Candidate Pourmohammadi blamed the 29% interest rate for the country's rising inflation.
He said, "Inflation and liquidity are intertwined, and inflation can be controlled by controlling liquidity."
In his concluding statements, the 'reformist' candidate Pezeshkian said, "I strongly believe in active engagement with the world. I believe sanction is equal to war, and the poor are those who get killed in the economic war."
None of the candidates mentioned the link between inflation and the two factors of foreign sanctions and harmful government control over the economy. With less income from oil exports and inefficiencies resulting from government interference in the economy, the Central Bank is forced to print money, which in turn fuels inflation.
Speaking about Iran's high inflation, hovering around 50%, the 'moderate' candidate Pezeshkian blamed "the banks" for printing money. It seems that the candidate is unaware that the Central Bank prints money not all the banks.
According to Iran's Constitution, the exclusive right of issuing the country's currency belongs to the government and has been exclusively granted to the Central Bank of the Islamic Republic of Iran. No bank in the country has the right to print banknotes.
Inflation's continued rise, a widening budget deficit, and the stability of the banking system dominated the final round of questioning. Candidates with links to late president Ebrahim Raisi sought to project that most of such problems were the legacy of the former administration under Hassan Rouhani.
During the 2.5-year tenure of President Ebrahim Raisi, Iran has seen its liquidity double due to a 100% increase in state debts to Iranian banks, aimed at compensating for the budget shortage and current expenses.
According to a report by the Central Bank, liquidity increased by 24% during the last fiscal year, which ended on March 19, reaching approximately 80,000 trillion rials ($123 billion, based on the USD rate in open markets). This figure represents more than 30% of Iran's GDP.
Iran is grappling with an infrastructure deficit of $500 billion. Iran is also facing a serious economic crisis since the United States withdrew from the JCPAO nuclear accord and imposed sanctions in 2018. However, the country’s economic vows go much deeper, as the Islamic regime failed toleverage its oil export revenues to properly invest in infrastructure and development since the 1990s. It is estimated that Iran sold around $1.5 trillion of oil in the past two decades, yet it faces a bankrupt government that has a stranglehold over 80 percent of the economy.
Restricted by US oil export sanctions, Iran sells its crude at lower prices to China and earns around $30 billion per year, with no other significant revenues in hard currencies. This does not even cover the annual budget of the government and there are no other funds for long-term investment.
Government officials have recently admitted that most of the $150-billion National Development Fund, or the sovereign wealth fund has been spent, since 2012, leaving nothing for investment. Foreign investments are also virtually non-existent due to sanctions and lack of political confidence in the Islamic Republic regime that has adversarial relations with Western countries and a government-controlled economy.
The Central Bank of Iran reports that the government's debts to this bank jumped by 65% year-on-year to more than 3,000 trillion rials ($4.6 billion) during the last fiscal year.
In addition to the government itself, state-owned companies also owe 880 trillion rials ($1.35 billion) to the Central Bank.
The International Monetary Fund has calculated that the debts of the Iranian government amount to 30.5% of its GDP, which is equivalent to $118 billion, or 2.5 times the government's budget for the current fiscal year.
Iran’s staggering state debt and liquidity have led to an acceleration in devaluation, especially in recent weeks when the Iranian rial plunged to its historical lowest value. Currently, each USD is sold at about 600,000 rials, whereas at the beginning of Raisi’s presidency, it was about 230,000 rials.
While some speak about the damage brought on by sanctions, no candidate has addressed the reasons why sanctions have been imposed. Iran's foreign policy and the controversial nuclear program remain largely a taboo in this election campaign.
While all six candidates speak about the economic failures of the Islamic Republic, a simple check reveals that all of them have been involved in governance as officials or lawmakers each for more than two decades. They have all been loyal to the political and economic system largely created or protected by Supreme Leader Ali Khamenei in the past 35 years.
In the second round of answers, almost all candidates made statements about sanctions and how to handle them as serious challenge facing the country’s economy. The candidates have different proposed solutions to the problem.
Qalibaf emphasized the need for diplomacy and utilizing existing resources.Qalibaf believes that with the right president and by utilizing existing resources in organizations like BRICS and Shanghai, as well as agreements with China, Iran can overcome its problems and achieve growth.
Pezeshkian claimed that China insists that unless Iran resolves its issues with the FATF, it will not finalize its investment in the country.
Zakani called for neutralizing sanctions domestically and using diplomacy to change their root causes.
Pourmohammadi advocated for ending ‘self-sanctions’ and using diplomacy and national power.
Almost all candidates called for a change in approach to international relations.
Pezeshkian, unlike some other candidates, called sanction “a disaster” and challenged the official narrative that Iran is able to circumvent the sanctions.
“Yes, we circumvent them, but in the process there is lot of corruption.”
He also emphasized that Iran ranks among one of the worst countries in the world in corruption indicators.
Pourmohammadi said, "We should not joke with the world. We should first rebuild our people's trust in us, and then use this popular support for our diplomacy. We must change our approach to international relations."
