Accessibility links

Breaking News

Rouhani Underestimates Impact Of Pandemic On Iran's Economy, Khamenei Demands Reforms

IRAN -- An Iranian woman enjoys her food at a restaurant in Tehran, May 26, 2020
IRAN -- An Iranian woman enjoys her food at a restaurant in Tehran, May 26, 2020

President Hassan Rouhani says Iran's economy has shrunk by only 3 percent as a result of the coronavirus pandemic, while the economy of most countries have contracted by up to 20 percent.

Rouhani made the claim in a video conference with Supreme Leader Ali Khamenei on Sunday, August 23. The video conference replaced a usual annual meeting to observe Government Week, during which executive officials present their annual performance to Khamenei.

Rouhani said that the Iranian economy’s relative health shows his administration's power and its resistance to problems.

Rouhani's report on the state of the Iranian economy stands in sharp contrast to his Economy Minister Farhad Dejpasand's statement at the Iranian parliament in June.

Dejpasand said that the pandemic “has adversely affected 15 percent of Iran's Gross Domestic Product," adding that "in this situation, the country cannot have access to all of its resources even the economy was not badly affected by US sanctions."

The Minister of Economy did not say anything about the extent of Iran's GDP and the damages made to it by the pandemic. However, according to the International Monetary Fund, Iran was expected to have a Gross Domestic Product of more than $439 billion in the current year.

This brings the estimate for possible damage to the Iranian economy by COVID-19 pandemic to around $66 billion, which is nearly twice as much as the Iranian government's annual budget.

Elsewhere during the video conference, Rouhani “the” drop in oil price in 2014 and the imposing of sanctions on Iran in 2018, as well as the COVID-19 pandemic in 2020, created three shocks in the economy, but the government managed to control the situation."

Rouhani made the claim while economic assessment by Iranian and foreign analysts show that the Iranian economy is suffering from a nearly 50 percent budget deficit, a high unemployment rate and a rising double-digit inflation that varies between 30 to 40 percent at various.

Meanwhile, Rouhani claimed that Iran's petrochemical product has risen from 56 million tons to 100 tons, and its production of steel has been redoubled, but did not elaborate on those figures, with the absence of reliable data making it difficult to verify Rouhani’s claims. However, because of the sanctions on Iran's international banking, Iran's trade partners find it hard to purchase any products from Iran, and Tehran finds it almost impossible to repatriate what it earns from exporting petrochemical products and oil.

During the teleconference, Khamenei offered some advice to the Rouhani administration and said the administration should work hard as there is still time before the end of its term of office to do some serious work. "A year is a long enough time," he said.

Meanwhile, he called on Rouhani and his administration to be transparent. "Talk to the people directly. Tell them about both achievements and bottlenecks," said Khamenei, adding: "Tell them about what you have managed to do, and what you should have done, but you haven't."

As Khamenei told Rouhani, "You may not accomplish some essential missions during your term of office. Leave them for the next administration and let them talk about you in a good way."

Reforming the structure of the country's budget and banking and taxation systems, as well as correcting the flaws in the privatization laws, were among the tasks Khamenei said he expected the Rouhani administration to accomplish during its last year in office.

The Rouhani administration was tasked with the same in its initial mandate when it first took office in 2013. This was probably Khamenei's way of reminding Rouhani of his failure without causing too much embarrassment.