Fiscal Sustainability in Iran: Assessing the Period of 1342- 1380



Budget deficit constitutes a major fiscal indicator. It has major important ramification on macro-economic position of all nations. In developing countries generally, and in Iran specifically, governments are likely to spend more on miscellaneous as well as differentiated obligations causing high expenditure costs with respect to their limited revenues. This causes a budget deficit to incur. The Iranian officials traditionally have regarded the oil revenue as an income item in budget statement and, generally, use a fraction of this revenue as current expenditure. Looking into this issue, the article analyzes the government’s inter-temporal budget with some adjustment and interpretation. The empirical findings suggest that the country has not been in a sustainable path during the sample period. This article arrives at the conclusion that the Iranian fiscal stance with respect to the future generations is non- stationary and that the fiscal authorities would not be able to repay the incurred debts to the future generations and that the central government is in fact vulnerable, viz., involved with insolvency conditions.