Iran’s new president has few viable economic options

Significance

He promised not to borrow any more from the central bank; to consider revising the official exchange rate; and to amend the budget bill to address the mounting deficit, projected to reach USD17bn in the current fiscal year ending March 2022, according to a September report by the Majlis Research Centre.

Impacts

• Further price increases and rising poverty will increase social tensions.
• The new central bank governor could impose interest cuts justified in terms of sharia-compliance.
• Austerity measures including reduced capital spending will weigh on slow-recovering economic growth.
• Some bankrupt government-owned entities will close, resulting in redundancies.