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The Rising Costs Of The War

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The rising costs of the war, coupled with falling oil prices in 1986, led to the use of non-oil exports to generate revenue because oil income was no longer a guaranteed source of foreign currency. To finance short-term debts, Iran drained its small reserve of foreign currency by allowing advance drawing on revenues. The FY 1987 budget also reflected the priority of the war effort. The government again promised to curb inflation, to continue to subsidize basic foodstuffs, and to make billions available to the import sector, presumably for consumer use. The Iranian fiscal year begins on March 21 and runs through March 20 of the following calendar year. The budget, presented to the Majlis by the Planning and Budget Organization, consists of three sections: ordinary, plan, and defense allocations. Because of conflict between the Revolution 's stated opposition to the massive defense expenditures of the shah and the high cost of the war with Iraq that began less than one year after the Revolution, by late 1987 there had been no fiscal year in which defense expenditures were not severely understated for domestic political reasons. As a result, attempting to set forth actual figures on the money supply, especially as a function of fiscal policy, was almost pointless. The preamble to the Constitution vests supreme authority in the faqih. According to Article 5, the faqih is the just and pious jurist who is recognized by the majority of the people at any period as best qualified

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