Severe Liquidity Growth in Iran, Direct Result of Government Performance; Experts Say Expect Rising Prices and Inflation
While the Iranian people have endured severe economic pressure from recession and high inflation over the past two years, a Central Bank report indicates a new record in liquidity growth in recent months, which will cause inflation rates to rise further.
According to the Central Bank report on liquidity growth in the first half of 1399, liquidity reached approximately 2,900 trillion tomans by the end of Shahrivar, showing a 17 percent growth compared to Esfand of the previous year.On the other hand, liquidity growth in Shahrivar this year was more than 36 percent compared to the same period last year. Meanwhile, point-to-point growth of “money” in Shahrivar reached 80.2 percent, which is an unprecedented figure in history.
The growth rate of money within Iran’s liquidity indicates a decline in long-term deposits and people’s tendency to hold money as cash or in current accounts.
The United States says the Islamic Republic uses the country’s wealth to support terrorist groups and destabilize the Middle East instead of spending it on its people.
The United States has repeatedly condemned institutionalized financial corruption and the plundering of Iran’s natural resources by associates of the ruling regime, and has considered them among the main factors of Iran’s economic and financial problems. Recently, for example, U.S. Secretary of State Mike Pompeo tweeted about Islamic Republic officials that instead of helping people, they have engaged in corruption.
The sharp increase in liquidity in Iran is alarming because it causes inflation and further price increases of goods and services. The Central Bank’s new statistics on liquidity in Iran have also prompted domestic economic experts to criticize the government’s performance. These experts, including Vahid Shaghaqi Shahri, a faculty member at Khwarazmi University, believe that liquidity growth is a direct result of government performance, including borrowing from the Central Bank and other banks to cover budget deficits.
Experts say that when on one hand liquidity growth is 36 percent and on the other hand economic growth rate is negative, this gap actually translates into inflation in the asset market and the goods and services market.
Thus, while it was previously reported that Iranians’ dinner tables have become smaller, this liquidity growth resulting from the performance of the Islamic Republic regime will increase inflation in the coming months.
In Shahrivar last year, it was also reported that based on information from Iran’s Statistical Center, with continued negative economic growth, Iran’s economy has shrunk by 20 percent in recent years and per capita national income has fallen to its lowest level in the past 16 years.
In recent months, multiple reports have also been published about sharp increases in house prices and housing rental rates, all indicating the inability of many citizens to rent or buy homes.
Despite all these problems, officials of the Islamic Republic continue to spend part of the country’s revenue on aid to the Syrian government, Yemeni insurgents, and Hezbollah in Lebanon.
The First Vice President of Iran told the Prime Minister of Syria on June 19 in a telephone conversation that the Islamic Republic will spare no effort to reduce pressure on the Syrian people.
Source: Voice of America
