Iran’s government on Tuesday submitted its draft budget for the year starting in March 2026 to parliament, with early indications suggesting one of the most restrictive fiscal frameworks in recent years amid persistent economic strains.
Officials familiar with the drafting process at the Planning and Budget Organization say the bill was prepared with tight spending limits.
President Masoud Pezeshkian has previously blamed budget deficits for fueling inflation, while the economy minister has said the government aims to eliminate the deficit in the coming year.
Unofficial estimates suggest the overall budget ceiling may increase by less than 5%. With inflation still running above 40%, economists say this would amount to a real contraction of around 35% in government spending power, a scale of adjustment that could weigh heavily on public services, development projects and support programs.
Wage increases draw early criticism
The draft was submitted to parliament amid immediate criticism from lawmakers, particularly over a proposed 20% rise in public-sector wages, which several MPs said lags inflation and risks further eroding household purchasing power.
The bill, state media reported, is the first budget prepared under a new format in which parliament no longer debates accompanying legal provisions, reviewing only numerical tables.
The draft, Budget chief Hamid Pourmohammadi said, was submitted after removing four zeros from the national currency, in line with recent legislation.
Inflation risks in the background
In his budget speech, Pezeshkian warned that water shortages pose an urgent national challenge, saying weak management could have lasting consequences.
The budget debate comes as gold and foreign-currency prices in Tehran have surged in recent weeks, particularly after the approval of a third gasoline price tier, developments that have reinforced expectations of higher inflation.
Lawmakers earlier on Tuesday held a closed-door session with senior ministers and central bank officials to discuss currency volatility and price controls.
