What is Raisi’s Problem with Hemmati? Part Three
Abdolnaser Hemmati’s main criticism of Ebrahim Raisi revolves around the publication of statistics and figures that lack clear evidence for their validation. It seems the head of the thirteenth government has turned institutions like the Central Bank into the public relations arm of his administration. This report, the third part of a three-part series examining the issues between Raisi and Hemmati, addresses the consequences of Ebrahim Raisi’s approach to managing the country’s economy. These conflicts go beyond a typical media dispute between two politicians and indicate a lack of expertise in the economic team of the thirteenth government. The previous two parts dealt with the instances and background of these disagreements, but this report aims to seriously examine Hemmati’s criticisms.
Borrowing Has No Horns or Tails
As mentioned in the previous parts of this report, the most significant disagreement between the former governor of the Central Bank and Ebrahim Raisi is over the claim that the government has not borrowed from the Central Bank. Raisi has repeatedly claimed in television interviews and his first press conference on the first anniversary of his administration that the government has not borrowed from the Central Bank. State media and those close to the thirteenth cabinet have tried to instill Raisi’s claim in the public by publishing strange reports. However, Abdolnaser Hemmati was the first to react to the president’s claim each time and exposed the situation. According to what Hemmati has shared on social media, the thirteenth government has engaged in indirect borrowing from the Central Bank.
In other words, the government has not reduced the growth rate of liquidity; instead, it has exacerbated inflation and facilitated corruption. The audit report from the Supreme Audit Court of the country, despite efforts to cover up the government’s disastrous performance, has confirmed Hemmati’s statements. According to the Supreme Audit Court, the government only managed to secure 40% of the projected budget in the first four months of the current year. Therefore, it can be said that the government lacks a stable and non-inflationary source of income, as the total revenues from oil, taxes, and asset sales have only met 40% of the 2022 budget expectations. A look at the figures related to bond sales also indicates the insufficiency of liquidity provision by the government. Thus, it can be said that Hemmati’s statements are rooted in reality, as the government sees no other option but to borrow from the Central Bank.
The Government’s Oil Ambitions
Another claim by Ebrahim Raisi, which faced a reaction from the former governor of the Central Bank, was the claim of achieving oil revenues five times that of the previous year. According to statistics published in the Supreme Audit Court’s report, which Raisi has repeatedly mentioned, the rial equivalent of the government’s oil revenues in the first four months of 2022 increased about five times compared to the same period last year. However, the question remains why the government and the Supreme Audit Court do not announce the dollar equivalent of oil revenues. According to Hemmati, it is unclear at which exchange rate the government has converted and declared the oil revenues. Some experts believe this claimed revenue from oil exports is calculated at the free market exchange rate. However, there is a way to verify this government claim.
According to the 2022 budget approved by the Islamic Consultative Assembly, the government achieved less than half of the projected oil revenues in the first four months of the current year. Furthermore, the oil price was estimated at $70 in the budget, but observations indicate that Iran’s oil is being sold at an average price of over $80. In reality, the government has not only failed to meet budget expectations regarding oil exports, but if the dollar equivalent of Iran’s oil exports is calculated, it will be significantly less than 40%.
Saleh Abadi’s Statistical Manipulation and the Central Bank’s Favor
Another main dispute between Hemmati and Ebrahim Raisi relates to the president’s report on a more than 20% reduction in inflation over the past year. Raisi repeatedly claimed inflation rates above 60% during Rouhani’s administration, which was met with reactions from economic experts each time. However, the most significant response in this case came from Hemmati’s famous tweets. Hemmati considered Raisi’s claim to lack authenticity and believed the government intends to manipulate statistics to alter its record. In fact, Ebrahim Raisi intends to manage public opinion by presenting unseen and unheard statistics from the Central Bank about inflation during Hassan Rouhani’s administration and comparing it with reports from the Statistical Center on the current situation in the country so that no one questions the government’s performance in the economic domain.
However, this approach by Ebrahim Raisi has had very destructive consequences for Iran’s economy, which can become more significant and widespread over time. Among these consequences is the degradation of the highest monetary and banking policy-making institution in the country. With this policy, the head of the Central Bank has been transformed from a powerful and influential manager into the public relations officer for the president and economic ministers. In other words, whatever statistics the government needs, Ali Saleh Abadi reaches into the mysterious and magical box of the Central Bank and fulfills the desires of the ‘Leader of the Deprived.’
What are the Consequences of Raisi’s Approach?
This situation will result in nothing but turning Iran’s economy into another Venezuela. It should be noted that in countries like Turkey and Venezuela, which currently have the highest inflation rates in the world, governments have done exactly what Raisi is doing to the Central Bank. The controversial appointment of Ali Saleh Abadi as the head of the Central Bank initially raised concerns that the government wanted someone compliant and undisturbed to be at the helm of the highest economic policy-making institution in the country to provide whatever it needs.
This approach was not as prominent even during Ahmadinejad’s administration. The current government’s approach appears so trivial and rudimentary that even some economic experts who politically supported the government have now become sharp critics of Raisi’s policies. These policies have destructive aspects that are much more significant and widespread than can be covered in a single report or article.
A Major Concern
Another concerning point is the similarity of Raisi’s recent statements with the baseless claims of Recep Tayyip Erdogan about Islamic economics. Some domestic media report a will to establish clergy in bank branches. Additionally, the suppression of interest rates under the pretext of Islamic banking is another indication of such an approach in the thirteenth government. Saleh Abadi, due to his familial relationship with Gholamreza Mesbahi Moghadam, who heads the Central Bank’s Jurisprudential Council, has become a tool in the hands of Ebrahim Raisi and the government’s economic team to implement the destructive policies of the government and radical clerics. Signs of the presence of religious overseers in banks and restrictions on banking services for women who do not adhere to the official interpretation of hijab have been observed. These signs are more pronounced in some provinces like Khorasan Razavi, which increases concerns about the step-by-step advancement of policies by individuals like Mesbahi Moghadam.
This article is part of the series ‘What is Raisi’s Problem with Hemmati?’ published in Iran Gate, and you have read part three. To read the previous parts, click on the links below.
- What is Raisi’s Problem with Hemmati? Part One
- What is Raisi’s Problem with Hemmati? Part Two
DMCA Protected Cover