On Tuesday, October 29, Iranian government spokesperson Fatemeh Mohajerani announced a proposed 200% increase in Iran’s military budget, following intensified hostilities with Israel. In a press briefing, Mohajerani confirmed, “Given the need to address our defense needs, we are witnessing a significant increase exceeding 200% in the national military budget.” This budget proposal, which the administration claims will reinforce national defense capabilities, arrives amid severe economic strain on Iran’s population.
According to Mohajerani, the budget increase is meant to “strengthen the country’s defensive capabilities,” though she refrained from specifying the total amount allocated for 2025. The significant boost to military funding is likely to favor entities such as the Islamic Revolutionary Guard Corps (IRGC) and its branches, including the Quds Force, an elite unit involved in regional military operations. Historically, official military allocations are designated for the army, IRGC, and Basij forces, while classified funds outside this official budget often extend to foreign operations in the Middle East.
The 1403 budget (March 2023- March 2024) allocated approximately 470 trillion tomans ($28,5 billion) to the armed forces, or roughly one-sixth of the total national budget. But at the request of Ebrahim Raisi’s administration, Parliament approved an additional provision, allowing over 132 trillion tomans of crude oil for the armed forces to sell and supplement their budget.
#Iran’s 1404 Budget Proposal: Fuel Price Hikes, Defense Spending Boost, and Increased #Taxation Amid Economic Strainhttps://t.co/VCpOvCO4YV
— NCRI-FAC (@iran_policy) October 22, 2024
Iran appears to be the only country globally that formally allows its military to play a direct role in selling national resources and retain a portion of the revenue.
The initial allocation of 470 trillion tomans for the armed forces in this year’s budget was divided as follows: 132 trillion tomans for social security (including insurance and pensions), 125 trillion tomans for the IRGC, approximately 67 trillion tomans for the regular army, over 87 trillion tomans for law enforcement, and slightly more than 48 trillion tomans for the Ministry of Defense.
Meanwhile, under the administration of Masoud Pezeshkian, a higher percentage of Iran’s oil revenue has been earmarked for the military. This approach aligns with a strategy aimed at bolstering regional influence, while domestic needs struggle for funding. Observers, including the Stockholm International Peace Research Institute (SIPRI), have reported that military allocations tend to surpass public estimates, with Iran’s military expenditure reaching approximately $10.3 billion in 2023.
Recent escalations between Iran and Israel have intensified these concerns. Following mutual rocket attacks in October, Israel responded with a major air campaign targeting Iranian military sites. Although Iran downplayed the impact, reporting “limited damage” to three military facilities, satellite imagery captured by international agencies suggested damage at strategic sites like Parchin and Khojir. The Iranian government has since emphasized its military readiness, warning that any further aggression would meet a “robust and unpredictable” response.
Taxation and #Tax Evasion Turns into Battleground between State and #Iran’s Populationhttps://t.co/sTudCY75UG
— NCRI-FAC (@iran_policy) February 12, 2024
Domestic reaction to the proposed budget has been mixed, particularly given Iran’s ongoing economic challenges. In recent months, inflation and economic instability have strained Iranian households, sparking criticisms over the prioritization of military spending. Pezeshkian’s administration has also introduced new tax reforms, increasing taxes by 39% for the 1404 fiscal year. The government anticipates significant revenue through these tax hikes, though critics argue the burden falls disproportionately on ordinary citizens rather than state-affiliated entities.
Despite economic hardship, the focus on military investment underscores the Iranian regime’s prioritization of regional power and military resilience. Experts note that Iran’s defense spending, particularly its external commitments, exceeds that of other major economies in the region, including Turkey and Saudi Arabia. Iran continues to support proxy groups across the Middle East, including Hezbollah in Lebanon and the Houthis in Yemen. According to Aftab News, Mohajerani acknowledged, “We recognize and appreciate the sacrifices of our defense units in maintaining our country’s security and stability.”
In light of escalating regional tensions, the administration of the so-called reformist Pezeshkian remains committed to the Supreme Leader’s defense strategy, despite mounting calls to address domestic economic challenges.