Economy, Domestic Economy

Moving Towards Economic Development

Moving Towards Economic DevelopmentMoving Towards Economic Development

Ever since the Rouhani administration took office, it has been promising to reduce the inflation rate and establish fiscal discipline. The achievement of these goals requires two steps; first, lowering inflation and second, which is more important, maintaining economic stability.  

It is evident that Iran needs to implement major reforms in order to rehabilitate the economy. A comprehensive nuclear deal will only be a first step in this direction, which will enable Iran to reinvigorate its trade ties with other countries and generate a new momentum in productive activities.

The Rouhani administration appears to have successfully managed the first step, as the economic indicators show a continuous decline in the inflation rate since president Rouhani assumed office in the August of 2013.

Inflation rate which had reached nearly 44 percent in July 2013, reduced to 15.8 percent in the first ten months of the Persian calendar year (ending March 20), based on the latest report of economic indices released by the Central Bank of Iran (CBI).

Moreover, a top CBI official recently announced that the central bank is expecting lower inflation rates in the next Iranian fiscal year (March 21, 2015 - March 20, 2016). CBI’s Deputy Governor Akbar Komeijani, announced on Monday that the government is planning to reduce the inflation rate to 13 percent in the coming year.

“Even though reducing the inflation rate is difficult at this point, the CBI is pursuing financial discipline strategies to achieve this objective”, Komeijani said.

Experts believe the second step is what the former administrations have not been able to take. Stable economic conditions and predictable market trends are prerequisites for achieving national development goals.

Stabilizing the economy is the next step and the Rouhani government seems prepared to step on this path cautiously. Official statements over the past few weeks indicate that the government is finally ready to calm down after its initial excitement and move towards implementation of long-term economic development plans.  

“The (western) sanctions against Iran are expected to be lifted in the near future,” anticipated Minister of Economic Affairs and Finance, Ali Tayebnia last week, who added: “Iran can achieve economic growth of more than 8 percent, relying on all of its internal resources.”

Speaking on the sidelines of the fourth conference on e-banking and payment systems, Tayebnia said: “Iran is currently faced with critical issues resulting from an improper economic structure, wrong policies in the past decade as well as the imposed sanctions.”

The minister’s remarks regarding the lifting of sanctions – imposed on Iran by the US, the EU and the UN Security Council over its nuclear energy program – come as economic experts and analysts have been wondering for quite some time as to how a potential lifting of the sanctions will influence economic developments in Iran.