One of the things that has remained consistent across all presidents during the rule of the mullahs is plundering the wealth of the people to keep the regime in power. The regime’s latest president, Massoud Pezeshkian, is sticking to the same game plan, plundering the last remaining public resources to preserve the regime amid domestic and international crises.
Internal unrest and fears of unpredictable regional and international developments have paralyzed the decision-making ability of the regime’s leadership. Pezeshkian’s empty promises and unrealistic dreams remain unresolved, leaving him uncertain of what to do. Rampant inflation, liquidity issues, crippling recession, poverty, and unemployment have forced government officials to recycle old tactics and tricks, hoping to find some way to salvage the regime buried under its own ruins.
On National Export Day, Pezeshkian admitted that improper legislation by the Majlis (parliament) and governments in recent years has led to the imbalance of banks and state funds. He said, “The parliament imposes obligations on the governments that do not align with realities, and the situation worsens day by day” (Source: Khabar Online, October 20).
Minister of Economy Abdolnaser Hemmati seeks to curb rampant inflation by reducing interest rates. However, this tactic does not have the support of other factions within the regime. Under Mohammad Reza Farzin’s leadership, the Central Bank raised the interest rate from 18% to 22.5% in February 2023. This increase did not improve the situation. Bank violations continued, and some accounts even received 25% interest. Despite fines imposed on bank managers, these violations remained profitable.
In this context, economic experts believe that Iran’s economic problems are beyond the capacity of monetary and banking policies and require serious decisions at the highest levels of governance. After nearly two years, the increase in interest rates failed to attract deposits and control liquidity. Even certificates of deposit with a 30% return had no effect on increasing deposits and only raised the cost of securing banking resources (Source: Bourse News website, October 14).
Pezeshkian has now decided to lower the interest rate, without anyone taking responsibility for the previous increase that plunged the nation into its current disaster.
The dispute between Farzin, the governor of the Central Bank, and Hemmati, the Minister of Economy, over how to reduce inflation continues. While the Central Bank insists on raising interest rates, Hemmati believes that lowering rates can curb inflation. This disagreement has worsened the situation instead of providing an effective solution. Lowering deposit interest rates could cause funds to leave the banks and flow into the currency, gold, and car markets, leading to higher prices and inflation.
Both sides point to the disastrous consequences of other policies, such as rising exchange rates, inflation, and deepening recession. Iran’s economy has been in a deep recession for nearly two years under the Central Bank’s “economic stabilization” policy. Meanwhile, new Central Bank statistics show that government debt to the banking system has surged by 148%, and liquidity has surpassed 9 quadrillion rials.
Economic experts also criticize the contradictions between the statements of the Minister of Economy and the head of the Central Bank and are concerned about the worsening economic situation in Iran. However, in the end, it is the oppressed people of Iran who are paying the price for this plundering game played by their predatory rulers.