Iran Says It Spent $20 Billion More In Hard Currency Last Year

Consumption of meat has decreased by as much as 50 percent in the past year due to higher prices.

Pourian said that red meat production was higher than consumption, with a surplus of 4 million sheep. He attributed this to stagflation and predicted that drought and water shortages in coming months would raise production costs. But he called on the government to allow the export of live cattle, which was banned last year as means to regulate the market and hold down domestic prices.

Inflation in Iran has been hovering around 40 percent after the United States imposed sanctions in 2018. But food prices have been rising at alarming levels, with government figures showing above 60-percent inflation at retail level in 2021, compared with 2020.

Aftab News website in Tehran reported on Sunday that one kilo of average fresh lamb meat has reached $8, which is not so high in comparison with Western countries, but is unaffordable for many Iranians who make around $200 a month.

Speaking to the official news agency IRNA Sunday, Mehdi Ghazanfari, chairman of the executive board of Iran's sovereign wealth fund (NDF), criticized governments, past and present, for taking a larger share from the fund's reserves than they were allowed by law.

Ghazanfari said that governments should not rely on the NDF to supplement their budget, but they always resort to taking money from the fund when they face problems. "The fund's resources should increase to the level that it can provide the country's budget if we are not able to sell gas and oil."

The fund aims to turn some of the country's petrodollars to durable wealth, productivity, economic incentive and capital and preserve wealth from oil and gas for future generations.

The budget bill presented by President Ebrahim Raisi's government to parliament on December 12 proposed to save only 20 percent of oil revenues and transfer the other 20 percent, which should have been given to the fund, to the government.

But Supreme Leader Ali Khamenei, whose authorization was required, refused to allow the government to borrow from the fund to supplement its budget. Borrowing from the fund would mean printing Iranian rials and spending it in the country, further fueling inflation, which now stands at around 40 percent.

Based on the country's fifth and sixth five-year socio-economic development plans, the percentage of the fund's share from oil revenues has grown from 20 percent to 40 percent since 2011 when the fund was established.

Ghazanfari said the fund is now seriously seeking to recoup all the past loans paid to various government organizations, such as the National Iranian Oil Company (NIOC).

He also suggested that the fund's articles of association need to be revised so that the fund extends 30 percent of its resources to private, cooperative, and non-governmental sectors as loans, and ideally even use the 20 percent share of the government to help the private sector.

The remaining 50 percent of the fund's resources must be used for investment, he said, adding that they are also considering a revision in the conditions for offering loans in the future.

Like the currency reserve fund established in 2000, all administrations have borrowed from the fund for various purposes, including 2 billion euros in 2019 to increase the military's budget. The administration of President Mahmoud Ahmadinejad borrowed heavily from the fund which had been handed over to him with over $24 billion, including $2.7 billion to pay New Year cash handouts to all Iranians in 2013.

In 2008, the Ahmadinejad government classified information about the fund. In 2013, the newly elected President Hassan Rouhani said the fund had completely been drained by his predecessor. There is currently no concrete information on the fund's assets, but it is clear billions have been withdrawn since 2018 when the United States abandoned the 2015 nuclear agreement and imposed sanctions.

According to the charter of the National Development Fund, 40 percent of oil revenues next year should be saved by the government in the fund for investment on productive economic activities that would guarantee the welfare of future generations.

Mohammad Shahriari told Tasnim news agency that from September to the end of March, 409 million cubic meters of water has entered dams in the Tehran province, while in the 2020-2021 season 573 million cubic meters entered the capital’s vital reservoirs.

Iran has been suffering from drought for at least a decade and this year officials have been warning of a further decrease in precipitation.

In 2021, large-scale water protests took place in two important provinces, Khuzestan and Esfahan, with several people killed and hundreds injured by security forces.

As drought persists, more underground water is exploited for irrigation, depleting natural reservoirs formed during thousands of years. This has led to ground subsidence, alarming government officials who have circulated confidential memos on the subject, according to a lawmaker who spoke to local media on Sunday.

