News : Economy
- Published: Wednesday, 19 September 2018
By INU Staff
INU - Since the announcement by U.S. President that the United States was exiting the 2015 Iran nuclear deal the Iranian economy descended further into chaos.
The value of the national currency – the Rial – dropped massively and life became much more expensive for the already poor people of Iran. Some of the sectors that are most impacted in Iran are the automobile, finance and healthcare ones.
The Europeans have established entreaties and requested exemptions and waivers from the United States for European companies doing business with Iran. Whether or not these exemptions and waivers would have been granted, not many companies were hanging around to find out.
The Iranian regime reformed its subsidies. This includes bread, water, electricity and fuel. There had been a small change in the economic activities of the country. In 2007/2008, the indirect subsidies totalled an equivalent of over a quarter of the country’s GDP. The indirect subsidies were then replaced by cash transfers to families in Iran.
The second phase of the subsidy reform began over four years ago. Fuel prices were gradually adjusted and increased targeting of cash was being directed to households with low incomes. This resulted in approximately three million households being removed from the subsidy list.
A consequence of the cash transfer program was that poverty in the country fell from 13.1 per cent to 8.1 per cent between 2009 and 2013. Bread and energy subsidies were cut and the lower-income families started to spend more. Yet, in 2014, poverty rose as social services declined.
Higher oil exports resulted in external and budget balances improving in 2016. The removal of sanctions on oil also helped.
When the new administration was put in place after the recent so called elections, its biggest challenge was to realise the reforms that were outlined. Non-oil sectors need to grow and the efficiency of labour markets were key to this.
However, since the beginning of the summer, the Iranian economy has been collapsing. The clerical regime is directly responsible for this. The officials can speak hypocritically about the economy’s future with great positivity as much as it pleases, however it does not mean that many believe it.
The standard of living in Iran is decreasing noticeably.
The drastic drop in the value of the Rial is something that is worrying the people of Iran. Many Iranians have lost a lot of money and millions of people across the country have been taking to the streets to protest the situation that has been caused by corruption.
Corruption is found at all levels of the leadership in Iran and the people do not want to witness or experience the effect of it any longer. Or live with the consequences.
They know, and it is very clear to see, that the Iranian regime is completely incapable of reform. It is facing more and more pressure from the international community – especially the United States and several Arab states, and it is unable to make any meaningful improvement.
Regime change is the desire of the Iranian people.