A full appreciation of the root causes of the recent protests in Iran requires deep and concise analysis of the socio-economic and socio-political realities in the country. Notwithstanding, even prior to these protests, there were enough signs to recognize a certain degree of discontent about the level of social and economic injustice in Iran. Besides the income gap, the phenomena that have fed that sense of injustice have been corruption and mismanagement. In fact, the televised debates of the presidential candidates ahead of the May 2017 elections provided enough evidence of the existence of corruption and mismanagement in various state institutions. Fighting corruption has also been one of the goals of the administration of President Hassan Rouhani since first taking office in 2013. There have also been various calls in the past to draft and implement the needed laws and regulations to prevent corrupt dealings.

On Dec. 10, when Rouhani presented his new budget bill to parliament, many focused on the disclosure of information about the allocations to various cultural and religious institutions. While that transparency deserves to be noticed, there are more important nuances, especially structural reforms, that should be appreciated. One noteworthy aspect of the new budget was its reference to “performance-based budgeting [PBB],” which is one of the best tools to prevent corrupt dealings with state allocations. In fact, the author of the new budget bill, the Management and Planning Organization (MPO), was quick to highlight this important nuance. Concurrent with the presentation of the budget to parliament, MPO expert Nematollah Akbari named PBB, transparency, financial discipline and decentralization as the main features of the new budget bill. He also underlined the fact that the budget framework has been simplified and that more budgetary control has been transferred to the provinces.

Parliament member Mohammad Hosseini, a member of the planning and budget commission, has also commented that the PBB approach is the main strength of the new budget bill. Now that the bill is being debated in parliamentary commissions, it is important for lawmakers to maintain the provisions of the bill to increase the overall efficiency of government allocations.

Within state structures, PBB is an administrative methodology through which public funds are released to programs and projects based on their performance and the actual achievement of defined goals. As such, PBB allows funds to move toward projects that are achieving their goals as opposed to allocating resources to half-finished projects and programs that may draw resources without producing the desired results. The PBB system does not intend to penalize or reward state institutions or agencies, but rather maximize the use of available resources. PBB also introduces a higher degree of flexibility into shifting priorities due to new needs on a regional level. This is why the introduction of PBB makes more sense if it is accompanied by genuine decentralization in budgetary affairs.