In recent years, Iran’s economy has faced increasing challenges, a situation that has only worsened under the 13th administration.
From the outset, this government grappled with ineffective policies, resulting in significant economic disruptions, including price and currency shocks in 2022.
Now, with the death of President Ebrahim Raisi, economic experts warn that the incoming government will inherit a deeply troubled economy.
The economic issues, exacerbated by systemic corruption, are most acutely felt by the Iranian people. Pedram Soltani, an economic activist, highlighted several critical economic issues on X (formerly Twitter), urging presidential candidates to address:
- The involvement of military institutions in economic activities.
- Tax exemptions for religious and charitable foundations.
- Strategies to lift economic sanctions.
- Economic relations with the United States.
- Compliance with FATF (Financial Action Task Force) requirements.
- Allocation of large budgets to religious institutions and state media.
- Energy subsidies.
- Dependence on China and Russia.
- The multi-tiered currency system.
- The dominance of the elite over the economy.
According to the regime’s media, the next government will inherit an economy burdened by increased taxes, contrary to the 13th administration’s claims of easing the people’s financial burdens.
The Tax Affairs Organization frequently releases reports touting their success in combating tax exemptions and evasion. However, many experts argue that these tax increases only exacerbate the financial strain on citizens and contribute to inflation.
For instance, higher value-added taxes compel producers to raise their prices, triggering a general rise in costs.
An economic expert remarked that the 14th government’s tasks would be daunting. The incoming administration faces the intricate challenge of addressing macroeconomic discontent, implementing structural reforms, and curbing inflation.
In an interview with ILNA, Vahid Shaghaghi Shahri discussed the impending difficulties: “In recent years, inflation has surged, and since 2018, it has doubled the long-term average, reaching 40%. This marks the longest period of high inflation in Iran’s economy, with no clear end in sight.”
Massoud Daneshmand, the Secretary General of the House of Iranian Economy, echoed these sentiments in an interview with Tosee Irani newspaper.
He detailed the numerous challenges: production, export, import, distribution of essential goods, exchange rate issues, inflation, liquidity, and monetary base. Despite efforts to enhance economic diplomacy, particularly within the region, the matter of lifting sanctions remains unresolved.
Misguided currency policies by the central bank, coupled with skyrocketing interest rates, have depleted foreign exchange resources and stifled economic growth.
Daneshmand believes the 14th government will face significant difficulties. Addressing macroeconomic dissatisfaction, implementing structural reforms, and curbing inflation will be incredibly complex and demanding tasks.
He emphasized that controlling high inflation requires addressing budget deficits and improving macroeconomic stability.
Unfortunately, current policies overly rely on monetary measures, neglecting crucial financial reforms, making sustainable inflation control seem unattainable.
Daneshmand asserted that the 14th government requires substantial economic reform, starting with prioritizing production as the economy’s central focus.
For domestic supply and exports to thrive, the regime must standardize the currency exchange rate and streamline export and import regulations.
The challenges facing the new administration are vast and multifaceted, demanding innovative solutions.
However, experts are skeptical about the regime’s ability to enact meaningful reforms while it continues to squander national resources on regional conflicts, warmongering, and terrorism.
The outlook remains bleak, as the regime’s current trajectory offers little hope for the comprehensive economic overhaul necessary to address these deep-seated issues.
The path forward requires significant political will and strategic vision, both of which are in short supply within Iran’s current political landscape.
The incoming government faces an uphill battle in restoring economic stability and improving the lives of the Iranian people.
