The Rouhani government is obliged to present its economic record to the public but refuses to do so with the excuse that it does not want to give the Americans and the international institutions a clear image of Iran’s economy.
However, President Hassan Rouhani understands that in the age of communications and observation by reputable international organizations, there are few economic subjects of which he can conceal important parts.
Some time ago, the head of the Budget and Planning Organization of Iran, Mohamad Bagher Nobakht, implicitly referring to the regime’s economic downturn and said:
“We are in a position that we must explain while there is not the opportunity for us to explain, I cannot provide you with a clear report on the treasury, oil and other issues, and we must grit our teeth and with a smiling face to run the country.” (Darayan, 30 August 2019)
Giving false and misleading statistics, instead of presenting a true record, has become a common factional and political issue in the rule of the mullahs. These statistics pursue two goals at the same time – to soothe the discontent of the people on the high rates of unemployment and high costs, and the growing problems of life, on the other hand, to keep the rival factions silent.
Giving confusing statistics, the task of Rouhani’s ministers
The Minister of Industry, Mine and Trade announced the growth of cement, ceramic and tile production by 31% in the country. (Jahan Sanat, 11 February 2020)
The same newspaper challenges the statistics of this Minister, and said, “how it is possible that construction activities in the country dramatically decreased, but the production of building materials is growing, a question that was not answered by the Minister concerned.”
Another example relates to statistics provided by Iran’s Minister of Economy, Farhad Dejpasand, who said: “The agricultural sector is at the peak of economic growth, and the industrial sector also shows about 7.5 percent growth in the nine months of 2019 and other signs show positive economic growth in the non-oil sector.” (Ba-Eghtesad, 10 February 2020)
At the same time, in its latest report on Iran’s economic growth rate (first nine months of 2019), the Statistical Center reveal his intentions of the Minister of Economy and provided new statistics showing that Iran’s economic growth rate during this period, with counting the oil income 7.6 percent and without oil it has been declared zero. In fact, the economy has shrunk by almost eight percent due to the regime’s inability to sell oil and investing in this sector.
“The statistics center reported GDP, with the counting of the oil income in the first nine months of 2019, at around 500 trillion tomans, this number was 541 trillion tomans in 2018, which shows the shrinking of the Iranian economy.” (Etemad, 10 February 2020)
With regard to the growth of the non-oil economy that Hassan Rouhani has referred to several times in the past few months and has called it a positive result of his government’s performance, one should only refer to statistics from the Ministry of Economy showing that, for example, car production for the second year has declined dramatically, and car production has fallen by about one-third in the first nine months of 2019 compared to 2018 and by nearly half compared to the same period in 2017.
In another example, the central bank in its latest report on the amount of non-oil exports, by appropriating the sale of gas condensates has estimated that the country’s non-oil exports amounted to $31.9 billion, but despite such confusing statistics, non-oil exports declined by 5.3 percent compared to the same period in 2018.
The budget deficit and the decline in Iran’s foreign exchange reserves from the IMF’s perspective
“According to the latest report by the Central Bank in the first nine months of 2018, budget revenues for the same nine-month period were only 61 percent, suggesting a sharp deficit of up to $ 37 billion.
“According to the International Monetary Fund, Iran’s total exports will decline to $ 55.5 billion in 2020, at half the volume of exports in 2018, and Iran will face a negative trade balance for the first time.
“The latest report by the Central Bank does not say about the number of foreign exchange reserves, but Iran’s currency reserves have fallen sharply due to international sanctions and will fall from $ 117 billion in 2018 to $ 73 billion in the spring of 2020.” (Deutsche Welle, 13 February 2020)
However, these figures are also very optimistic because the forecast is true if the economic data for the next few years is almost constant, but with the pressure of sanctions and corruption on government bodies, the economic situation is deteriorating not year-on-year, but day by day.
That is, the government’s budget deficit alone in 2020 will be $37 billion. Much of this deficit, which belongs to the salaries of employees, workers, and retirees, leaves no room for the Rouhani government to make up for it either by removing it from foreign exchange reserves or by taxing more people and not government holdings.
Although it is important to note that the amount of foreign exchange reserves in a country is confidential and will be not made public, but given the harsh conditions the regime faces, it can be assumed that the foreign exchange reserves are much lower than those provided by the IFI.
Achieving a new record in losing Iran’s share in the world economy
Iran’s economy has been severely affected by the war, ineffective governance, corruption, non-transparent economy and sanctions since the beginning of the revolution.
Iranian officials have always spoken of the post-revolution economic boom and growth of the country’s economy, which at first glance does not look bad, but in comparison with the average growth of the world economy, it is very low.
For example, according to IMF statistics, Iran’s GDP will be $463 billion this year, more than five times the size that it was at the time of Iran’s revolution in 1979, but the average economic growth in the world at that time was much higher than Iran’s. While Iran’s share of the world economy was about two percent in 1980, it will fall below one percent in 2020.
It is not only in terms of losing the global economic share that the regime has managed to set new records on Iran’s economic collapse and set a negative record; Transparency International’s 2019 CORRUPTION PERCEPTIONS INDEX report ranked Iran in 146th position in terms of government corruption from 180 countries.