How Rouhani can Combat Corruption in Iran’s Budget

The best example for such a scheme has been the Mehr housing project that started under former President Mahmoud Ahmadinejad (2005-2013), where a large segment of the original investments is unfinished, having wasted public and private investments in the process. Generally, tackling unfinished projects has always been a challenge to Iranian administrations.

According to the MPO, if the structural provisions of the new budget bill are passed by the parliament, about 34% of the national allotments will be supervised and released based on the PBB approach. This is an important first step in preventing the misappropriation of the country’s resources. Furthermore, 868 national projects have been transferred to provincial management, facilitating the regional allocation of funds and better control on the actual performance of these projects.

Looking at international benchmarks, there is ample evidence that a PBB approach can help prevent corruption and increase accountability. PBB has also been an ingredient of the United Nations Development Program’s anti-corruption initiatives in different countries. As a case study, the anti-corruption campaign in Chile is another good example where so-called performance-based incentives pushed back against corruption.

However, international experiences have also underlined that the successful implementation of PBB and other programs will require strong governance structures. In fact, weak governance — especially at the local and provincial levels — may be the biggest impediment to actually use the PBB approach to fight corruption. In other words, implementing a PBB approach without the appropriate governance and supervision structures will merely create a new platform for corrupt dealings.

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