In a significant escalation of military spending, Iran has announced plans to triple its military budget, with a proposed 200% increase confirmed by spokesperson Fatemeh Mohajerani on October 30, 2024. This decision comes in the aftermath of Israeli strikes on October 26, which were a response to a ballistic missile attack from Iran. The proposed budget increase follows a military spending of $24.6 billion in 2022, which ranked Iran 14th globally in terms of military expenditure [2349623f].
The Revolutionary Guard's budget has already seen a 14% increase, now accounting for 34% of Iran's total military spending. This budget proposal is set to be debated and finalized by March 2025, raising concerns about how Iran's struggling economy can accommodate such a substantial increase in military funding [2349623f].
As Iran grapples with economic challenges, including high inflation and the impact of international sanctions, the feasibility of sustaining this military budget raise is under scrutiny. The World Bank estimates Iran's defense spending at approximately 2% of its GDP, which was around $6.85 billion in 2022. This raises questions about the balance between military ambitions and economic stability in a country already facing significant financial pressures [2349623f].
In the context of these developments, Iran's security agencies have also taken drastic measures to stabilize its currency market, halting currency exchanges to prevent further depreciation of the rial following the recent military tensions. The price of the US dollar had surged past 690,000 rials, prompting the government to intervene [1fd41b91].
With the Tehran Stock Exchange experiencing declines amid these military and economic pressures, the Iranian government faces a challenging landscape as it attempts to navigate both domestic stability and international relations [1fd41b91][17fa7b4e].