Iran Economic Report (Monthly) - Number 2, October 2011
Vesta Monitor has published its October 2011 issue of “Iran Economic Report”. Executive Summary follows. To see and download the full report, please go to www.vestamonitor.com.
Iran's economy, although benefiting from the advantages of one of the world's largest oil and gas reserves and tourist attraction landmarks, has grappled over the past years to cope with the incompetence of the state-owned enterprises that form the vast majority of Iran's economy. While many attempts have been made to alter and privatize, a variety of barriers remain and the country still has a limited private sector. Additionally, many different political issues, both international and domestic, have surrounded the country and its policies, leading to a number of economic effects including sanctions.
A depraved rentier condition is bringing the Iranian economy to its knees. The economy once again is experiencing a multiple foreign-exchange rate regime that has created enormous risk free rent for the ones, who have access to it. The current situation consists of an official exchange rate that coexists with the informal parallel market exchange rate. While there has been a greater use of informal exchange rates by private sector agents over the years, the current system is nontransparent, creates various distortions, and imposes high costs on participants. In many attempts the central bank tried to inject foreign currencies to the market to stabilize the prices with no success. This failure goes back to the economic policies that the government and central bank set to conduct the economy.
In the past month alone, Iran uncovered a $2.6 billion fraud, involving four major banks, including Bank Saderat. Several arrests were made so far but the event was capped by the supreme leader. Another one with roughly the same amount involves the Social Security Organization, which has been one of the major buyers of government enterprises under the privatization plan. The Majlis head prevented any further investigation that was being conducted by the Investigation Committee of the Majles. The root cause may be sought in economic mismanagement of the country.
About: Vesta Monitor is a wholly independent economic research group under the management of Vesta Capital, LLC (www.vestacapitalllc.com). With a focus on West and Southwest Asia (currently Iran, Iraq, and Afghanistan), VM offers clients a complete perspective into the dynamics and developments of its covered regional economies and current affairs. The group reports include:
Periodic economic and business review reports: VM’s periodic reports comprise current economic and business events and the corresponding analyses. The reports are published monthly and quarterly;
General economic and business analysis reports: VM’s general reports include macroeconomic analysis and forecasts as well as industry and business analysis.
For more information please refer to the Vesta Monitor website www.vestamonitor.com.
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