The Iranian Parliament on Tuesday [February 2] turned down the government’s draft budget bill in a session held in the absence of President Hassan Rouhani, who again snubbed the hardline-dominated parliament and its speaker, Mohammad Bagher Ghalibaf (Qalibaf). Of 261 lawmakers present, 148 voted no, 99 yes and 12 abstained.

Parliament rejected the bill despite its budget reconciliation committee making many changes to the government’s draft. The discussion and the vote Tuesday revealed a split among hardliners, as the more experienced politicians urged the approval of the amended budget, while younger, new lawmakers decided to reject the budget altogether. 

After announcing the result, Ghalibaf said the government had not cooperated with the parliament by refusing to amend its bill. In response, government spokesman Ali Rabiei said the government was prepared to cooperate with the parliament to amend the bill “without destroying its framework” or adding “imaginary revenues” by changing the exchange rate used in calculations.

Rabiei was responding to criticism from both the Majles Research Center and the parliamentary speaker that the government’s proposed budget includes a sizable deficit, which they argue will lead to higher inflation. Ghalibaf and the parliament demanded changes but Rouhani has refused amendments.

While the deficit can theoretically be reduced by changing assumptions over foreign exchange rates – as Rabiei noted – it essentially results from United States sanctions that have reduced Iran’s oil exports and cut dollar earnings that traditionally financed over half the government budget. While Iran is already expanding its oil exports, critics also say the draft budget is based on overly optimistic assumptions about higher oil exports in the next Iranian year (beginning March 21) after the possible easing of US sanctions.

Rouhani has stayed away from parliament since it first met in May 2020 after February’s election, sparking criticism from Ghalibaf and majority hardliners. “Based on law, the president must have attended [the Tuesday session] to defend the outlines of the budget bill for the year 1400 [in Iranian calendar, starting March 21],” Ghalibaf said on Tuesday after it became clear that Rouhani had opted not to come.

“The president’s avoidance of the House of the Nation (parliament) in the past nine months is an insult to the people of Iran and the parliament,” Naser Mousavi-Largani, a member of the parliament’s presidium, told lawmakers.

Rouhani had another engagement - a meeting of the government’s Economic Coordination Headquarters – where he stressed that the draft budget sent to parliament was based on “economic war conditions” and that fundamental changes could inflict serious harm on “people’s subsistence, the path of development and economic management of the country.”

One of the concerns of the principlist majority in parliament is that any budget should not constrain a new administration after June’s presidential election, which they expect or hope to win. Only with difficulty did the 2019-20 budget bill pass parliament, then with a majority sympathetic to Rouhani’s centrist administration. The majles elected in February 2020 has been at loggerheads with the government, suggesting Rouhani’s final budget faces even tougher obstacles.