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Iran’s 2021 budget: Dangerous instability and hyperinflation

Iran's 2021 budget will cause dangerous inflation
Iran's 2021 budget will cause dangerous inflation

Analysis by PMOI/MEK

Iran, January 11, 2021—In the latest World Bank estimate of Iran's economy, the statistics show negative economic growth and a shrinking economy.

According to a World Bank report, Iran's economy has shrunk by 16.5 percent over the past three years. For the deprived people who barely make ends meet and millions of hungry people, this means that their tables are getting even smaller and emptier.

The notable point in this report is the forecast of economic growth of 1.5 percent next year, which is rejected by both economists inside the regime and a report by the Majlis (parliament) Research Center.

According to some economic analysts in the country, the conditions facing the regime show no signs of development and progress, and the continuation of the current situation will create many problems.

In an article run by the state-run Donyay-e Eghtesad daily on December 7, an economy expert warns: "Economy and market in Iran have unique definitions in such a way that their coordinates are different from other countries in the world. The business score, the degree of economic competitiveness, the rate of corruption along with the instability of trends in the country are so unfavorable that not only has development been impossible in such an environment, but also production has faced many challenges in such conditions.”

Economic growth is a mirage

The Research Center of the Regime Parliament has also recently announced its concerns and warnings about the 2021 budget.

The center, which has also questioned the World Bank's optimism, says: “We should not pursue economic growth and production boom and inflation at all, which are nothing more than a mirage at the moment, but what is possible, and desirable is ‘economic predictability and stability.’”

The fact that the Majlis Research Center, which itself has a history of publishing falsified optimistic reports about the economy, is acknowledging the dire conditions of the economy speaks volumes of how disastrous the reality is.

The Research Center warns that the lack of a realistic view of the 2021 budget revenues will put the economy in a trap of instability. According to the Donyay-e-Eghtesad article, “The report emphasizes that ‘the risk of hyperinflation is not far’ and that an expanding budget can only be reasonable if it does not threaten the macroeconomic stability of the country. This is unattainable for 2021.”

Therefore, the parliament institution believes that any hope and expectation for growth slightly above zero is a mirage, and that the more formidable danger of "hyperinflation" is imminent.

Government economy analysts believe that "policymakers should not make the fundamental mistake of proposing expansionary budgets because of the recession, as government resources are currently very limited and financial expansion will certainly lead to monetary expansion, and as a result, the risk of hyperinflation still remains. Therefore, if the 2021 budget is based on unrealistic sources, the country's economy will be caught in the trap of high inflation and more instability in various markets," according to a January 6 report by the Alef website.

An important point in the probable forecast for next year’s budget is the acknowledgment of the fact spending oil revenue on missile construction and exporting terrorism and filling the pockets of government-backed gangs sitting on oil wells will make no difference in the livelihoods and lives of millions of Iranians.

The Parliamentary Research Center’s report explicitly points to this fact: "This study shows that for next year, with different scenarios, we can have a small positive economic growth or, in the event of an increase in oil revenues, a significant positive growth through this sector, however, it is worth noting that even in the case of significant positive economic growth, we can’t expect a significant improvement in the living conditions of families, especially in the lower deciles,” according to a January 7 report by the Eghtesad daily.

 Iran's economy in 2021

Studies and evaluations of international institutions and government centers show that the expectation of growth and the dream of overcoming the incurable economic crisis is nothing more than a crude fantasy.

It means that, under this regime, there is no window of hope for improving the living conditions of the millions of poor people who are suffering from hunger and disease.

 

The future of the regime's economy, according to reports by the regime's own research centers, is successive recessions and horrific hyperinflations. Their best hope is to just get out of negative economic growth. But there isn’t such light on the horizon.