Minister of Economy’s Statement

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Minister of Economy's Statement

Minister of Economy in words

The Minister of Economy in words has been in office for over two and a half years since the start of Seyyed Ehsan Khandouzi’s tenure at the Ministry of Economy, but it is hard to find any economist who not only defends his performance but even a public economist who does not criticize Khandouzi and his policies at the Ministry of Economy.

It is well known among the faculty members of the Economics Department at Sharif University of Technology that Khandouzi has been one of the weakest members of the Governance Institute of this university. This theoretical and even managerial weakness has been so evident that when the members of the institute intend to select periodic managers, they not only do not consider him seriously but also mockingly imagine Khandouzi in the position of the institute’s director.

But after less than a year of these events, Ebrahim Raisi decided to introduce Khandouzi as the Minister of Economy of the thirteenth government to the parliament. Perhaps even Khandouzi’s close associates did not expect him to one day be in the highest position of economic policymaking in the country and the executor of those policies. Now, more than 30 months have passed since Khandouzi’s ministry in Ebrahim Raisi’s government, and his poor track record is on the critics’ table. This report examines the performance of the Minister of Economy of the thirteenth government.

How can we satisfy everyone

From the very first days of Khandozi’s appointment as Minister of Economy, the deputies and employees of this ministry spoke about the new minister’s weak management in internal relations. However, as time went on, Khandozi’s weakness became more apparent, as his positions and statements indicated that the Minister of Economy under the Raisi government lacks the minimum authority to deal with various executive, regulatory, and judicial elements.

In fact, it is said that no one can enter Khandozi’s room and get a clear opposition or agreement from him on a specific issue. In other words, due to his weakness and lack of authority, Khandozi’s generosity does not bend. This can be the starting point for the minor and major problems of a senior executive manager.

This problem is so serious that it is said Khandozi is unable to defend his position when faced with Mohammad Reza Farzin, with whom he has many disagreements. It is said that the Governor of the Central Bank has repeatedly accused him and his team of academic and executive weakness in meetings with the Minister of Economy, both directly and indirectly.

Khandozi has been unable to respond to Farzin due to his numerous behavioral and managerial weaknesses. Many believe that if Khandozi did not have strong political supporters, he would have been impeached multiple times and may have even been dismissed by Ebrahim Raisi. However, he is currently part of Mohammad Bagher Ghalibaf’s team and benefits from the influence of principlists in the Raisi and Partners Joint Stock Company.

What is Khandozi’s main duty?

One of the most important duties of the Minister of Economy is to create a balance between the national budget and the treasury, meaning that the Minister of Economy is practically responsible for formulating the annual budget of the country based on the state of the executive treasury and working in collaboration with the Organization of Planning and Budget of the country. In order to establish such a balance among the mentioned economic components of the country, it is necessary for the Minister of Economy to have the necessary ability to collect government revenues and claims. Furthermore, they should have the power to manage and implement the national budget law.

However, these factors are contingent on many variables, the most important of which is the budget setting and the quality of this important document of governance. It should not be forgotten that the Ministry of Economy also has direct influence on the budget planning process in the Planning Organization, not only in implementation but also in budget policy-making, the Minister of Economy has complete discretion.

But implementing such a heavy commitment requires the possession of complete authority and a kind of expertise. As mentioned before, it has been said that the Minister of Economy lacks this fundamental characteristic for managing the most important economic artery of the country, and this has caused the Ministry of Economy to remain inactive in carrying out its most essential duty.

The result of this inability is clearly the government’s manipulation of banking resources, resources that naturally are obtained through the issuance of money and expanding the monetary base due to the lack of economic support. In simpler terms, it can be said that the weakness of the Minister of Economy in terms of management has led to the intensification of heavy inflation, making people’s livelihoods increasingly difficult. In fact, the weakness of the Ministry of Economy has turned it into the driving force behind inflation, a force that has led to the continuous depreciation of the value of the rial and the constant decline in purchasing power and subsequently the deteriorating conditions of ordinary people.

Banks and Stock Exchange on the Rail of Populism

One of the main slogans and media maneuvers of the recent 30 months has been the increase in bank lending and the creation of an active space in the Tehran Stock Exchange. However, statistics show that this has not only been achieved, but the stock market situation has become much more severe than in 2021, and the real value of bank facilities provided to the general public has decreased compared to two years ago. Although numerically significant, when we consider the purchasing power variable in calculating the value of bank facilities, we realize the backwardness of the banking system in the value of loans paid to applicants in the current government.

The stock market also has a similar situation, in a way that the overall index crossed the 2 million and 500 thousand unit mark in the first half of 2023, but then faced a heavy decline. However, the government is trying to resume the 2 million unit range as a way to build its own resume.

Corruption in government and state-owned enterprises

One of the most important slogans of the Ibrahim Raisi government is the fight against corruption. Ehsan Khandouzi has always emphasized anti-corruption since the beginning of his tenure in the Ministry of Economy. For example, in an unprecedented move, he revealed a list of all the banking debtors in the country. This led to the government being introduced as the country’s largest debtor to the public. However, the absence of many individuals who have played a role in major corruption cases was clearly felt in this list.

These actions by Khandouzi were taken at a time when Mohammad Reza Farzin had not yet taken office. The heavy pressure that the government had put on facilitating loans to banks was completely neutralized with Farzin’s entry into the Mirdamad Street building. Moreover, during the year that Farzin served as the head of the Central Bank, we witnessed the disclosure of serious corruption cases in the preferential allocation of foreign currency at various prices.

In such a way that the Dabash tea case, due to the large scale of corruption, has taken on extensive political and social dimensions. The first defendants in this case are the Ministry of Economy and the Central Bank, who have allocated nearly $4 billion in preferential foreign currency for the import of tea over three years to only one non-governmental company, without clear justification.

It appears that the weakness in domestic management has allowed profit-seekers to take advantage of the situation by pressuring him and using various leverage, such as lobbying in parliament, to impeach him for their own benefit. This is happening while the government is forced to sell oil to the Chinese at unprecedented and heavy discounts in order to secure the country’s required foreign currency, and these dollars do not easily reach the central bank, making them now victims of incompetence and lack of economic management.


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