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Raisi's Economic Legacy: Trail of Unkept Promises and Escalating Hardships

May 23, 2024
Arezoo Karimi
6 min read
With a landscape of over 50 vague and unmet economic pledges, Ebrahim Raisi earned the moniker "president of promises"
With a landscape of over 50 vague and unmet economic pledges, Ebrahim Raisi earned the moniker "president of promises"

With a landscape of over 50 vague and unmet economic pledges, Ebrahim Raisi earned the moniker "president of promises."

Among his pledges were achieving single-digit inflation, bolstering economic growth, erecting four million homes, curbing unemployment, combating economic malfeasance, and mitigating the burdens of healthcare and sustenance costs on citizens. 

However, the fate of these commitments remained shrouded in disillusionment.

Raisi's assurance of single-digit inflation garnered significant attention.

Proponents of his administration, including key economic figures, incessantly projected a downward trajectory in price escalation, purportedly aligned with this vow. 

Yet, revelations from institutions such as the Central Bank and the Iran Statistics Center unveiled a starkly different reality. 

Contrary to the promised single-digit realm, inflation surged to unprecedented heights, marking the highest levels witnessed in the country over the past eight decades.

The fall of the national currency's value exemplifies the tangible consequences of economic mismanagement. 

Under Raisi's tenure, the exchange rate against the dollar skyrocketed from 23,000 to 60,000 tomans, representing a staggering 152 per cent depreciation in just two and a half years.

Meanwhile, the escalating prices of essential commodities lay bare the chasm between official narratives and lived realities. 

For instance, the cost of red meat ballooned from 141,000 to 800,000 tomans per kilogram—a staggering 467 per cent surge—within less than three years.

Moreover, the promise to construct four million homes metamorphosed into a stark juxtaposition as property prices soared by 162 per cent during his tenure. 

These figures paint a picture of a populace burdened by the weight of unfulfilled promises and spiralling economic hardships.

Raisi's administration introduced what they termed "economic surgery," a policy purportedly aimed at restructuring the economy. 

However, rather than healing the economic ailments, this strategy inflicted further pain, exacerbating inflation and escalating prices of essential goods, thereby burdening the populace.

At the heart of this initiative was the elimination of the government-subsidized US dollar rate of 4,200 tomans, intended for the import of basic necessities or raw materials. 

In its place, promises of increased subsidies were made to the people. Yet, the reality unfolded starkly differently: the removal of the 4,200-toman rate precipitated a surge in the prices of essential commodities, plunging citizens into hardship.

Furthermore, the subsequent adoption of a preferential US dollar rate of 28,500 tomans by Mohammad Reza Farzin, president of the central bank, merely reinstated the profit disparity between the government-set rate and the free market, fostering an environment ripe for financial malpractice and corruption. 

Despite warnings from 61 Iranian economists regarding the detrimental ramifications, this decision was implemented.

The repercussions of abolishing the 4,200-toman rate reverberated beyond mere price hikes. 

According to the Parliament Research Center, this action not only contributed to the escalation of commodity prices but also destabilized the currency market, exacerbating exchange rate fluctuations—a consequence directly attributable to the policies of the government.

The purported objective of this "economic surgery," as championed by Raisi's administration, was to streamline state subsidies, particularly in sectors such as medicine, livestock, meat, rubber, and medical equipment. 

However, the reality was starkly different, citizens saw no corresponding increase in subsidies. Instead, they were subjected to skyrocketing inflation and exorbitant price hikes.

Ebrahim Raisi's rise to power was accompanied by ambitious pledges of economic revitalization and advancement. 

However, the current state of affairs, three years into his tenure, presents a starkly contrasting narrative—one characterized by economic decline and widespread devastation across multiple key indicators.

The Iran Stock Exchange, once emblematic of economic vigor, has suffered a staggering loss of $114 billion in value over the past 31 months, marking the most significant downturn in the total index since its inception.

Iran has experienced an unprecedented trade deficit, reaching a negative $17 billion last year—a level unmatched even during the eight-year Iran-Iraq war. 

Attempts by the government to portray this dire situation favorably, such as by incorporating revenues from discounted crude sales in trade balance calculations, only serve to obfuscate the severity of the crisis.

Compounding these challenges is a decline in government revenue, exacerbated by diminishing oil revenues despite claims of increased production. 

The government has resorted to imposing heavier taxes on its citizens, triggering widespread discontent and igniting protests and strikes.

For instance, this year's budget witnessed a 50 per cent uptick in taxes, while last year's budget bill projected a 71 per cent surge in anticipated tax income—an imposition disproportionately borne by the populace.

Amidst these economic adversities, the promise of generating one million jobs annually remained unfulfilled, casting doubt on any substantive reduction in the country's unemployment rate. 

The gaping chasm between rhetoric and reality underscores the profound economic challenges confronting Iran under Raisi's leadership, leaving citizens grappling with the harsh repercussions of unfulfilled assurances and mismanagement.

Setting new records, the poverty line has skyrocketed under the government. 

Before the current administration took office, it stood at 10 million tomans. Now, it's soared by 150 percent to 25 million tomans, plunging a third of the population below the absolute poverty line.

Despite claims by Raisi of offsetting budget deficits through business expansion rather than money printing, reports reveal a 45 per cent annual growth in the monetary base last April. 

By circumventing the banking system, Raisi's government has fueled a 97 per cent surge in debt owed to banks and a 162 per cent increase in debt to the central bank, contributing to the unprecedented growth of the monetary base.

In a span of 31 months under this administration, domestic and assembled car prices have surged drastically, disproportionately affecting the low-income bracket. 

For instance, the cheapest car on the market has inflated by 230 million tomans, a 164 per cent surge, despite production halts due to quality and safety concerns.

Despite rhetoric condemning corruption, the government's actions have failed to curb financial misconduct. 

Moreover, published lists of bank debtors lack completeness and accountability, offering little in the way of curbing banking malpractice.

Instances of embezzlement have been rife since Raisi's government took office, involving staggering sums of money, yet there's been no indication of these funds being returned to the national economy.

The list below outlines some of the corruption cases that have transpired under Raisi's presidency:

  • Misappropriation of $3.4 billion in the Debsh Tea. 
  • Financial irregularities amounting to $22 million in the Astan Quds Razavi tyre imports.
  • Million-dollar corruption involving Mohammed Mokhber and his son at Pasargad Bank.
  • A 92 trillion toman corruption case at Folad Mubarakeh.Billions in payments to Tehran Municipality officials.
  • Financial misconduct within the Raefipour Charitable Institution.
  • Corruption within the Iranian Football Federation.
  • Embezzlement of $2 million at Imam Khomeini Port.
  • A misappropriation of 29 trillion toman in one of the state banks.Disclosures of embezzlement and financial impropriety within Shasta.

In his Nowruz message this March, Raisi underscored the imperative of bolstering production growth and curbing inflation, purporting to bolster economic advancement within the nation. 

However, despite assurances of heightened production and burgeoning manufacturing facilities, scrutiny of stock exchange systems reveals a contrasting narrative of declining production and dwindling profitability among companies.

In response to Raisi's assertions of economic growth, some experts have levied accusations of governmental manipulation of statistics. 

Abdelnaser Hemmati, former President of the Central Bank, said, "When discussing the projected 6 per cent growth for 2023, one must acknowledge that the 1.5 per cent growth observed in the initial 9 months of 2023 was primarily attributable to oil extraction, while key production sectors such as agriculture and non-oil industry and mining experienced consecutive seasons of negative growth, effectively signalling stagnation in the production of goods."



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