Despite the skyrocketing prices, high unemployment, and the constant shrinking of the people’s food baskets in Iran, the authorities persistently claim that the country’s economy is in good condition. They lay all the blame for the country’s financial dilemmas on the U.S. sanctions. In reality, none of these claims are accurate!
A glance at the country’s current situation shows that the economic crises have originated from the mismanagement and systematic corruption by the Iranian regime. Printing unsupported banknotes have become a routine in the regime’s day-to-day activities to fund their malign activities and ensure their survival.
Printing Banknotes, the Government’s Futile Attempt to Offset Its Debts to the Central Bank
For decades, various governments under the control of the regime’s founder Ruhollah Khomeini, and the current Supreme Leader Ali Khamenei, have resorted to printing banknotes as a short-term solution, revealing the extent of their financial incompetence.
This ‘solution’ has caused skyrocketing inflation, disbalancing within the demand and supply, disruption in the country’s exports and imports, financial turmoil, and in a nutshell, misery, and poverty for millions of Iranian families.
It is common knowledge that the lack of production and industrial infrastructure will cause more inflation, directly increasing the government’s regular expenses. The lack of productive facilities also raises the liquidity and the country’s negative economic growth.
In this situation, a government should increase its employees’ salaries to compensate for the high inflation and aid them in retaining their purchase power. However, the mullahs’ irrational expenditures on provocative projects, such as malign and destructive influence in regional states’ affairs, nuclear weapon-making projects, advancing ballistic missiles’ range, and waging terror plots and propaganda campaigns, have resulted in a massive budget deficit.
For years, economists have tried to convince the public that the banknote printing and the subsequent inflation by the Central Bank of Iran (CBI) are equivalent to looting people’s pockets. On the other hand, previous and current officials have insisted that this is merely a measure to publicly decrease deficits, despite all warnings and failed experiences.
Raisi Lies to Ease Public Pressure
Aside from his previous corrupt cases in regards to Astan-e Quds Razavi, and his crimes against humanity, such as murdering thousands of political prisoners in 1988, President Ebrahim Raisi is infamous today for his false promises. ‘Avoiding borrowing from the CBI or forcing it to print banknotes to compensate for the budget deficit’ was among Raisi’s bold slogans during his presidential campaign in 2020.
In early May, Raisi’s government implemented its latest economic plan with a sudden increase in the price of bread, prompting public concerns and criticism. At the same time, authorities rationed wheat for bogus reasons, such as countering smuggling.
Raisi’s agricultural minister also reckoned that the bread price hike was due to Russia’s invasion of Ukraine, which the regime heavily supports. In response, citizens challenged the minister and the entire ruling system, stating, “In the war-torn country of Ukraine, the bread has yet to ration, but [our] officials have imposed a bread quota due to the war in Ukraine.”
In his latest interview, former CBI governor Abdolnasser Hemmati blamed Raisi for the unbridled printing of unsupported banknotes. He said, “Raisi’s cabinet registered a new record in printing banknotes in the country during less than a year.”
Notably, Raisi inherited this title from Hemmati, who was infamous for printing unsupported banknotes during Raisi’s predecessor Hassan Rouhani’s presidency. At a conference on February 2, 2021, Hemmati said, “Regarding the country’s financial situation and the importance of printing banknotes, we had no choice but to print banknotes to pay subsidies for 60 million citizens.”
What Would Be Happen?
Currently, many officials are feeling the dangerous fate of the Raisi cabinet’s mismanagement and financial failures. The government’s debts to the CBI are the most crucial among the various components of the monetary base. These debts are now increasing slowly, but are set to sharply soar between July and August.
The question is how does the government afford its expenses while its borrowing rate from the CBI has come down? A review of the changes in national banks’ debts to the CBI and the government’s debts to the banking system has unveiled how the Raisi cabinet is offsetting its budget deficit.
The government, indeed, has headed toward other banks to compensate for its expenditures. The CBI has left a way open for banks to leave the national banking system. Simply put, the government borrows from the CBI but through other banks.
Former MP Gholamali Jafarzadeh Imanabadi has provided a relatively realistic view of this economic chaos. He said, “The government’s economic team is confused. Raisi is disappointed with his cabinet. Ministers claim that inflation has decreased by 13 percent while the prices increase daily. Seniors, how much did you purchase in comparison to last week? Why do you lie to people? None of Raisi’s promises has been met. Regarding the construction of one million residential units, they say the construction cost is too high, and we have no land.”
He added, “Raisi should decide and make fundamental changes in the Budget and Planning Organization, the Economic Affairs Ministry, and the Labor and Social Welfare Ministry. The condition is so destructed that the people can no longer buy bread.”
Nevertheless, the people of Iran seemingly do not care about such warnings, which are no longer fit for purpose. Iranians have grasped that the theocratic regime is on the brink of collapse so they have had to preserve their power through the naked and brutal suppression of Iran’s citizens.
On the other hand, citizens across the country, from different walks of life, have nothing to lose. The constant and growing protests are proving this reality, that the people no longer desire such a ruling system, and the state can no longer rule.