This article is part of our series that explore liquidity in Iran and its harrowing impact on various elements like the country’s financial systems, citizens’ livelihood, industry, and agriculture.
The Islamic Republic is supposed to hold its 13th Presidential election on June 18. Observers argue that Iran’s economic situation is in a volatile situation rather than being in a growing status. They believe that liquidity, inflation, and recession have engulfed the country’s economic structure and are driving it to collapse.
However, on the verge of the Presidential election, the main question is can anyone actually survive Iran’s financial system? In recent televised debates, candidates pointed to several truths like embezzlement cases and lace of education and degrees, which had already been exposed. Although no one questioned and no one provided a plan for how to run the country’s economy?
“If you’ve found any plan of candidates, send it to economists to study,” wrote Aftab-e Yazd daily on May 31. Vahid Shaqaqi Shahri, an economics professor, also said, “I have yet to see any specific plan from candidates.”
In such circumstances, there is nothing remained expect inflation, economic pressure, recession, liquidity, worn-out infrastructures, and people’s empty food baskets from Iran’s economy. The social gap has dramatically expanded while rich ayatollahs’ wealth is estimated to be multiple times the wealth and properties of kings and royal families in the pre-revolution era.
Instead, millions of citizens face horrible phenomena such as organ sale, child laborers, homelessness, and poverty. According to official statistics, more than 90 percent of working families in Iran live below the poverty line.
This figure, of course, does not display the whole reality. Indeed, it only expresses the living condition of those who still have a career. This is while there are millions of unemployed youths, retirees, homeless people, and slum-dwellers who have nothing to lose.
Regarding the candidates’ lack of specific economic plans, it is clear that nothing will change if any candidates take office. In other words, aside from gestures and factional claims, they are all cut from the same cloth, and Iran’s economy would not be glorified via these people, dissidents say.
Liquidity and Its Terrible Impact of Iran’s Banking System
Today, liquidity is one of major dilemmas for Iran’s economy. In the past decades, different administrations tried to ease financial failures through uncountable printing and injecting banknote to the market.
However, in this status quo, printing unsupported banknote has added insult to injuries of society, particularly the low-income classes. In reality, the people have a lot of money, but their purchasing power has been vanished due to a sharp devaluation of national currency rial.
“According to official, in the first nine-month of 2012, the country’s liquidity was 4.3 quadrillion rials [$162.246 billion]. In 2013, this number exceeded 6 quadrillion rials [$173.913 billion]… However, printing destructive banknote significantly increased in next years while more than 50 percent of Iran’s liquidity in history was occurred in only the past three years,” wrote Hamdeli daily on June 9.
“From 2018 to 2020, liquidity amount surpassed 16 quadrillion rials [$90.909 billion], reaching a mind-blowing number of 35 quadrillion rials [$147.679 billion],” Hamdeli added.
Abovementioned clause of Hamdeli’s piece indicates that despite an increase in the liquidity amount—based on rial—however, the value of liquidity against credit monetary units like U.S. dollar and Euro has significantly declined.
In other words, the increasing rate of liquidity has been matched with the national currency’s devaluation tarnishing people’s food baskets dramatically. In this context, outraged people frequently chant in their protests, “Expenses are based on dollars while our salaries are based on rial.”
Presidential Candidates’ Solutions for Financial Issues
Following public grievances and power struggle among different parts of the ruling system, some candidates were forced to present ‘economic plans.’ However, given the lack of a profound cognition of financial crises, they have provided ridiculous solutions, which would complicate dilemmas more rather than solving them.
For instance, Mohsen Rezaei, the former command-in-chief of the Islamic Revolutionary Guard Corps (IRGC), announced that he would increase monthly subsidies from 450,000 rial [$2.20] to 4.5 million rial [$22.00]. Rezaei also introduces himself as an elite economist.
Indeed, in a country that does not have any stable revenue, which has built up its all economy and budget on oil sale—while the oil has yet to extract, refine, and export, a ten-time increase in subsidies will only meet through printing unsupported banknotes. Such decision will only double the liquidity amount and devaluate rial more than before.
“The root of inflation and recession dilemmas should be searched in some officials’ irresponsibility and rational imprudence,” Hamdeli added.
On the other hand, the Supreme Leader Ali Khamenei’s representatives and Friday prayer Imams tout participation in the election as a resolution for economic problems while no candidate has provided a specific plan for financial affairs. “Today, the main solution for difficulties is a strong participation [in the election] and right choice,” said Khamenei’s representative in Qom Sayed Mohammad Saeedi.
“Inflation, raw material sale, social justice, economic infrastructures, privatization, water and environment, families, reduction of population, slum-dwelling, youths’ inability to marry, addiction, social harms, divorce, resistance axis—referring to Tehran’s extremist proxies in the Middle East, etc. are the most important topics that should be addressed by officials in the new era. They should no longer speak about sidelines,” the official IRNA news agency quoted Saeedi as saying on June 10.
Therefore, authorities well realize the country’s current situation from environmental catastrophes to families’ dilemmas, slum-dwelling crisis, addiction, high-prices, inflation, and liquidity. However, no one approaches such major issues avoiding shedding light on institutionalized flaws in the theocratic system.
And maybe the candidates’ refusal to addressing such issues is due to systematic corruption that has engulfed the entire Islamic Republic. In February 2018, Khamenei described the corruption as a seven-headed dragon that “still moves whenever one of its heads was cut off.” Nevertheless, the candidates’ refusal may be for their direct or indirect role in 42 years of corruption and their interests through such worn-out system.