TEHRAN – Iran’s Economy Minister said the government is preparing revisions to the 2025 budget law to reduce the deficit, expand supply chain financing, and steer large enterprises toward the capital market in a bid to ease inflationary pressures and boost liquidity for the private sector.

Speaking at the 131st meeting of the Government-Private Sector Dialogue Council, Seyed Ali Madanizadeh said Iran has long struggled with budget shortfalls. Under the approved 2025 budget, the government must issue bonds worth 80 quadrillion rials ($160 billion), reflecting the scale of the deficit. He said revenue and spending shocks this year have further deepened the gap.

Madanizadeh warned that when banks divert liquidity to buy government bonds, funds that should go to private borrowers are absorbed into state spending. This, he said, leads to higher lending rates and weaker access to credit for businesses, while also pushing up inflation as banks rely more on central bank financing.

Budget revision to ease pressure

Calling the deficit the root of inflationary pressures, Madanizadeh said the government is working with parliament to cut non-essential expenditures. Reducing reliance on bond sales, he added, will free up space for private sector financing and help bring down interest rates.

Supply chain financing expansion

The minister said the government plans to expand supply chain financing, where credit is injected at the beginning or end of the chain rather than into each production unit. This reduces liquidity needs and, when linked to the capital market, lowers inflationary effects. He said tools such as “GAM” bonds will be scaled up for this purpose.

Large firms to tap capital market

Madanizadeh said large enterprises, given their financial transparency and stock market presence, will be encouraged to issue corporate bonds at lower rates, easing pressure on banks. This, he noted, will allow smaller firms, which lack access to cheap bond issuance, to obtain financing from the banking system.

Foreign currency bonds to reduce banking strain

He also announced the rollout of foreign currency bonds for exporters. With lower interest rates than rial-denominated bonds, these instruments are expected to attract savers while reducing pressure on the banking sector and channeling foreign exchange resources into production.

Tax deferrals to support liquidity

Madanizadeh pointed to temporary tax deferrals during the recent 12-day conflict, saying the measure acted as indirect support by preserving working capital for companies hit by liquidity shocks.

Agriculture sector support

Citing Agriculture Minister reports that 2.5 quadrillion tomans ($50 billion) is needed to revive farming units, Madanizadeh said President Masoud Pezeshkian has ordered a plan to allocate $2–3 billion in oil revenues in late 2025 and 2026 to boost domestic farm production instead of imports. He stressed that support will be tied to efficiency and free of state price controls to prevent banking sector losses.

EF/MA