Tuesday, April 22, 2008

Outgoing Economy Minister on Iran’s Economic Challenges

Davoud Danesh-Jafari, Iran’s outgoing economy minister, today outlined the major challenges facing the country’s economy and slammed government officials, including President Ahmadinejad, who without any deep knowledge of the economy support policies that make the country’s economic situation even more bleak.

Danesh-Jafari made his harsh criticism during his farewell address at the ministry, a highly unusual step for a civil servant or a politician in Iran.

Danesh-Jafari identified the growing, and seemingly out-of-control, money supply and the resulting inflation rate as the major economic challenge facing Iran.

Danesh-Jafari said last year Iran oil exports brought in $61 billion. The petro-dollars were converted into rials to meet the government’s budget expenditures, with the money supply reaching levels that naturally produces high inflation. Danesh-Jafari voiced concern that government officials did not understand the relation between the money supply and the inflation and insisted in printing ever more rials.

“Do not worry about the money supply,” the officials told Danesh-Jafari.

The problem is that the money supply is on the rise at a whooping 35-40% annually. When the additional money is not used to create goods, but to purchase what goods are available, then the price of those goods go up. Danesh-Jafari had a tough time as the country’s minister of economy to convince officials of this simple casual relation.

Danesh-Jafari also criticized Ahmadinejad for creating hostile relations between the government and the Majlis, the Expediency Council, the IRIB (Radio/TV), the newspapers, his rivals in the last presidential election, his potential rival in the future Majlis, and with certain individuals. He paints an administration with a limited knowledge of the economy and an administration with a siege mentality.

[For the complete Persian text of Danesh-Jafari farewell address, see Fars News Agency: http://www.farsnews.com/newstext.php?nn=8702030748 ].


Mark Pyruz said...

Professor Farideh Fahri has posted a recent article related to the Iranian economy. Ahmadinejad and the "System" is available at:


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