Reports Say Iran’s Budget Chief To Be Fired Amid Economic Chaos
The head of Iran’s Planning and Budget Organization Masoud Mirkazemi will be replaced, Iranian media reported, as the country faces a serious economic crisis.
The head of Iran’s Planning and Budget Organization Masoud Mirkazemi will be replaced, Iranian media reported, as the country faces a serious economic crisis.
Fars news website affiliated with the Revolutionary Guard reported about Mirkazemi’s impending dismissal, while the central bank chief was fired in late December.
Mirkazemi this week claimed that 93 percent of the budget was fulfilled in the previous Iranian year that ended on March 20, but this was done at the expense of the people who indirectly paid as the government kept printing money and increasing the inflation rate.
Iran’s currency rial has halved in value since early September and is now trading at 500,000 to the US dollar. This immediately translates into higher consumer prices, which have seen on high, double digit annual increases since 2018 when the United States withdrew from the JCPOA nuclear deal and imposed sanctions.
Fars did not mention a reason for Mirkazemi’s possible dismissal and only said that a tax office senior official, Davoud Manzoor is his possible replacement.
President Ebrahim Raisi’s government has been repeatedly claiming that it has lowered government borrowing from the central bank, but the effectual devaluation of the currency says otherwise.
Mirkazemi is also one of Raisi’s vice presidents and might also lose that position unless he is offered another post.
Iranian media reported in December that despite government claims, the money supply had grown by 1,000 trillion rials in seven months. Taking an average of the US dollar exchange rate in that period, the amount comes close to just $4 billion, but Iran has been printing money with an accelerated pace since the US imposed sanctions in 2018.
With no short-term prospect for an agreement with Washington over the nuclear program and other issues, local investors are nervous to hold on to rials and the US dollar began to reach unprecedented highs in 2023.
If Mirkazemi is fired it would be a step long demanded by a chorus of politicians and pundits who have been asking for a major overhaul of the government for more than a year. Iran’s restricted media has been echoing calls not only by the president’s opponents but also by many conservatives and allies.
So far, lawmakers who have been demanding the impeachment of some ministers have been rebuffed by parliament speaker Mohammad Bagher Ghalibaf (Qalibaf), who has tried to protect the administration, probably carrying out orders from Supreme Leader Ali Khamenei’s office.
The whole budget approval process in the parliament has remained obscure, as many among the elite believe that it is simply not realistic to expect sufficient revenues to come close to a balanced figure. Mirkazemi and others have put in the budget bill expected oil revenues of $43.3 billion, based on selling 1.4 million barrels per day for $85 per dollar – both unrealistic estimates. The annual budget cycle already started on March 21, while Iran is selling much less oil at steep discounts, probably bartering some of the exports.
Mirkazemi, an industrial engineer by training, is a conservative political operator who was minister of trade for four years and minister of oil for about two years under President Mahmoud Ahmadinejad.
Conservatives who assumed dozens of positions under Ahmadinejad are also ascendant in Raisi’s administration.
According to Iranian state media, Russia's Igor Levitin and the Islamic Republic’s top security official discussed Moscow’s readiness to invest in Iran’s oil, petrochemicals, and steel industries.
The two reportedly also discussed ways to thwart Western sanctions through ditching the dollar in their bilateral transactions, claiming that this would weaken the US currency.
Expressing satisfaction with the volume of economic cooperation between Tehran and Moscow, Shamkhani praised "the path that started to reduce the influence of the dollar in regional and international economic exchanges."
One of the points discussed was the ongoing joint project, the North-South Transport Corridor, which the Iranian official described as having a "decisive role in changing the geometry of transportation in the region."
During Levitin's visit to Iran last January, the two countries agreed that the remaining part of the North-South strategic corridor, in Iran’s northern Rasht-Astara route, will be built with the direct investment of Russia. The North-South Transport Corridor is a network for moving freight between Iran, Russia, Azerbaijan and other countries in Asia and Europe.
Tehran keeps boasting about its long-term strategic cooperation deals with Russia and China, but such deals have not yet borne any tangible results, despite several meetings among senior officials of the countries.
Jomhouri Eslami [Islamic Republic] newspaper reported April 8, that one of Iran's major pharmaceutical firms has increased the prices of its products by 67 percent. In another report, the daily said that during the past week state-owned companies raised vehicle prices by 40 to 70 percent.
Meanwhile, the daily charged that the Raisi administration's economic policy is in sharp contrast with the Supreme Leader’s Nowruz slogan of "Boosting production and controlling inflation". Raisi has said his government will do everything to achieve what the motto calls for.
An unprecedented drop in the value of Iran’s currency since September 2022 has led to runaway inflation and forced Iran’s ruler Ali Khamenei to officially call for a crusade against rising prices. The value of the rial has halved dropping from 250,000 to the US dollar to around 500,000.
The main reason for the crisis is the lack of any prospect for reaching an agreement with the West over Iran’s nuclear program, which can lift crippling sanctions imposed by the United States.
The newspaper warned Raisi not to resort to invalid justifications to whitewash the bitter realities Iranians are facing daily. Jomhouri Eslami also accused Raisi of burying his head in the sand and trying to sort out the problem by issuing orders while only during the first ten days of the New Year the price of essential commodities have undergone a 15 percent hike while travel costs have risen between 25 to 40 percent.
The daily asked Raisi: "Didn't you know before the Leader’s speech that inflation should be controlled? And how can you guarantee that you are able to control the prices from now on?" The newspaper suggested that Raisi should change his government's policies, start proper planning and hand over executive works to experienced and expert individuals.
Jomhouri Eslami had said in an earlier report on April 4 that the Raisi was not planning to discontinue his failed policies. The daily had said that Raisi should have taken a lesson from the people's protest in 2022 and suggested that he should not allow a hardliner minority to make decisions for his government.
Meanwhile, former reformist lawmaker Mahmoud Sadeghi on March 31 called on Raisi to resign and told him in a tweet that "The best solution for the country's problems is your resignation before holding a free and fair election." He further asked Raisi to be brave and resign.
Although US sanctions are a key factor in the economic crisis, politicians and pundits pile on Raisi, because they do not dare to say that Khamenei should allow a nuclear agreement with the West. Raisi’s haphazard management is another reason why critics find it easy to attack him.
In another development, conservative commentator Nasser Imani opined on April 4 that the government's weakness in decision-making reflected the President's mentality. He charged that Raisi's slow decision-making often ends in no decisions being made.
Speaking on the accusations of Raisi being under the influence of the ultraconservative Paydari Party, Imani said: "Being under the influence of Paydari Party is not the Raisi administration's main problem. The problem is that the government usually either finds it difficult to make decisions or it does not make any decision at all."
Imani argued, "Many government plans have remained undecided. For instance, the government said recently that it was about to create a Commerce Organization to operate under the President's Office, but the idea was abandoned after some time."
Imani further said that a major part of the problem is caused by the confusion in the government about how to tackle inflation. Raisi thinks inflation can be controlled by issuing orders, but the economy does not work that way.