Iran’s Untenable Economy

Iran’s Untenable Economy

from The Diplomat by Dina Esfandiary

Mention of the words ‘structural reform’ these days usually conjures up images of the unrest in Greece. But according to a new report from the International Monetary Fund, Iran has also been restructuring its economy, introducing changes that have resulted in an unexpected growth rate of 3.2 percent in 2010-11. Maybe. Following a two week visit to Iran and discussions with Iranian officials in the spring, the IMF reviewed its initial criticisms, and applauded the regime’s removal of its decade-long subsidy programme. But economic mismanagement by Tehran has prompted scepticism of these findings – and is threatening to wipe out the potential for long-term growth. Until December 2010, Iran was spending about a quarter of its GDP on food, fuel and electricity subsidies, and the dismantling of the subsidies system therefore removed a major financial burden for the government. The promise of $40 per month, deposited straight into the accounts of registered lower income ... Read More...