By Firoozeh Matin, Rooz Online
With the sharp rise of prices in Iran - most recently announced by the Iran Statistical Center to be at 39 percent even though Donyaye Eghtesad (World of Economy) pins it at 41.5 percent - and as the government debates the launching of the 2nd phase of the subsidies program which would hand out more cash to ordinary citizens and talks of raising the price of gasoline to 2,000 Toman per liter, holding down the interbank-rate at zero has created some serious issues for the Iranian economy.
Prices have risen sharply in the past year
photos by Leila Ghodratollahi, Mehr News Agency
The new wave of price increases has been not just watched by the politicians but has in fact alarmed Majlis deputies who have called for a discussion of its economic-political-security implications of the rapidly changing economic terrain. A special closed session of parliament has been scheduled for next Tuesday with the participation of the minister of intelligence, the chief of police, and a member of the supreme national security council, along with the minister of economy to discuss the impact of the rampant inflation that is eating into the pockets of citizens across the country.
The Majlis has indicated in the past that it favors a reduction in the direct payout amounts to the public and a price ceiling of 1,000 Toman per liter on gasoline while Ahmadinejad wants to hand out 250,000 Toman to every Iranian and raise the price of gasoline to over 5,000 Toman per liter.
The uncontrollable inflation in the country has forced the Majlis to rearrange its normal schedule and call for an extra-ordinary session to look into the implications of the rising prices and possible public discontent.
Iranians wait to buy low-price chicken offered by the government in Tehran - July 2012
According to Iran's ISNA student news agency, two days ago Majlis deputy Mohammad Hassan Abutorabi said, "Majlis shall have a closed session to discuss the rise in the price of basic goods. This meeting will be held in the presence of responsible officials to examine the impact of the rising prices."
He did not mention that security officials would also be present at the meeting, but a parliamentary journalist who was present at yesterday's Majlis session told Rooz, "Majlis deputies talked about rising prices all day yesterday and expressed their concerns about possible social unrest because of this. They believe that the passage of the annual budget and the increase in the price of gasoline will result in public discontent which could bring about unprecedented security issues. The deputies stressed that all ministers involved in economic affairs would participate in Tuesday's meeting, along with security officials which include the minister of intelligence, chief of police and a representative from the supreme national security council."
The decision to hold this extraordinary session comes days after Iran's Statistical Center issues economic indicators, including details of inflation for the Iranian month of Forwarding (March 21 to April 20). According to its report, the average increase in prices compared to the same period last year stood at 38.7 percent, while this figure for the last 12 months for urban areas stood at 29.8 percent. The report also indicated that the price of bread had increased by 35 percent, red meat by 53 percent, white milk by 64 percent, milk by 50 percent, cooking oil by 45 percent, vegetables by 70 percent, fruit by 45 percent, tea by 54 percent, tobacco products by 87 percent, housing rents by 32 percent and cost of housing by 40 percent compared to the previous year.
At the same time, a member of the High Monetary and Credit Council of the Central Bank Mohammad Hassan-nejad told Radio Farhang that while the body had met to decide on the new inter-bank rate, it adjourned without making any decision. He said "The Council was paralyzed. We do not know what to do. If we increase the rate, there will be greater liquidity which will result in greater unemployment and then a reduction in industrial production following which we will have greater inflation. If we do not increase the rate, then with the current 50 percent loss in purchasing power and the devaluation of the currency by 80 percent, people cannot survive. The Council is really at a loss as to what to do."
"If we look at the problem from an economic perspective, there is one solution. But if we look at it from a political angle then that is a different issue.
While the Iranian economy has seen a sharp deterioration since new round of international sanctions hit its oil, banking and shipping sectors, some Iranian officials continue to talk of "administration of the world," "administration of the region," and other grandeur visions. These illusionary aspirations are not confined to the president and even ayatollah Khamenei is affected by them. In his last speech at a gathering titled "The Ulema and the Islamic Awakening" he talked of moving towards the grate Islamic civilization. Words that were clearly reminiscent of what the last monarch of the Persian dynasty, Mohammad Reza Pahlavi used to say during the last months of his regime.
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