Analysis of the Legal System of Budget Formulation in Iran in Light of the Principles of Good Governance

Abstract

The government’s public budget, as the most important annual financial document, is regarded as the primary instrument for implementing public policies, allocating resources, and directing the government’s economic and social activities. The budget formulation stage, as the starting point of the budgeting process, plays a decisive role in ensuring transparency, accountability, and efficiency within the public financial system. In the legal system of the Islamic Republic of Iran, this stage is regulated within the framework of constitutional principles—particularly Article 52—and financial laws, including the Public Accounting Law. However, the legal structure governing budget formulation faces challenges that may hinder the realization of good governance principles. The present study aims to examine and analyze the legal system of budget formulation in light of the principles of good governance and to identify the legal deficiencies affecting this process. Employing a descriptive-analytical method and based on the examination of legal sources, legislation, and higher-level policy documents, this research evaluates the extent to which this process conforms to principles such as the rule of law, transparency, accountability, and efficiency. The findings indicate that the major deficiencies include the expansion of the Budget Law’s scope beyond its financial function through the incorporation of unrelated provisions, insufficient transparency in the formulation process, institutional centralization in budget preparation, and a lack of coherence between annual budgets and development plans. This situation has reduced the effectiveness of the budget as an instrument of financial governance. Ultimately, the findings demonstrate that reforming the legal framework of budget formulation and aligning it with the principles of good governance can play an effective role in enhancing transparency, strengthening accountability, and improving the quality of financial governance.