Page 13 - Iran OUTLOOK 2025

seventh National Development Plan (2023-2027), which set an inflation target of 9.5% by the plan's conclusion. This target represents a significant reduction from current levels and forms part of the CBI's broader strategy for achieving price stability.
These monetary policy measures implemented throughout 2024 reflect the central bank's response to Iran's complex economic environment, combining traditional interest rate tools with specialised deposit schemes and targeted inflation objectives. The effectiveness of these policies will be crucial in determining Iran's economic trajectory in the coming years.
5.0 Budget & Debt
• 5.1 National budget
Iran's 2024-2025 fiscal budget totalled 2,462 trillion tomans (IRR24,620,000 trillion), representing an 18% increase on the previous fiscal year. This budget marked the first under the country's seventh quinquennial development programme and reflected significant shifts in both revenue sources and spending priorities.
On the revenue side, the government projected a 50% increase in tax collection compared to the previous year, signalling an intensified effort to reduce oil dependency. This strategic pivot was further evidenced by a planned 6% reduction in oil-derived revenues, demonstrating a continued push towards revenue diversification.
Military expenditure emerged as a dominant component of the budget, with defence spending set at $16.7bn – equivalent to 25% of the total national budget. This allocation represented a 20% y/y increase, reflecting heightened focus on defence capabilities amid regional security concerns.
The fiscal deficit remained a significant challenge, with projections indicating it would reach 5.8% of GDP by year-end 2024. This deficit persisted despite efforts to boost tax revenues and optimise spending, highlighting underlying structural challenges in Iran's fiscal management.
The budget's composition raised several economic concerns. The substantial increase in targeted tax revenues, combined with reductions in essential goods subsidies, suggested potential additional pressure
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