Since its founding, the mullahs’ regime in Iran has mastered the craft of spinning words and changing the meaning of terms to serve its needs in different situations.
And now, the state-affiliated media are readily using the phrase “imbalance” to indicate economic failures. It is employed to justify budget deficits, embezzlements by banks, and the disarray of financial systems. Regime experts and economists, either within the system or under its influence, use such phrases to present analyses and describe a fraction of the economic crises and disasters that are plaguing the country. However, it is necessary to investigate beyond these evaluations and analyses to uncover the severity of the economic situation.
Many experts have borrowed the term “imbalance” from accounting and applied it to the field of macroeconomics. They claim that imbalance permeates the entire Iranian economy. However, if it exists everywhere, then it loses its meaning. And the accounts are balanced in a manner controlled by the system. Since the government has control over monopolistic price increases for goods and services, government analysts also provide the necessary grounds for “balancing” the economy. Rumors immediately turn into price hikes for water, electricity, bread, vehicles, energy carriers, housing, medicine, and more, to potentially cover the colossal budget deficits of the regime.
Oil and gas imbalance
One prominent example of the so-called imbalance can be seen in the gas sector. The government daily faces a gas “deficit” of 250 to 300 million cubic meters. However, instead of using the term “deficit,” they use the word “imbalance” to diminish the negative impact of this failure.
And when predictions for oil revenues proved to be incorrect, leading to staggering deficits, the government spokesperson stated: “Most governments have experienced budget ‘imbalance’ issues in different eras.” (Source: Keyhan, December 26, 2023)
Imbalance or bankruptcy of banks?
Another example of imbalance is related to the bankruptcy of banks. According to the Journal of Management, Economics and Entrepreneurship Studies on December 13, 2023, “[The banks’] asset growth is lower than the deposit interest rate. In the payment system, this is referred to as the growth rate of liabilities… Therefore, the concept of bank imbalance refers to its economic and financial implications… If a bank or financial institution lacks sufficient and easily accessible funds at a reasonable cost, it is the first sign and indication of its critical state of imbalance.”
Hidden expenses
These imbalances, of course, are accompanied by budget deficits resulting from excessive hidden expenditures allocated by the regime and its criminal Revolutionary Guards. According to a December 5 report by Farday-e Eghtesad, “Not all government revenues and expenditures come into the budget; there is a more hidden, off-the-radar segment that is not as transparent as the obvious parts of the budget. Part of this meta-budget can be found in the paragraphs of the budget bill, but these figures are not included in the total budget and how they are spent and their figures are not so clear; for example, in the 1402 [2023] budget, beyond the oil ceiling, €3 billion for the General Staff of the Armed Forces and €1.5 billion for a number of support schemes were intended to be converted to ETS rates.”
An imbalance 250 quadrillion rials
With a rough calculation, we can estimate the extent of this discrepancy. On January 14, ILNA news agency quoted economist Vahid Shaghaghi as saying, “I believe we still don’t know the depth of the disaster. Until we understand the depth of the disaster, we cannot address the issue. Essentially, our problem is not just a deficit of 3 quadrillion rials in the budget and discrepancies in banks. Today, the issue of Iran’s economy is 500 billion dollars, which is equivalent to 250 quadrillion rials, considering the exchange rate of 500,000 rials per dollar, to cover and compensate for the discrepancies in electricity, gas, water, gasoline, and inflation.”
Political imbalance the root of economic discrepancies
On January 14, the state-run Etemad newspaper wrote, “There is a consensus that Iran has experienced several serious discrepancies, and we must expect a bleak future without their effective and sustainable resolution. The complex knot of these imbalances lies in politics. The reality is that people’s perception of the current policies and management is not positive. Only a small number of people defend the current situation. Apparently, the latest polls indicate that only 7% support this situation.
The second imbalance lies in the mismatch between the professional qualifications of the managers and the magnitude of the country’s problems. The strange statements and positions of the managers, the lack of clear plans and ideas, and countless inefficiencies are clear examples of this political discrepancy. Therefore, without resolving the political imbalance, not only will other imbalances remain unresolved, but they will also intensify.”
Deterioration of the economic cycle
The worn-out economic status has reached the point of no return. In a country where the average economic growth has been close to zero in the past 12 years and the money supply has increased 22 times compared to 2011 by the end of this year, a country that lacks investment in infrastructure and faces challenges in maintenance and depreciation throughout the economy.
On January 15, the state-run Ebtekar newspaper quoted a regime insider as saying, “We are rapidly moving towards the comprehensive deterioration of the economy.”