Following the sudden death of late president Ebrahim Raisi, Iran is set to hold a snap election on June 28.
Candidate Pourmohammadi blamed the 29% interest rate for the country's rising inflation.
He said, "Inflation and liquidity are intertwined, and inflation can be controlled by controlling liquidity."
In his concluding statements, the 'reformist' candidate Pezeshkian said, "I strongly believe in active engagement with the world. I believe sanction is equal to war, and the poor are those who get killed in the economic war."
None of the candidates mentioned the link between inflation and the two factors of foreign sanctions and harmful government control over the economy. With less income from oil exports and inefficiencies resulting from government interference in the economy, the Central Bank is forced to print money, which in turn fuels inflation.
Speaking about Iran's high inflation, hovering around 50%, the 'moderate' candidate Pezeshkian blamed "the banks" for printing money. It seems that the candidate is unaware that the Central Bank prints money not all the banks.
According to Iran's Constitution, the exclusive right of issuing the country's currency belongs to the government and has been exclusively granted to the Central Bank of the Islamic Republic of Iran. No bank in the country has the right to print banknotes.
Inflation's continued rise, a widening budget deficit, and the stability of the banking system dominated the final round of questioning. Candidates with links to late president Ebrahim Raisi sought to project that most of such problems were the legacy of the former administration under Hassan Rouhani.
During the 2.5-year tenure of President Ebrahim Raisi, Iran has seen its liquidity double due to a 100% increase in state debts to Iranian banks, aimed at compensating for the budget shortage and current expenses.
According to a report by the Central Bank, liquidity increased by 24% during the last fiscal year, which ended on March 19, reaching approximately 80,000 trillion rials ($123 billion, based on the USD rate in open markets). This figure represents more than 30% of Iran's GDP.
Iran is grappling with an infrastructure deficit of $500 billion. Iran is also facing a serious economic crisis since the United States withdrew from the JCPAO nuclear accord and imposed sanctions in 2018. However, the country’s economic vows go much deeper, as the Islamic regime failed toleverage its oil export revenues to properly invest in infrastructure and development since the 1990s. It is estimated that Iran sold around $1.5 trillion of oil in the past two decades, yet it faces a bankrupt government that has a stranglehold over 80 percent of the economy.
Restricted by US oil export sanctions, Iran sells its crude at lower prices to China and earns around $30 billion per year, with no other significant revenues in hard currencies. This does not even cover the annual budget of the government and there are no other funds for long-term investment.
Government officials have recently admitted that most of the $150-billion National Development Fund, or the sovereign wealth fund has been spent, since 2012, leaving nothing for investment. Foreign investments are also virtually non-existent due to sanctions and lack of political confidence in the Islamic Republic regime that has adversarial relations with Western countries and a government-controlled economy.
The Central Bank of Iran reports that the government's debts to this bank jumped by 65% year-on-year to more than 3,000 trillion rials ($4.6 billion) during the last fiscal year.
In addition to the government itself, state-owned companies also owe 880 trillion rials ($1.35 billion) to the Central Bank.
The International Monetary Fund has calculated that the debts of the Iranian government amount to 30.5% of its GDP, which is equivalent to $118 billion, or 2.5 times the government's budget for the current fiscal year.
Iran’s staggering state debt and liquidity have led to an acceleration in devaluation, especially in recent weeks when the Iranian rial plunged to its historical lowest value. Currently, each USD is sold at about 600,000 rials, whereas at the beginning of Raisi’s presidency, it was about 230,000 rials.
While some speak about the damage brought on by sanctions, no candidate has addressed the reasons why sanctions have been imposed. Iran's foreign policy and the controversial nuclear program remain largely a taboo in this election campaign.
While all six candidates speak about the economic failures of the Islamic Republic, a simple check reveals that all of them have been involved in governance as officials or lawmakers each for more than two decades. They have all been loyal to the political and economic system largely created or protected by Supreme Leader Ali Khamenei in the past 35 years.
In the second round of answers, almost all candidates made statements about sanctions and how to handle them as serious challenge facing the country’s economy. The candidates have different proposed solutions to the problem.
Qalibaf emphasized the need for diplomacy and utilizing existing resources.Qalibaf believes that with the right president and by utilizing existing resources in organizations like BRICS and Shanghai, as well as agreements with China, Iran can overcome its problems and achieve growth.
Pezeshkian claimed that China insists that unless Iran resolves its issues with the FATF, it will not finalize its investment in the country.
Zakani called for neutralizing sanctions domestically and using diplomacy to change their root causes.
Pourmohammadi advocated for ending ‘self-sanctions’ and using diplomacy and national power.
Almost all candidates called for a change in approach to international relations.
Pezeshkian, unlike some other candidates, called sanction “a disaster” and challenged the official narrative that Iran is able to circumvent the sanctions.
“Yes, we circumvent them, but in the process there is lot of corruption.”
He also emphasized that Iran ranks among one of the worst countries in the world in corruption indicators.