According to state TV on January 4, the Iranian regime’s parliament allowed Ebrahim Raisi’s government to “Sell government bonds worth 200 trillion tomans, to fortify the water and electricity sectors.”
Fifty trillion rials of this sum will be allocated to electricity, and 150 trillion rials will be transferred to the Ministry of Energy and Tavanir company. Thus, government-affiliated contractors receive bonds instead of their long-overdue payments. Based on the current dollar exchange rate, Raisi’s administration will sell roughly $500 million worth of government bonds.
A government bond is a form of bond issued by the administration to support public spending. It includes a commitment to pay periodic interest, aka coupon payments, and to repay value on the maturity rate. This could help a nation with a solid economy to overcome a budgetary crisis temporarily. But this is not the case in Iran under the clerical regime, with its economy in shatters.
Issuing government bonds in a country like Iran with an unstable economy results in default. Since Tehran lacks enough foreign currency and the national currency is highly devalued, the government must borrow funds from the central bank. This means more banknote printing, which would further plunge the rial’s value. It will also increase the country’s liquidity, and due to the exceptionally low production rate, inflation will skyrocket more.
Raisi has claimed many times that his government, unlike his predecessor Hassan Rouhani, would not allow banknote printing. But the economic indicators tell differently. The rapid devaluation of the rial alone calls out Raisi’s bogus claims.
On May 8, 2022, Abdolnasser Hemmati, the former chief of Iran’s Central Bank, aka “king of banknote printing,” said: “Raisi’s government has broken the record of printing bank notes. According to the Central Bank’s statistical report of 2021, Raisi’s government printed 1.4 quadrillion rials, earning them the title of ‘supreme sultan’ of banknote printing.”
On December 20, Hemmati admitted amid the regime’s infighting that Raisi’s administration has printed 1.2 quadrillion rials of banknotes, three times more than his predecessor in 2020.
Bereft of any real economic solution to Iran’s economic crunch, the regime’s supreme leader Ali Khamenei and his madcap sidekick Raisi repeatedly blame all problems on Rouhani and the rival faction.
“Rouhani handed a severely wounded economy to Raisi, with roughly five quadrillion rials of the budget deficit. Raisi’s government now has to pay at least 130 trillion rials per month to cover this deficit. This is in addition to the national currency’s devaluation, soaring prices, skyrocketing inflation while sanctions doubled,” Keyhan Daily, Khamenei’s mouthpiece, wrote in this regard on January 6, 2023.
Undoubtedly, as top executive officials of a corrupted regime, Rouhani and all other regime presidents have destroyed the country’s economy. But Raisi has achieved such massive destruction in a year that no one could have done it in a lifetime. According to his Ministry of Labor, “The poverty line has increased by 50% in a year, surpassing 147 million rials for a family of four.” (Etemad daily, January 2).
Meanwhile, in September, the state-run Khabaronline website reported that “The relative poverty line has surpassed 185 million rials.
“Nearly 66 million Iranians live under the poverty line,” the state-run Hamdeli daily reported in December.
The current exchange rate perfectly portrays a financial calamity and the plight of a nation deprived of its wealth, as the latter is squandered by the mullahs. A dollar is equivalent to 400,000 rials. In other words, the value of Iran’s national currency plunged by 60% in a year and a half.
Khamenei and Raisi can only pull the wool over their eyes by trying to blame other administrators. After all, those so-called presidents were appointed by Khamenei.
Economic crisis is the result of corruption & lutting ppl’s assets by the #Iran ian regime that answers ppl with further suppression
— Maryam Rajavi (@Maryam_Rajavi) August 29, 2015
The current economic crisis will certainly backfire as Iran’s restive society has been rattled by protests. The crisis-riddled regime is sailing too close to the wind. Khamenei opted to consolidate power in his regime by appointing Raisi as president and hand-picking the parliament. But the revolution in the making and the stubborn economic facts on the ground foretell his failure. A social and economic explosion is on the horizon. The question is, when would it happen?