What is Raisi’s Problem with Hemmati? Part Three
The main criticism of Abdolnaser Hemmati towards Ebrahim Raisi revolves around the publication of statistics and figures without clear evidence to support them. It seems that 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 disagreements 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 covered the examples and background of these disagreements, but this report aims to seriously examine Hemmati’s criticisms.
Borrowing Has No Horns and 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 by the head of the government that there has been no borrowing from the Central Bank. Raisi has repeatedly claimed in television interviews and his first press conference on the first anniversary of his government that they have not borrowed from the Central Bank. State media and those close to the thirteenth cabinet have tried to propagate this claim among the public by publishing strange reports. However, Abdolnaser Hemmati was the first to react to this claim by the head of the government and expose it. According to what Hemmati has published 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; rather, it has exacerbated inflation and paved the way for corruption. The Audit Court’s report, despite efforts to cover up the disastrous performance of the government, has confirmed Hemmati’s statements. According to the Audit Court, the government only managed to meet 40% of the projected budget in the first four months of the current year. Therefore, it can be said that the government does not have a stable and non-inflationary source of income, as the total revenues from oil, taxes, and asset sales only met 40% of the 2022 budget expectations. A look at the figures related to bond sales also indicates the insufficiency of the government’s liquidity provision. Thus, it can be said that Hemmati’s statements are deeply rooted in reality, as the government sees no other way but to borrow from the Central Bank.
The Government’s Oil Dreams
Another claim by Ebrahim Raisi, which faced a reaction from the former governor of the Central Bank, was the claim of earning oil revenues five times that of the previous year. According to statistics published in the 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 fivefold compared to the same period last year. But the question is why the government and the Audit Court do not announce the dollar equivalent of oil revenues. According to Hemmati, it is unclear at what exchange rate the government has converted oil revenues into rials and announced them. Some experts believe that this claimed revenue from oil exports is calculated based on 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. Additionally, the budget considered the price of oil at $70, 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 in terms of oil exports, but if the dollar equivalent of Iran’s oil exports is calculated, it will be far less than 40%.
Saleh Abadi’s Fabricated Statistics and the Central Bank’s Compliance
Another major dispute between Hemmati and Ebrahim Raisi is related to the government’s report of a more than 20% reduction in inflation over the past year. Raisi has repeatedly claimed that inflation in Rouhani’s government was over 60%, which has been met with reactions from economic experts. However, the most significant reaction in this case comes from Hemmati’s famous tweets. Hemmati deemed Raisi’s claim as lacking authenticity and believed that the government intends to manipulate its record with fabricated statistics. 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 government and comparing it with reports from the Statistics Center about the current situation in the country, so that no one questions the government’s economic performance.
However, this approach by Ebrahim Raisi has had very destructive consequences for Iran’s economy, which could become even more extensive 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 head of government 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 to fulfill 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 to appoint a compliant and worry-free individual to the highest economic policy-making institution to fulfill whatever is needed.
This approach was not even as prominent in Ahmadinejad’s government. The current government’s approach is so crude and simplistic that even some economic experts who politically supported the government have now become sharp critics of Raisi’s policies. These policies are far more destructive and extensive than can be addressed in a single report or article.
A Major Concern
Another concerning point is the similarity between Raisi’s recent statements and Recep Tayyip Erdogan’s baseless claims about Islamic economics. Some domestic media have reported on the intention to station clerics in bank branches. On the other hand, suppressing interest rates with the justification of Islamic banking is another sign of such an approach in the thirteenth government. Saleh Abadi, due to his family relationship with Gholamreza Mesbahi Moghadam, who heads the Central Bank’s Fiqh Council, has become a tool for Ebrahim Raisi and the government’s economic team in implementing the government’s and hardline clerics’ destructive policies. Signs of the presence of religious supervisors in banks and imposing restrictions on banking services for women who do not adhere to the official interpretation of hijab have been observed. These signs are more prominent in some provinces like Khorasan Razavi, further heightening concerns about the gradual implementation 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 the third part. 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
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