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Rouhani Takes First Step Addressing Economic Crisis As Food Rationing Weighed

IRAN -- Iranian President Hassan Rohani attends a meeting at the Ministry of Economy, in Tehran, January 8, 2018

The change in the Rouhani administration awaited by both critics and supporters appears to have started on July 25 with the replacement of Iran's central bank governor and news of the Planning and Budget Organization (PBO) chief's offer to resign.

This comes as Vice President Eshaq Jahangiri has said economic hardship could prompt the government to resort to food rationing.

Abdolnasser Hemmati was appointed central bank governor,and PBO Chief and Administration spokesman Mohammad Baqer Nobakht told the press he has offered to step down in order to give President Hassan Rouhani a free hand in reshuffling his economic team.

Nobakht added that Rouhani had still not accepted his resignation as of Wednesday afternoon, ISNA reported. Rouhani's chief of staff also told reporters in Tehran, "Whatthe media quoted Nobakht as saying is not true."

Iranian media had reported that Rouhani had offered Nobakht's job to former Economy Minister Ali Tayebnia but that he rejected the offer.

ISNA noted that the fact that the first change in the administration took at the central bank reveals Rouhani's priorities in tackling the country's economic crisis.

Reports from Tehran say that changes are also under way at the industry, economy, and housing ministries.

The unusual turbulence on Iran's foreign currency market wreaked havoc in Iran's economy and elicited social unrest at the markets and across Iranian cities during the past several months, while the rate of exchange for the U.S. dollar against the Iranian rial nearly tripled.

Rouhani hoped Hemmati would "revitalize the banking system," but critics -- including Sweden-based economist Ahmad Alavi -- say Iran's economic problems cannot be solved before tackling structural flaws that hinder transparency in Iran's economy.

Nevertheless, Rouhani said, "The cabinet has absolute confidence in Hemmati," ISNA quoted him as saying.

In his address to the cabinet on July 26, Rouhani cited"reforming the banking system and financial and monetary policies, and the improvement of banking relationships with the world as well as preserving foreign exchange reserves as the priorities of the new head of the central bank," reported the Tehran Times newspaper.

Critics say these objectives are hard to attain while Iran facesmajor international relations and economic crises as a result ofthe U.S pull-out from the West's nuclear deal with Iran.

The paper wrote that Hemmati is a former lecturer ofeconomics at the University of Tehran and the Iranian state TV chief's deputy for political affairs before serving as head of the Central Insurance Company of Iran, as well as SinaBank and Bank Melli.

Hemmati had been named as Iran’s new ambassador to China last week but his new post means that plan has been canceled.

Hemmati replaced Valiollah Seif, whose tenure saw Iran’s national currency lose its value against the U.S. dollar by more than three times. The dollar was trading at about 30,000 rials when he took over five years ago. Now, it is changing hands at more than 90,000 rials on the unofficial market, the Tehran Times observed.

The situation of Iran's economy is so serious that Jahangirisaid at a meeting with Iranian diplomats on July 24 that the government might reintroduce the food rationing system that was in place in the 1980s at the time of the Iran-Iraq War, reported Jamejam Online, a news outlet affiliated with Iran's state TV.