Iranian regime’s attempts to prop up economy

Iranian regime’s attempts to prop up economy

It was clear from the moment the Iranian regime’s 2020 to 2021 budget was presented that objectives would not be reached. It was obvious that it was not going to achieve target sales for oil exports. And it was also obvious that the high rate of unemployment and the widespread poverty was going to make it impossible to achieve projected tax revenues. A budget deficit was inevitable.

Only two months into the new budget year, the government is already calling on branch heads to issue financial securities. Debt bonds of 150 trillion tomans have been authorized already.

The FARS news agency recently explained that the government can compensate for the budget deficit by issuing financial papers. It said that the “bonds are to be offered in a variety of debt markets, both in the interbank market and in the debt market in the capital market”.

Jahan-e Sanat, a state-run publication, also reported on the budget deficit, saying that the government is not going to have any other option other than resorting to the withdrawal of banking resources. It wrote: “If the government wants to issue financial securities as well because the main and important buyers of these securities are the banking system and the Central Bank, we will still face injecting money into the economy and the subsequent inflationary consequences.”

Other publications have been saying that the government’s current action is not going to be sustainable in the long-run and that it is a risky course of action.

The Rouhani government, by resorting to financial securities or the issuance of bonds, is making a move that is simply concealing the budget deficit. It is going to have a major impact on the economy and once again it is going to be the people that are the most impacted.

The Iranian economy is in tatters. Administration after administration has made grave errors as temporary fixes to the economic difficulties. The Rouhani government alone has made countless mistakes including borrowing from bank resources and the printing of unsecured banknotes.

The government is no doubt resorting to the issuance of financial securities because it needs to finance current expenditures but we can look back on previous instances that show it is a bad move. There is a high probability that the government is going to have to call on banks and government institutions to auction the bonds, resulting in further destabilization of the economy.

As mentioned before, it is the people of Iran that are going to suffer the most. There are more people than ever living in poverty in Iran and the absolute poverty category has expanded over the past few decades. Unemployment is high and is getting even higher because of the Coronavirus health crisis. Economic worries have been present for years and the regime has proven itself to be completely incapable of improving the situation.

This economic mismanagement gives the people more ammunition in their fight for regime change. They know that nothing will change in their favor until the regime falls.   

The People’s Mojahedin Organization of Iran (PMOI / MEK Iran) have stressed repeatedly that the regime is using coronavirus as a tool to keep its shaky grasp on power that little bit longer. They said as the Iranian people know, that the only solution for coronavirus, poverty, oppression, tyranny, and all of the issues faced by the Iranian people is regime overthrow.