20 September, 2014 / Ziqa'ad 24, 1435

Iran’s supreme leader Ayatollah Ali Khamenei, who dubbed this year the year of “domestic production and the support of Iranian investment and labour”, and other senior officials increasingly admit to economic pain, but deny the Western sanctions are the principal cause.    — File Photo by AFP

TEHRAN: Top Iranian government officials gave lawmakers a closed-door briefing on Wednesday on the problems facing the economy, which is struggling under Western sanctions and alarming inflation.

The economy, oil, commerce and agriculture ministers, along with the central bank chief, addressed the meeting, the ISNA news agency reported.

The official IRNA news agency quoted parliament speaker Ali Larijani as saying the briefing was “to assess the economy and production situation.”

Economic problems are increasingly dominating news reports in Iran, despite a directive two weeks ago from the culture and Islamic guidance ministry warning Iranian print and online media to avoid reporting on the impact of the sanctions.

Iran’s supreme leader Ayatollah Ali Khamenei, who dubbed this year the year of “domestic production and the support of Iranian investment and labour”, and other senior officials increasingly admit to economic pain, but deny the Western sanctions are the principal cause.

“The reality is that problems exist in Iran, but we should not blame them on each other but we should solve them through unity.... (Officials) should refrain from useless quarrels and from publicising them,” Khamenei told cabinet ministers and military leaders late Tuesday, according to state media.

The United States and the European Union this month severely ramped up their sanctions on Iran with the aim of strangling its oil-export dependent economy in a bid to force it to roll back its controversial nuclear programme.

But Khamenei said that the West’s pressure would not work.

“When we look at the reality, we have to conclude that not only will we not revise our calculations, but we will continue on our path with greater confidence,” he said.

“Iran retreating (from its policies) regardless of justifications or excuses, or showing flexibility, will only embolden the enemy,” he said.

The sanctions are expected to cut Iranian oil exports by 40 percent, according to the International Energy Agency. They have also greatly pushed up the price of imported goods after the Iranian currency lost nearly half of its value against the dollar this year.

Hardship for ordinary Iranians

The effects of the inflation could be seen in media photos of long lines at state distribution centres for subsidised chicken, whose price in normal supermarkets has nearly tripled in the past year.

“We don’t eat a lot of red meat because it’s not healthy. But now chicken has also become expensive. We eat chicken just two times a week and make more vegetable dishes,” one shopper, a 57-year-old cleaning woman who gave her first name only as Pouran, told AFP.

“Now, when we invite people, we have them over after dinner because everything’s become so expensive,” she said.

Inflation is officially put at 21 per cent but estimated by outside analysts to be much higher.

Some Iranian officials attribute the painful price rises to government mismanagement.

Larijani, for instance, said last week: “The country’s economic problems are only 20 per cent due to the sanctions. Unfortunately, the main origin of the inflation comes from the maladroit application of the plan to suppress subsidies.”

The government of President Mahmoud Ahmadinejad has since 2010 been phasing out state subsidies on petrol, food and energy, offsetting them with cash handouts to most of Iran's population.

The latest phase of the subsidy cuts was suspended this month.

Authorities instead are deploying measures to make staples, such as meat, chicken, animal feed, powdered milk and medicine, more affordable for the population by fixing their import price to the fixed official exchange rate, which is 40 per cent cheaper than the open-market rate.

“Thirty billion dollars have been allocated for imports of priority products at the official rate of 12,260 rials (to the dollar),” an official with Iran’s Trade Development Organisation, Kiomars Kermanshahi, was quoted as saying by newspapers on Tuesday.

Other, non-essential, imported goods would be priced higher under a three-tier exchange rate system.


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