Friday 18th Jan 2019 

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Iran Regime on the Verge of Economic Collapse

Demonstrations in the Tehran bazaar by merchants and shopkeepers over rising inflation in the country in June 2018

By Mahmoud Hakamian

The acceleration of Iran regime’s economic collapse is a grave concern. Economists look toward the economic situation of Venezuela and compare the inflation rate and the conversion rate of USD to Venezuela currency with the inflation rate and conversion rate of Iranian rials to USD. The Iranian people wonder, “Will Iran become the next Venezuela?”

Like Iran, most of Venezuela’s income is from the oil industry. In 2015, the inflation rate was at 57%, but in 2014, it jumped to 181%. Oil revenues fell by 12.7% in 2016, and the inflation rose to 254%. This trend continued through 2017, and the inflation rate reached 741%.

The once prosperous country faced economic disaster. Venezuelans reduced their meals, and were forced to eat garbage from dumpsters.

Rouhani blames U.S. sanctions, instead of regime’s mismanagement, for the country’s troubles. And Khamenei, referring to the shortage of baby diapers, blamed it on "the enemy" (U.S.) who "wants the Iranian people to be angry with their own government.” Just as President Rouhani and Supreme Leader Khamenei say today, Maduro’s government blamed the situation on an “economic war” led by the country's political adversaries with the help of the United States.

Professor Steve Hanke, an American economist and a professor at Johns Hopkins University, states that Venezuela’s annual inflation rate on September 4th, 2018 was 55,049% — 304 times that of 2015. According to Professor Hanke's further analysis, Iran’s inflation rate in April 2018 was 52.7%, but five months later, on September 4th, 2018, the inflation rate reached 268%. Therefore, it took two years for Venezuela’s inflation rate to increase to the extent that Iran did in only five months.

In September 2018 the exchange rate was 38,900 rial per USD. On September 4th, 2018, it reached 140,000 rial, which is an increase of 260% in a year. It doesn’t seem to be coincidental that this figure nearly matches the 268% inflation calculated by Professor Hanke.

Iran regime’s President Rouhani presented a $47 billion state budget in December 2018. It displayed an 85% decrease compared to the budget of 2017. Officials say that the budget calculations were based on a forecast oil crude price of $50-$54 per barrel and exports of 1 to 1.5 million barrels per day.

A few months before sanctions began, Iran's oil exports dropped sharply. Experts believe that the IRI regime sold only 1 million barrels per day in August 2018, compared to 2.3 million barrels of oil a day in June 2018.

Like Venezuela’s inflation rate, Iran’s has become “exponential", and the country’s economy is on the verge of collapse.

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