Sunday, April 6, 2008

Growing Inflation

Ahmadinejad’s “Great Economic Leap” ‎

President Ahmadinejad who had announced his new “Great Economic Leap” agenda ‎during the Iranian new year message on March 20th, 2008, issued a series of executive ‎orders and met a number of provincial Governors in which he called for wider efforts to ‎control the rising national inflation. These efforts came at a time when the Minister of ‎Economy Dawood Danesh Jaafari told Mehr news agency, “Despite wide efforts, the ‎government has not attained its goals regarding inflation last year in which there was a ‎rise of 4 to 5 percent in the rate of inflation compared to the previous year.”‎

Economists have openly charged the government’s policies to be the cause of the rise in ‎prices. Saeed Shirkund, for example, told Aftab, “The head of the cabinet and the head of ‎the Majlis, including a number of others within each branch, have each tried in recent ‎weeks to hold the other responsible for the spiral inflation, while the real cause of ‎inflation for last year and the year before rests with the government and the Majlis.” Dr ‎Mohammad Bagher Nobakht, the head of the Center for Economic Studies belonging to ‎the research center under the State Expediency Council told ISNA student news agency, ‎‎“Not only will economic problems be lessened next year, but the economic growth too ‎will be about 6 percent less this year.”‎

Experts believe that the recent circulars by the administration will only complicate the ‎problems. In one specific government circular to its departments, President Ahmadinejad ‎has asked government departments to each forego 20 percent of their budget. ‎

The newspaper Asr-e Iran interprets the circular of the government requesting them to ‎reduce their budget to be in contradiction to measures passed by the Majlis. “While the ‎Majlis spent three months working on the budget for 2007 and finally passed the budget ‎bill by slightly increasing its initial amount, the administration - in amazing contrast - has ‎requested the operational divisions of the administration to only consider 80 percent of ‎the allocated budget for 2008 to be applicable.”‎

ISNA student news agency also reported that in the recent gathering of Iran’s Governors, ‎President Ahmadinejad linked the growing rate of inflation in the country to Western ‎countries and said, “While the rate of inflation was bitter, but its actual amount is less ‎than what they thought.” Looking into the future, the president said, “We shall be ‎celebrating the third decade of the revolution and every operational division and province ‎should complete and inaugurate its projects in thirties (i.e. 30, 60, 90, etc).”‎

In a related circular, at its most recent meeting, the cabinet passed an order according to ‎which the banking system should limit its monetary disbursements to the public to 5,000 ‎million Toman (which is about $1,000) per person per day. It should be noted that many ‎businesses in the country need more than that limit for their daily operations. Surgeons ‎for example need much more than that to perform their operations forcing patients to ‎collect the money they need to pay the surgeons during several days. The circular is very ‎specific in making sure that banks authenticate their customers with IDs such as the ‎nation l ID code and their zip codes. This circular also tasks banks to send their records ‎every two months to the national documents and land registry, including company ‎registrations organizations (Sazeman Sabt Ahval-e Keshvar and Sazeman Sabt Asnad va ‎Amlak Keshvar) for their review and confirmation, further providing that customers ‎whose records contravene these stipulations will have to make their transactions ‎compliant within a month. The Central Bank of Iran is the ultimate policeman in the ‎process which must enact punitive measures for violators.‎

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