A new IMF estimate has led to claims that Iran’s gross international reserves have been “wiped out.” But a closer look at the data makes clear that this is far from the case.
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A new IMF estimate has led to claims that Iran’s gross international reserves have been “wiped out.” But a closer look at the data makes clear that this is far from the case.
Washington and Tehran could use the COVID-19 public health emergency to show goodwill, dial down tensions while saving face, and avoid a dangerous confrontation.
For the first time in 60 years, Iran has requested a loan from the International Monetary Fund (IMF), seeking emergency financing to support its efforts to combat COVID-19. If the IMF fails to provide Iran financial assistance that it makes available to countries in similar situations, the fund’s reputation will take a hit, as the fact of effective American control over its operations is laid bare.
Earlier this month, the Statistical Center of Iran reported a record high level of employed Iranians, with nearly 25 million people in work. Meanwhile, the IMF has revised down its 2019 projection for Iran’s economic growth to -9.5 percent. What explains the divergent narratives in Iran’s employment data and growth data?
At first glance, the IMF’s new projection that Iran’s economy will contact 9.5% this year seems to support the Trump administration’s claims that its “maximum pressure” sanctions campaign is bringing the Iranian economy to the brink. But Iran’s economy is poised rebound to zero growth next year—despite the sanctions.
◢ New data indicate that, while Donald Trump’s policy of “maximum pressure” has reduced Iranian oil exports to near zero and seriously hurt Iran’s economy, it has not caused anything resembling economic collapse. Furthermore, these data suggest that the economy is not in a steep decline, one that would anytime soon force Iran to capitulate.
◢ A new report from the International Monetary Fund (IMF) examining “selected issues” in Iran’s economy, including the expansion of non-oil exports and the role of women in the labor force, places special emphasis on the importance of the development of Iran's government securities market, which is a priority under the Sixth National Development Plan (NDP).
◢ Iran's inability to link with the European banking system stems in part from a lack of capacity in key governance and compliance functions.
◢ In the 1990s, European governments launched substantial "training and technical assistance" programs to help post-Communist states raise standards. Iran needs similar programs, and a model from Sweden may be the most effective.
