The damning assessment of Iran’s financial state also said macroeconomic performance had worsened markedly following the subsidy reform in late 2010 and the intensification of sanctions in 2012.
The IMF said in a press release: “Looking ahead, the near-term outlook remains highly uncertain. Facing continued constrained prospects for oil revenues and international financial transactions, the economy is envisaged to remain stagnant in 2013/14, with real GDP estimated to decline by 1¾ percent.
“With about 10 percentage points of GDP decline in total revenues since 2010/11, the authorities cut spending and the overall budget balance shifted from a surplus of 3 percent of GDP in 2010/11 to an estimated deficit of 1 percent of GDP in 2013/14.
“The deficit of the Targeted Subsidy Organization remained high, bringing the expanded overall deficit to about 2¼ percent of GDP in 2013/14.
Throughout these shocks, monetary conditions were relatively accommodative, as domestic interest rates became increasingly negative in real terms. The financial system was also adversely affected, particularly banks’ asset quality and profitability.
“The current outlook remains highly uncertain and subject to downside risks. In the meantime, the authorities are taking steps to make the regulatory framework for foreign investment in the oil sector more attractive, while upside risks emanate from the interim agreement with the P5+1.”
The IMF’s statement on Iran was made under Article IV of the IMF’s Articles of Agreement, in which the IMF holds annual bilateral discussions with members, and a staff
team visits the country to collect economic and financial information, and discuss the country’s economic developments and policies with officials.