The sharp increase in liquidity in Iran is a direct consequence of the government's actions; experts say to expect rising prices and inflation

While the Iranian people have endured severe economic pressure caused by recession and high inflation over the past two years, the Central Bank's report indicates a new record in the increase in liquidity in recent months, which is causing the inflation rate to rise further.

According to the Central Bank's report on liquidity growth in the first six months of 2020, liquidity reached about 2,900 trillion tomans at the end of Shahrivar, which is a 17 percent increase compared to Esfand last year. On the other hand, liquidity growth in Shahrivar this year was also more than 36 percent compared to the same period last year. At the same time, the point-to-point growth of "money" in Shahrivar reached 80.2 percent, which is unprecedented in history.

The growth in the ratio of money to liquidity in Iran indicates a decrease in long-term deposits and people turning to keeping money in the form of banknotes or in current accounts.

The United States says the Islamic Republic spends its country's wealth on supporting terrorist groups and destabilizing the Middle East, instead of its people .

The United States has also repeatedly condemned institutionalized financial corruption and the plundering of Iran's God-given assets by the regime's affiliates, citing them as the main causes of Iran's economic and financial problems. Not long ago, US Secretary of State Mike Pompeo tweeted about the Islamic Republic's officials that they were involved in corruption instead of helping the people.

The sharp increase in liquidity in Iran is alarming in that it will lead to increased inflation and higher prices for goods and services. The Central Bank’s new statistics on liquidity in Iran have also prompted economic experts in Iran to criticize the government’s performance. These experts, including Vahid Shaghaghi Shahri, a faculty member at Kharazmi University, believe that the growth in liquidity is a direct result of the government’s performance, including borrowing from the Central Bank and other banks to address the budget deficit.

Experts say that when liquidity growth is 36% on the one hand and the economic growth rate is negative on the other, this gap practically turns into inflation in the asset market and the goods and services market.

Thus, while it was previously reported that Iranians' tables have become smaller, this growth in liquidity due to the performance of the Islamic Republic regime will increase inflation in the coming months.

Last September, it was also reported that, according to data from the Statistical Center of Iran, with continued negative economic growth, Iran's economy has shrunk by 20 percent in recent years and per capita national income has reached its lowest level in the last 16 years.  

In recent months, numerous reports have been published about the sharp increase in house prices and housing rental rates, all of which indicate the inability of many citizens to rent or buy a home .

Despite all these problems, the Islamic Republic's officials continue to spend a portion of the country's income on aid to the Syrian government, Yemeni rebels, and Lebanon's Hezbollah.

On June 10, Iran's First Vice President told the Syrian Prime Minister in a telephone conversation that the Islamic Republic would not hesitate to take any action to reduce pressure on the Syrian people.

Source: Voice of America