![\"Iran](\"https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2019\/12\/Iran_Regimes_New_Budget_Will_Exacerbate_Inflation___.jpg\" "\\"Iran's")
\nIn his proposed budget for the upcoming Iranian calendar year, the Iranian regime\u2019s president, Hassan Rouhani, has used the exchange rate of 42,000 rials per U.S. dollar for calculating the income from imports of essential products and medicines. According to the government\u2019s spokesperson, around $10 billion of presumed oil revenue is allocated to these imports.<\/p>\n
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This is while the regime\u2019s oil revenue will continue to decline due to the United States sanctions on the regime\u2019s oil industry.<\/p>\n
In addition, given the likely decline in tax revenues due to the economic recession and the supposed 15% increase in public employees’ salaries, the budget deficit is likely to be very large and perhaps unprecedented during the next year.<\/p>\n
The government, therefore, is in dire need of oil revenues. The regime\u2019s economists have repeatedly emphasized the ineffectiveness of government currency policy in controlling the inflation<\/a>\u00a0rate of essential products and medicines. Given these two points, the government’s decision to use the exchange rate of 42,000 rials per dollar and allocating its nearly total oil revenue to this policy raises this question that how the regime could easily make such a dangerous decision?<\/p>\n Angry Over Inflation, High Prices, People Protest Against #Rouhani<\/a> in #Yazd<\/a>, Infighting Within the Ruling Clique Escalates https:\/\/t.co\/RElWFhvM2o<\/a>#IranProtests<\/a> #FreeIran<\/a><\/p>\n \u2014 NCRI-FAC (@iran_policy) November 11, 2019<\/a><\/p><\/blockquote>\n The Iranian regime has decided to use the exchange rate of 42000 rials per dollar as the basis of the country\u2019s import and export. Meanwhile, the exchange rate at the free market is around 140,000 rials per U.S. dollar. So, given its difficulties in selling oil, the regime will face a serious shortage in its budget, and it must either use the Central Bank\u2019s resources or print banknotes to fill this economic gap. This economic policy will ultimately result in a much higher inflation rate.<\/p>\n To understand this issue better, it is necessary to examine the foreign exchange and rial-dollar relationship between the government\/Central Bank and the importers of essential products next year. If the government transfers dollars from the sale of oil to the Central Bank at the free market rate and the Central Bank transfers money to the importers at the government rate of 42000 rials, the answer is clear. The implication of this plan would result in both the importer acquiring the 42000 rial exchange rate and the government selling its currency at the free market rate.\u00a0 In other words, given the high inflation rate, it\u2019s the Iranian people who must pay for this economic policy.<\/p>\n U.S. Sanctions #Iran<\/a> Regime\u2019s Central Bank https:\/\/t.co\/sfdR7vnrdK<\/a>#IranDeal<\/a> #FreeIran<\/a>#NoImpunity4Mullahs<\/a><\/p>\n \u2014 NCRI-FAC (@iran_policy) September 20, 2019<\/a>\u00a0<\/p><\/blockquote>\n\n
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