The Underlying Cause of Iran’s Economic Crisis

(NCRI) and (PMOI / MEK Iran): The Iranian regime is behind all of the economic troubles, yet it cannot admit to it.

The National Council of Resistance of Iran (NCRI), and the People’s Mujahedin of Iran (PMOI / MEK Iran), reported that Iran is in the midst of the worst economic crisis in its history. While many in the west try to minimise these issues or blame them on sanctions, state-run media acknowledges some parts of them. They emphasise that the government is responsible for the current situation.

“While productive sectors of the economy are being closed due to lack of liquidity, liquidity in non-productive sectors has increased dramatically in recent years. Therefore, inflation has made life bitter for the Iranian people.

In other words, the lack of liquidity in the productive sector of the economy and, on the other hand, the entry of huge amounts of money into speculative and destructive activities leads to a cycle of destruction and weakening of the Iranian economy,” on June 13, the state-run Frahikhtegan daily acknowledged the circumstance.

Iranian regime
(PMOI / MEK Iran) and (NCRI): Iranian regime’s slow, steady and continual destruction of its economy.

The recent report of Iran’s Central Bank, according to Farhikhtegan’s article, reveals that “the Amount of liquidity by the end of February 2021 has reached 3.4 quadrillion, which is 40% more than the liquidity of 2.4 quadrillion Tomans in February 2020. The 40% growth of liquidity in 2021 was the most unprecedented in the last five decades.”

Iran’s growing liquidity is primarily due to the regime’s banknote production to cover its budget deficit. The government of Hassan Rouhani borrowed money directly from the central bank and sold the government’s foreign exchange revenues to the central bank. Because the Central Bank lacked the means to cover the government’s expenses, it began manufacturing banknotes. However, in today’s economy, commercial banks manufacture banknotes, and the central bank has a limited role in directly creating liquidity in society.

(PMOI / MEK Iran) and (NCRI): the inflation rate in 1399 was higher than the International Monetary Fund’s (IMF) latest forecast for Iran’s previous year’s inflation rate.

According to Farhikhtegan newspaper, “In our economy, even in years when the growth of the monetary base was low and reasonable, liquidity has increased.

The monetary statistics in 2014, in which the growth of the monetary base was 10%, but the growth of liquidity was 31% confirms this fact. Therefore, in the absence of budget deficits or sanctions, what has led to chronic inflation is the banking system.”

As a result, Iranians face rising inflation and skyrocketing prices while earning low salaries.

Commodity Prices Rise
(NCRI) and (PMOI / MEK Iran): Commodity Prices Rise: the goods have risen in price by over 100 per cent in Iran in the last 12 months.

“Most Iranian households are currently in absolute poverty. Absolute poverty is a severe form of poverty in which individuals are unable to meet the basic needs of themselves and their families, including food, water, health, education, and housing,” on June 13, the state-run Vatan-e Emrooz published an article.

In Iran, societal crises are escalating as a result of extreme poverty, such as the rising number of labour children.

“Poverty is the single most important factor contributing to the rise in the number of labour children, particularly children working on the streets. We will undoubtedly see more labour children on the streets as a result of our current economic position and the lack of a vision to solve these issues that can alleviate concerns,” noted the state-run Hamdeli daily on June 13.

economic troubles
(NCRI) and (PMOI / MEK Iran): The people have suffered from huge levels of inflation, the rising cost of goods, and so on, and more and more people are falling into absolute poverty.

Iran’s social and economic crises and the regime’s role in creating and amplifying them have turned Iranian society into a powder keg. Two major Iran protests in 2018 and 2019 that rattled the regime’s foundation started due to the economic crises.

“The last popular protest started due to the fuel price-hike. But officials seem to have forgotten this. The truth is that the consequences of social issues are very much worrying. Yet, officials have not understood the importance of this matter,” Hamdeli daily cautioned regime officials.

Uprisings to Come in Iran
(PMOI / MEK Iran) and (NCRI): Reuters, “that order, confirmed by three sources close to the supreme leader’s inner circle and a fourth official, set in motion the bloodiest crackdown on protesters since the Islamic Revolution in 1979.”

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