Iran Economy NewsCapital Outflow Intensified in Iran

Capital Outflow Intensified in Iran

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One of the current major crises in Iran’s economy is the capital outflow, which is implemented by the regime’s officials who are depositing huge amounts of wealth into foreign banks and private accounts. One way in which they transfer the currency they have received from the central bank abroad is under the pretext of importing basic goods. However, in practice, they do not import any goods in return, which has raised many skepticisms even among the regime’s experts.

On May 1, the state-run Etemad Online website quoted one of the regime’s economic experts in their publication, writing, “$20 billion was taken out of the country in 2018 in the name of importing goods, many of which did not return.”

According to unofficial statistics, more than $10 billion leaves the country annually. On May 1, the Jahan-e-Sanat newspaper cited the Central Bank in an article, stating that the outflow of capital from the country in 9 months in 2021 was “more than $10 billion”, which is double the amount compared to the same 9 months of 2020.

They added, “The outflow of capital in the third quarter of 2021 was accompanied by a growth of 96 percent compared to the same period in 2020. The increase of the outflow of capital from the country according to the government’s statistics, can be a warning signal for the situation of investment in the country.”

These are just the official statistics that are ringing the alarm bells. Unofficial statistics are painting a picture of a much worse situation.

In regards to the capital outflow over the past four years, the state-run daily Jahan-e Sanat wrote, “In fact, in a situation where the outflow of capital from the country has increased during the last four years and in 2020 for the second time the depreciation rate exceeded the investment rate, the economic situation for producers was such that in most seasons with increasing production costs and they faced a decline in consumer purchasing power.”

One example that has exposed the severity of this critical situation is the bankruptcy of small businesses. According to Jabbar Kouchaki Najad, a member of the regime’s parliament, “Many small production centers are in crisis and some workers have been laid off.”

It is clear that under this amount of pressure, it is impossible to form a real private sector, and what is left are so-called private businesses that are owned by the regime’s officials, which are operating to support the regime’s looting and thefts.

Discussing the regime’s pressure on the private sector, the Jahan-e-Sanat daily wrote in their April 29 publication, “The government has blamed the private sector and employers for the entire costs. Now we must see how it can continue this policy.”

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