Domestic Economy, World Economy

Perspective: Economy Held Hostage by Politics

Perspective: Economy Held Hostage by Politics
Perspective: Economy Held Hostage by Politics

The quality of arguments used in televised presidential debates has raised concerns among economic analysts over the future of Iran’s economy, decisions that will be made and the consequences of those decisions. 
What follows is a translation of a write-up by Masoud Nili, a well-known economist and a former senior aide to President Hassan Rouhani, for the Persian-daily Donya-e-Eqtesad.  
Presidential debates have now reduced to slamming the government for its handling of the economy, for holding fiscal auctions and making promises mostly involving handing out money to people, the unrealistic nature of which was apparent to even inexpert persons. 
When the treasury is under such financial pressure to even pay government workers’ monthly wages, hearing most candidates promise the moon reveals this bitter fact that either politicians have lost touch with the economic reality of the country or are unaware of public knowledge and perception, or else rely on people’s forgetfulness after the election time. 
The country’s budget imbalance is at 50% (most similar to how it was in the year ending March 1989, the worst fiscal year of the country); government expenditure, using constant prices, is at 20-year lows. 

The government managed to dodge a bullet of hyperinflation temporarily, and through the simplest way, by relying on treasury bonds to finance more than 50% of last year’s [March 2020-21] budget. But the relief won’t last long, as current year’s budget [deficit] and then the next year’s are just around the corner. 
Expenses will soon outgrow resources and increase the likelihood of future defaults unless the general condition of the country improves.
Oil exports per capita when compared with constant prices of the year ending March 1960 (the earliest available data) have never been as low as the year ending March 2021. 


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