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Iran: Rising Inflation Rate, Regime’s Deception, and a Restive Society

The Iranian regime’s wrong economic policies and institutionalized corruption has resulted in rising inflation rate and high prices. Yet, regime officials, particularly regime’s President Hassan Rouhani and his government, try to cover up this reality and deceive people.  

Akbar Turkan, former advisor of Rouhani, in an interview with the state-run Arman daily on August 3 identified “widespread high prices” as the most important economic challenge for poor people. He also called out the country’s budget deficit and government’s subsequent borrowing in different forms to cover this budget deficit. This is while government is the main monetary policy maker of a country 

In this regard, the state-run Jahan-e Sanat daily in an article published in August 1, entitled as “Who to blame for rising inflation rate?” wrote: The government’s non-compliance with monetary policy has made it impossible for the economy to get out of the damaged cycle of creating liquidity and inflation. But since only one aspect of the devaluation of the national currency goes back to the policies of the central bank, if the policymaker is short of money and does not increase his oversight of the money creation process in the banks, it becomes a factor in increasing liquidity and inflation.”  

In another article on August 2, Jahan-e Sanat wrote: The central bank speaks of an ongoing rising trend of liquidity and confirms the strong long-term correlation between money growth and inflation. Liquidity has risen and paved the way for rising inflation. The severe budget deficit, disruption of non-oil export trends and currency fluctuations after that have kept the money creation engine running, and inflation expectations have undergone fundamental changes. We are witnessing the daily creation of 2,000 billion tomans of liquidity. We are facing an increase in money circulation between different economic markets that are changing inflation expectations in their favor. 

Recently Abdolnaser Hemati, the Iranian regime’s Central Bank President, acknowledged that rising prices of goods and the inflation rate is due to the regime’s wrong economic policies. “Purchasing part of the currency’s resources of the National Development Fund to cover the budget deficit by the Central Bank (as mandated in this year’s budget) in the case of sanctions is to cover the budget deficit from the monetary base. In the short term, this would be like borrowing from the Central Bank, he wrote in his personal Instagram account.  

With the devaluation of the national currency as the main indicator of the country’s economic bankruptcy, we are subsequently witnessing an unbridled rise in the prices of basic goods and sending more people below the poverty line. The International Monetary Fund (IMF) previously said that inflation in Iran is the highest in the world after Venezuela and Sudan.  in addition, the IMF had predicted that Iran’s economy is expected to shrink by 9.5% this year 

The state-run Arman daily, while referring to the severe impact of the Iranian regime’s wrong economic policies on people’s lives such as removal of people’s basic and essential goods wrote: In addition to the high price of domestic rice, now imported rice has joined the ranks of expensive goods simultaneous with the national currency devaluation. It can be predicted that rice will be removed from the table of many families and lower classes of society by becoming 85% more expensive. The increase in the price and inflation of foreign rice occurs while it was one of the basic commodities that was on the list of people when one dollar was sold at the exchange rate of 4200 Tomans.”  

Iran regime’s deception in face of economic crisis 

Instead of acting and helping the Iranian people that are grappling with poverty, the regime has increased it deception. For instance, Iran’s Statistics Center which is under Rouhani’s control announced the inflation rate at 26%. Now which one should people believe: their empty tables or these fabricated statistics?  Rouhani had previously claimed: “Controlling prices and providing essential items for people’s lives is the main priority of the government’s economic programs, and fortunately the people have witnessed that we have had the least difficulty in providing the items they need. 

He bogusly claimed this while reports from Iran indicate how people are forced to live in graves or on rooftops. If the economy cycle is in such a good situation that Rouhani claims, then why did Rouhani and the regime’s Supreme Leader Ali Khamenei force people back to work amid the COVID-19 outbreak?  

Meanwhile, Professor Steve Hanke of Johns Hopkins University in the United States said the Iranian regime’s official 26 percent inflation rate is a lie and Iran’s accurate inflation rate stands at 98 percent. 

 In this regard, Isa Jafari, the regime’s Member of Parliament, terrified of the social outcome for the regime, on June 23 said: “Mr. President, are you aware of the unbridled prices of goods? Can you live with 1.2 million tomans? Mr. President, how much has your government fought corruption? Do you know that some of your officials have been reluctant to pay rent for corporate homes for several years? When will these people understand the unbridled cost of housing?”  

Sanctions or the regime: which one to blame for economic hardship 

Jafari’s remarks, the contradiction between Rouhani’s bogus claims and forcing people back to work, and the regime’s wrong economic policies, which are even highlighted in the state media, reject the regime’s campaign of blaming international sanctions as the real source of Iran’s economic problem.  

In addition, while the Iranian people are grappling with poverty, financial institutions under Khamenei’s supervision have been profiting from the situation. In 2019, while many governmental and non-governmental organizations were involved in production and went bankrupt, Bonyad Mostazafan, which is directly controlled by Khamenei, had an astronomical income.  

Parviz Fattah, head of this foundation, told the state-run ILNA news agency on July 27: “In the past year, we had a 34% growth compared to 2018, and the total income of the foundation reached 36,000 billion tomans.”   

In addition, the regime, through these institutions, has never stopped funding terrorism. In a TV interview (Ofogh -Horizon- Network) in early April 2020 Fattah confessed to paying Revolutionary Guards (IRGC) mercenaries in Syria, saying: “I was at the IRGC Cooperative Foundation. Haj Qassem [IRGC-QF commander Qassem Soleimani] came and told me he did not have money to pay the salaries of the Fatemiyoun. He said that these are our Afghan brothers, and he asked for help from people like us. 

 The outcome   

The regime’s wrong economic policies along with its oppression and now the coronavirus crisis have increased the Iranian society’s restiveness.  In this regard, the state-run Ebtekar daily in July 31 wrote: The current situation cannot be continued. We have been through the warning point for a long time. If the starving people’s movement is fully established, there will be nothing left. This society has reached its boiling point many times, but it has stalled for whatever reason. November [nationwide Iran protests] was just the partial rising of the starving people. If there is no positive and serious change in the current situation, sooner or later, a fire will ignite; a fire which will burn everything.