As New Year Begins, Iran Grapples With Inflation And Poverty

As the new Iranian year commenced on March 20, the Iranian press overflowed with complaints, criticism of the government, and dire economic forecasts.

A video released by Etemad online, showed prominent cleric Alavi Boroujerdi speaking out against the government regarding the people's challenging circumstances. He protested that "The people are no longer able to endure the economic hardships," and pointed out that "the clerics are being held responsible for all their troubles."

Boroujerdi also criticized the government for the way it is running the affairs of the state. He said: "The people's economic situation is very bad. Bring in a few honest experts to address the problems as people's patience has come to an end."

Meanwhile, in an interview with Rouiydad24 website, labor activist Hassan Sadeghi warned the government about a fast approaching 67-percent inflation rate in the new year. Sadeghi also warned that the price of gasoline is also going to rise in the new year. The latest gasoline price increase by the government in 2019 led to nationwide protests in Iran during which security forces reportedly killed around 1,500 Iranians.

Sadeghi lamented the state of the country's economy, criticizing the decision to entrust economic matters to individuals lacking adequate expertise in the field of economics. He cautioned that with inexperienced non-experts overseeing the nation's economy, the Iranian currency is poised to face further devaluation in the upcoming New Year, beginning on March 20.

Expressing concern, Sadeghi cautioned that these developments could precipitate crises, including widespread protests in Iran in the coming year. He highlighted the anticipated impact of inflation and rising prices, particularly on the most vulnerable segments of the population. Additionally, he noted that the heavy reliance on taxation in the government's budget for the New Year is likely to exacerbate the inflationary pressures.

Furthermore, Sadeghi suggested that the Iranian government should take cues from Turkey's approach and adjust wages to keep pace with the rise in inflation. However, talks between the government and representatives of workers yielded no progress on the eve of the New Year.

In another development, former Central Bank Governor Abdolnaser Hemmati, who was President Ebrahim Raisi's rival in the 2021 presidential election, wrote in a tweet: "Government officials are lauding each other for achieving a 4 percent economic growth rate, even as the official inflation rate stands at a staggering 42 percent. Hemmati pointed out that "in 2020, despite facing intense pressure from the US and grappling with the pandemic, Iran managed to achieve a 4.2 percent economic growth, with meager oil revenue of only $7.4 billion." This achievement is particularly noteworthy considering that Iran faced fewer obstacles in exporting oil last year, resulting in oil revenues exceeding $30 billion."

In an earlier letter to the Iranian President, Hemmati had told Raisi that "With the plan you called 'economic surgery' you created a triple-digit inflation rate for commodities such as meat, poultry, and dairy products people need on a daily basis.”

He addressed Raisi directly, stating, "You recently expressed your desire for a headline in the press that reflects the government's empowerment of Iran! But can we truly consider the sharp decline in people's purchasing power, in a country endowed with the world's largest oil and gas resources, and the fact that over 30 percent of the population has fallen below the poverty line as indicators of a powerful nation?"

As evidence of the Iranian government's inefficiency, Hemmati highlighted that one year after the conclusion of Iran's 6th development plan, the country's 7th development plan remains unfinished. Additionally, just five days before the end of the current Iranian year, the government has yet to finalize the annual budget bill for the upcoming year.