The International Monetary Fund said on Monday that Iran’s economy is in great danger because of the uncertainly with regards to the sanctions it is now subject to. Its unstable relations with the United States also pose a risk to the economy.
The sanctions referred to are the sanctions imposed by President Donald Trump at the beginning of February. Twenty-five individuals and entities with links to the Islamic Revolutionary Guards Corps (IRGC) and the country’s ballistic missile program were sanctioned.
President Trump dealt these sanctions out after Iran test-fired a ballistic missile saying that it was a blatant breach of a UN Security Council resolution that prohibits Iran from using any missiles that are capable of carrying a nuclear device.
The Trump administration also warned Iran that the previous administration in Washington had been too lenient and “too tolerant” with regards to Iran’s aggressive behaviour. It also criticised the leniency of the Iran nuclear deal that was signed in 2015
The National Security Advisor at that time, Michael Flynn, said that the administration is not going to tolerate any more of “Iran’s provocations that threaten our interests”. He said: “The days of turning a blind eye to Iran’s hostile and belligerent actions toward the United States and the world community are over.”
The Article IV review – the International Monetary Fund’s annual report – said that the recent wave of uncertainty following the imposition of sanctions is “dampening sentiment”. The report said that expert analysis predicted a 6.6 percent growth in the years 2016 to 2017 due to higher oil production, and then going to 3.3 percent the following year. But now that there is increased uncertainly because of the nuclear agreement, the sanctions imposed by the United States and turbulent Iran-US relations, and it is likely that investment and trade could be deterred which will result in a very unstable economy that is at high risk of falling into recession. The report said that re-imposing sanctions “would lower direct investment and capital inflows, and disconnect Iran from the global financial system.”