Zakan said, "Sanctions must first be neutralized inside the country, and then through diplomacy. In the case of COVID-19 vaccine, the world provided vaccines to Iran only after we managed to neutralize the sanctions and produce our own domestic vaccine."
Iran did not have any restrictions on the purchase of vaccines, but the import of vaccines from the United States and the United Kingdom was prohibited upon an order by Supreme Leader Ali Khamenei.
The second round of questions mainly focused on how the government can encourage economic growth through reduced intervention and privatization. The experts asked questions about the candidates' strategy for privatization and promoting public participation, or how they want to shift from selling state-owned companies for revenue to a broader approach that fosters competition and empowers the private sector as well as encouraging broader public involvement in the economy.
The role of semi-governmental entities (mixed ownership companies) was also among the main questions. “Semi-Public” (Khosoulatiin Persian) is a term coined by fusing the Persian words for private and public, and refers to companies that are sold to the private sector on the surface, but are owned by the government, IRGC entities, or entities under the control of the supreme Leader in reality. These companies are run by regime insiders as their private fiefdoms, and often when they lose money, they turn to borrow from government banks, which are also run through the same political network of government loyalists.
A report in Tehran media in January showed that there are more than 2,000 registered quasi-governmental companies that are often exempt from taxes, enjoy monopolies and avoid any accountability.
In his first four-minute segment, Ghazizadeh Hashemi did not directly answer the questions. Instead, he used his time to advise fellow candidates against making promises they can't keep in economic affairs. He emphasized that Iran needs $200 to $250 billion in investment to achieve the country's goal of eight-percent growth.
Ghalibaf did not provide any specific details for implementing such a plan. He stated, "One of the most important duties of the President in these difficult conditions is to focus on the economy, especially for disadvantaged families, workers, employees, nurses, social workers, and those with fixed incomes who are affected by inflation. The President should be elected and act to resolve these issues, with the help of the people."
Pezeshkian, the 'reformist' candidate, reiterated the investment figure mentioned by Ghazizadeh but stressed that without open relations with the world and improved international relations—hindered by US global sanctions—such plans cannot be realized.
"It is impossible to achieve 8% growth without establishing connections or opening our borders to countries in the region and the world. For 8% annual growth, we need $200 billion. We must establish connections with the world, and how we do this is essential for this 8% growth," Pezeshkian said.
Jalili criticized the questions, stating that economic growth cannot be achieved solely by attracting investment.
Zakani claimed that the problems are not due to US sanctions and repeated misinformation of the Islamic Republic, such as calls to avoid using dollars in international trade and strengthening the national currency. Iran's GDP grew by less than one percent on average since 2012 when first international sanctions and then US sanctions reduced oil exports, the main source of revenues for the government
"Iran's problem is not US sanctions but US economic policies. We need to focus on economic independence by removing the US dollar from our transactions and strive to increase the value of our currency."
He argued that people earn in rials but spend in dollars, which he claimed is the main problem affecting the country's economy.
Pourmohammadi also focused on how the country's foreign policy and lack of cooperation with the world have hindered the attraction of investment.
Iran needs foreign investment to reach its target of 8% economic growth, although in the absence of independent economic data, estimates for the required investments vary from one expert to another.
Economist Vahid Shaqaqi-Shahri stated last month in an interview with the ILNA news agency, "Iran requires substantial investment to modernize and rebuild its deteriorating infrastructure. Without attracting $500 billion in resources for the modernization and reconstruction of infrastructure over the next eight years, we cannot manage Iran." Regarding the funding source, he mentioned that such a substantial amount cannot be raised through either foreign or domestic investment alone.
Each candidate was given several four-minute segments to answer questions posed by a panel of former officials and experts. The debate opened with a video montage of questions, challenging the candidates to explain how they plan to achieve the country's economic growth goals, create stability, prevent the devaluation of the national currency (the rial), and curb inflation.
The first televised debate between the six Iranian presidential candidates kicked off on Monday evening, starting about 30 minutes later than scheduled.
Iran's handpicked presidential candidates are facing scrutiny from the media and social media users for their unrealistic plans, promises, and the false claims their supporters have made about their character.
Most criticism on social media revolves around former nuclear negotiator Saeed Jalili and his rival, Parliament Speaker Mohammad Bagher Ghalibaf. Both candidates hail from the so-called “Principlist” or hardliner camp, but their supporters are currently fighting an intense war on social media.
During the live airing of the debate across three state broadcaster channels, hosts focused their introductions on explaining why boycotting the election would not be beneficial for the country.
They highlighted Iran's Supreme Leader's call for citizens to participate in the election, emphasizing the importance of voter turnout for the nation's future.
A key question is whether 'moderate' candidate Masoud Pezeshkian can motivate reform-minded and other voters, who have abstained from voting in the last three elections in Iran, to return to the polls.
Presidential candidates gathered for a group prayer ahead of their first round of debates.
The first televised debate between the candidates for the 14th presidential election will focus on the economy and will take place on Monday evening, June 17th.