After introducing the members of Iranian president Ebrahim Raisi’s economic team, it became clear that this government and its team have no specific plan for the country’s development and an economic boom as they have claimed before.
Instead, their main concern is about who can gain more access to the country’s resources and wealth. The supporters of the so-called ‘Resistance Economy,’ who stand to gain huge wealth from this policy, now have the keys to the country’s main economic veins. Without even carrying about the international economic mechanisms and disregarding the normal economic procedures internationally and regional which is moving the country away from any development.
As an example, Raisi’s economy minister believes that “in the context of sanctions, the implementation of the demands of the Financial Action Task Force (FATF) will make the economic life of the country more difficult.” (State-run website Alef, March 13, 2021)
Reza Fatemi, Minister of Industry, who is coming from an office called, “Astan Quds Razavi Endowment Productivity Foundation and Astan Quds Razavi Investment and Partnership Management and Astan Quds Razavi Deputy Governor” which is a strange and unclear position, has started a plan called ‘Islamic Economy’ with no clear goal.
Hojjatollah Abdul Maleki, Minister of Labor who has worked at the supreme leader’s office and was a member of the Board of Trustees of the Imam Khomeini Relief Foundation and the Central Insurance Jurisprudence Council, proposed as his solution to solving the unemployment crisis and the poor conditions of 40 million working community households as a secret circumvention of sanctions. Because he is against establishing ties with the international economy.
Right after such appointments, many economists who are themselves part of this rent-seeking mafia raised concerns.
Mohsen Jalapour from the Chamber of Commerce questioned the competence of these people and said the country is involved in some mega economic crises and if there is no solution to solve these problems, the country will face huger problems.
And that in such situations it is expected that specialized people are picked up for such positions.
“There is evidence that some of the people in this government who are supposed to take responsibility believe in ‘liquidity guidance.’ Liquidity guidance or phrases like that in Iran’s economy is the code name for politicians who view liquidity as an opportunity and a tool for solving the country’s problems. Since in the past, the output of such thinking has been liquidity growth and a sharp rise in inflation, this thinking can exacerbate inflationary expectations.” (State-run daily Donya-e-Eghtesad, August 25, 2021)
Kamran Nodri, an economic government expert, also expressed his concerns about accelerating inflation by assessing the future of the country’s economic situation and said: “Seeing inflation of 45% in August, the fundamental cause of high inflation is liquidity growth, which was followed by the government’s large withdrawals from the Petty Cash account to finance the budget deficit and has greatly increased the monetary base. With the coming of the new government in Iran, inflationary expectations are now on an increasing circuit and its impact the continuation of the upward trend of inflation.” (ISNA, August 26, 2021)
In a brief look at these expressions, we find out what crises the government is facing. One of the most critical is the government’s budget deficit. In the first four months of this year, 24.5 percent of the government’s resources came from the Treasury petty cash account, the Treasury Department said. That is, printing the money that the Central Bank does.
“During the same period, only 11.6 billion tomans of revenues resulted from oil exports and petroleum products, which is about 9 percent of the approved budget figure for this period.” (State-run daily Eghtesad Online, August 29, 2021)
Interestingly, during this period, only 5 trillion tomans of Islamic financial bonds have been sold and the government has failed to sell about 20 trillion tomans of other published bonds.