TehranIran’s economy is facing a very complex phase, with internal challenges intertwined with external pressures, creating a difficult economic reality for the new government.
The government’s economic team, led by the Minister of Economy, is carrying out its duties in an economy burdened by the ongoing international sanctions, which have restricted foreign trade and led to the deterioration of the value of the local currency, leading to repeated protests against the economic crisis in recent years, as well as workers’ strikes in various fields.
This is in addition to Iran’s high inflation rates, rising unemployment, and declining investments, which increases the challenges that the government must urgently address.
balanced policies
In this difficult economic environment, the new economic team is required to come up with radical and innovative solutions to boost economic growth and achieve financial stability, and their priorities remain clear: combating inflation, restructuring the banking system, and stimulating productive sectors.
However, the task is not limited to addressing immediate crises only, but also requires developing long-term strategies to achieve sustainable development and ensure improved living standards for citizens.
In this context, the Minister of Economy and his team will need to adopt balanced policies that take into account the economic and social dimensions, and work to protect the Iranian economy from increasing external and internal challenges.
Economic Team
Contrary to popular belief, the government’s economic team is not limited to the Minister of Economy, the heads of Planning and Budget, and the Central Bank. Rather, more importantly, the government’s economic team includes ministers who hold positions responsible for production, directly or indirectly.
Therefore, the economic team includes the ministers of production, including the ministers of industry, minerals, trade, agriculture, and oil, who are directly responsible for the country’s production sectors.
In addition, the ministers are responsible for providing the country’s infrastructure, including roads and development, communications, energy, health and treatment, and higher education, and also prepare the country’s production ground, the importance of which is very vital for economic growth.
But in the current situation, perhaps the most important ministry to solve the economy’s pressing challenges is the Foreign Ministry, that is, Minister Abbas Araghchi and all his subordinate directors, including deputy ministers and Iran’s ambassadors to other countries.
Since the country’s economy is still heavily dependent on oil revenues and more than 7 years have passed since the tightening of sanctions, reducing or solving many economic problems in the short term depends entirely on lifting trade and financial sanctions, so the role of the Ministry of Foreign Affairs is very vital for the country’s economy in the current situation.
In light of this fact, the Minister of Economy, the President’s Economic Advisor, the Head of the Program and Budget and the Central Bank, who are responsible for the country’s fiscal and monetary policies, can provide a basis for solving some economic problems, such as inflation, unemployment, inequality and poverty.
weak hope
In this context, Professor of Economics Morteza Afqahi saw that the most prominent economic challenges facing the new government are inflation, which has remained at 30% or more for more than 7 years, the low rate of economic growth, and the reluctance to invest due to the continuation of sanctions and the existence of regional tensions.
He added in his interview with Al Jazeera Net that these crises are in addition to the instability of economic variables (such as the commodity price index and the currency rate), administrative and political instability, high unemployment, inequality, poverty, and other problems.
He pointed out that in light of the regional tension resulting from the Israeli war on Gaza and its consequences for Iran at its peak, the horizon for resolving the sanctions problem is not clear and will not be so until months after the US elections.
Afqa added that even with the complete lifting of sanctions and the reduction of regional tensions, at best and on condition that the government appoints executive directors in ministries, provinces and cities, the government can only prevent the deterioration of the economic situation.
With the government on the verge of drafting next year’s budget, if the economy minister and the new head of the Planning and Budget Organization, with the help of parliament, can cut unnecessary spending, they could control the budget deficit and inflation, he said.
On the other hand, Afaq says that if the Minister of Industry, Mines and Trade, with the help of other responsible institutions, can remove or reduce the number of obstacles facing businesses, the government can limit inflation and the decline in economic growth.
The most prominent challenges
For his part, economics professor Isaac Saeedian, in his interview with Al Jazeera Net, considered the following points as the most important challenges facing the Iranian economy:
- energy imbalanceOne of the biggest challenges facing the new Iranian government is the energy imbalance. Iran, which has rich oil and gas resources, is suffering from an energy crisis for various reasons, with a large portion of the country’s gasoline consumption being met through imports.
- Power outageMany industries and even household electricity subscribers experienced intermittent power outages in the summer, while the Iranian government pays large energy subsidies to its citizens.
- Bank imbalanceIn the past decade, the Iranian economy has faced a problem called banking imbalance, which has led to high inflation and money printing in Iran at times.
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Liquidity volume:The total liquidity in Iran is 8 trillion tomans, and due to the lack of economic growth and insufficient domestic GDP, this large part of this volume of liquidity is basically unsupported.
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International sanctionsIn the wake of international conflicts, the Iranian economy was subjected to global sanctions, which made Iran unable to compete well in global markets in terms of trade, export and import.
On the other hand, these sanctions have caused investors to show no desire to invest in Iran, and this trend has caused assets from the Iranian people to flow to other countries.
It is worth noting that the sanctions have caused major energy companies in the world to show no interest in investing in Iran’s oil and gas industries, due to fear of sanctions laws. It is certain that developing Iran’s oil and gas industries in the long term can greatly increase the efficiency of this industry in Iran.
Minister of Economy
In a related context, Professor of Economics Saeedian pointed out that the new Minister of Economy, Abdolnaser Hemmati, was previously the head of the Central Bank, and the value of the Iranian national currency declined significantly during his tenure.
Saeedian added that Hemmati, during his tenure as the head of the Central Bank, was unable to control the high inflation rate in the Iranian economic community, although the role of global sanctions during this period cannot be considered ineffective.
According to Hemmati, the focus of the Central Bank of Iran during the mentioned period was only to preserve the bank’s reserves.
In conclusion, the economics professor saw that at present, according to the current sanctions, Iran’s non-acceptance of the Financial Action Task Force (FATF) agreement, Iran’s arrival at a liquidity level that cannot be practically supported, and due to the imbalance of banks as well as the energy sector, it is not expected that he and the new government will succeed in improving people’s lives, and their implementation plans will be a sedative for the Iranian economy.
