakers in the planning process is one of the reasons behind Iran’s budget-planning failures.