Old and unregulated irrigation methods, as well as an aging urban water distribution infrastructure compound the shortage.

However, politicians and experts say that there are no consistent government plans to deal with the water crisis, which can result in mass migration of millions of people in the next ten years.

“it’s incomprehensible to the American people that we are negotiating with Iran to lift sanctions, presumably to buy more oil,” Pence told Fox News Friday. The former vice-President backed refusing Russian oil and gas, while suggesting the US facing rising prices should neither use reserves nor consider imports from Iran or Venezuela.

Pence denounced year-long negotiations, including Russia as one of five world powers, to revive the 2015 Iran nuclear deal, which the US left in 2018 with Pence as vice-president under Donald Trump. Pence said the talks emboldened Putin over Ukraine.

“It’s only with American strength and rallying our Western allies that we’ll be able to return peace to Ukraine,” Pence argued. He rejected “working with Russia to try and convince Iran to get back in the nuclear deal.”

Pence criticized Biden’s move to release 1 million barrels of oil a day over six months from reserves to decrease prices, suggesting there were options to raise production. “These are the kind of messages of weakness the American people aren’t having,” he said. “American strength is the antidote to this moment at home and abroad.”

He attacked Biden for sending a “delegation to Venezuela, to the dictator [President Nicolas] Maduro, to presumably begin to beg for more oil when we have vast reserves of oil in this country.”

President Ebrahim Raisi in a speech on Thursday declared that oil exports have reached the pre- 2018 levels, when former US president Donald Trump withdrew from the nuclear deal with Iran and began imposing sanctions on Iranian oil exports.

If Raisi meant that Iran is shipping two million barrels a day like it did in 2017, it would mean observers of the global oil trade have underestimated Iran’s illicit exports by almost 100 percent. Various estimates in recent months have ranged between 750,000 to one million barrels a day.

Raisi who is under a lot of pressure to improve the battered economy is using media under his government’s control and every public speech to claim economic successes.

The policy of claiming economic successes could also be a tactic to persuade the United States that its sanctions are ineffective and Iran can afford not to sign a nuclear agreement negotiated in Vienna if Washington rejects its demands.

Petroleum Minister Javad Owji also told Shana news agency on the same day that “the capacity of oil production has returned to pre-sanction period” reaching to more than 3.8 million barrels per day.

The key word in Owji’s remark is ‘capacity’ which could substantially differ from actual production. This claim was made earlier by other oil ministry officials. He did not give an exact figure about exports and it is not clear if president Raisi mixed up ‘production’ with ‘exports’ when he said Iran has reached the pr-sanctions level.

Domestic critics of the government have pointed out that the president’s claims of more oil revenues and economic growth are simply due to higher oil prices in recent months, and not any breakthrough in Iran’s economic fundamentals.

Average oil price in the first 7 months of 2021 was around $60 per barrel, while in the following 6 months (August-February) it was about $80. Raisi assumed office in the beginning of August. Following Russia’s invasion of Ukraine on February 24, prices shoot up well above $100.

During Donald Trump’s presidency, Iran’s clandestine oil shipments hovered around 200-300 thousand barrels pd but they picked up right before the US presidential election in November 2020 and steadily increased in 2021.

President Joe Biden’s administration apparently decided not to strongly enforce the sanctions, violated mainly by China, which has been buying the bulk of Iranian shipments.

The director of National Iranian Oil Company, Mohsen Khojasteh when asked a question by local media on Friday if exports increased because of lax enforcement by the United States, insisted that Iran was able to increase production capacity and exports despite sanctions.

Khojastreh claimed that the oil ministry made a $700 million investment since Raisi assumed office and revived production at 750 oil wells. He added that export of oil and other hydrocarbon products increased because Iran was able to find new customers but did not provide any details. Tehran regards such information as strategic secrets.

More exports and higher prices, however, have done little to visibly improve Iran’s economic indicators. Inflation continues to hover around 40 percent, with prices for food and other essential goods increasing to unprecedented levels. The government struggles to pay salaries and pensions, with no major proven investments in infrastructure, beyond general declarations of accomplishments.