Iran Faces Six Super Challenges

    1456282081776.jpg By Kaveh Taheri
    Iran Faces Six Super Challenges

    Dec 31, Tehran: Iran faces sıx super challenges such as "the country's water resources crisis", "environmental issues", "the pension fund", "government budget", "banking system" and "unemployment" as the economic Advisor to the President Dr. Masoud Nili told Doniya-e-Eqtesad.

    Economic problems are the most important challenge for the Islamic regime in Iran. The economy is sick and getting sicker because of inflation, bribery, embezzlement and lack of any methodical control on bankıng and fınancıal system.


    There are more than 5 million unemployed people in Iran. If we go through the experienced models, we will have more than 11 million unemployed in 2021, interior minister declared. We created only 14,000 jobs a year. Inflation has increased by its high rate in the past years, and is skyrocketing day by day, although, the Inflation rate in Iran has always been two-digit.

    According to the latest estimates, the government’s debt is more than $175 billion, IRGC-backed Tasnim News said. The volume of government debt is equivalent to 60% of GDP, Tabnak News reported.

    Banking System

    Iran’s banking system faces serious problems such as the high rate of delayed loan payment, and  high share of fixed assets (mainly real estate) in bank assets is one of the most important problems. In the past decades in Iran, Bankruptcy in financial and credit institutions have also impacted the economy. According to the latest Central Bank statistics Persian BBC released, the volume of liquidity at the end of July reached more than USD 324.250 million, which is about $293.500 million worth of penny money (types of investment deposits and savings and long-term deposits) and $40.750 million of money (types of deposits Visits and banknotes are in the hands of the people). According to Donya-e-Eqtesad, the barriers to the advancement of the banking system are:
    1. Granting higher interest income by unauthorized financial and credit institutions.
    2. Grant equal interest, by all authorized banks.
    3. Incompatibility with deadline for maturity of deposits with maturity of facilities.
    4. Failure of the central bank to enter the cash flow of banks.
    5. The entry of the central bank into details, instead of identifying macroeconomic policies.
    6. Disregarding consultation with other banks and elites of the banking and monetary system of the country in the formulation of new regulations.
    7. Failure to define a new guarantee for the granting of facilities.
    8. Formulating regulations without any consideration to time requirements and economic conditions.
    9. Lack of willing in the central bank to amend the laws and regulations (reference laws) that were drafted many years ago.
    10. Absence of foreign banks and institutions in the country.
    11. High and non-standard volumes of non-bank demands in the country's banks
    12. Inconsistency between the Tax Office and the Central Bank.
    13. The economy is based on the banking system.
    14. Instability in monetary policy.
    15. Problems related to regaining payments due to the bankruptcy laws of corporations.
    16. Government dominance on monetary policy.
    17. Insufficient capital of banks.
    18. Delayed payments.
    19. Unprofessional performance of banks.

    The pension fund

    Both pension fund system and financial and credit institutes face major problems because;  1. They are state-backed institutions. 2. The institutions have no qualified management. 3. The institutions are infected with political and economic corruption. 4. The institutions are bankrupt. 5. The main investors, governmental employees, have no role in making decision of the system. In fact, the system has not any transparency, the local sources believe. How the financial and credit institutions were founded in Iran:
    The Shiite tradespeople and merchants established unofficial Islamic institutions, called “Gharz-al-Hassan” in Persian, because they believe that the banking system in the Shah’s era was corrupt. In Islam, any usurpation is forbidden.

    Mosques and religious centers also established some institutions by the pattern to pay loan to poors.
    After the 1979 Revolution, the Islamic institutions have been extensively practicing and practically enjoying a form of “legitimacy” without being supervised by the supervisory authorities. Afterwards, Finance and Credit Institutions were established by IRGC or state-affiliated sections. In instance, the Bonyad Finance and Credit Institution was established late 80s. The Bonyad Finance and Credit Institution continues to be named Sina Bank, affiliated to IRGC’s Mostazafan Foundation of Islamic Revolution. Gharz-al-Hassan’ institutions in Iran reached to 3,000 branches across the country in late 80s, but, the number of branches reduced to 200 in 90s. The issued banking-law in 1985 led people taking out their money from the banks to the Gharz-al-Hassan’ institutions.
    The adoption of the Lawless Banking Law in August 1983 led to the withdrawal of funds from banks and the growth of loan repayments.

    All of the Finance and Credit Institutions, with the exception of a few of them, are affiliated to the IRGC.
    In the mid-80s, two limited-partnership companies, named Be’sat and Nobovat were bankrupt after many of people deposited all of the money they had. The owners were allegedly arrested for charges of fraud, the former Saderat Bank CEO said. People deposit in the Finance and Credit Institutions because they are paid more interest than from banks. The institutions misuse the people’s ignorance of bank rules to get more profit.
    Read More:

    Iran’s “Economic Mirage” under the Khomeinist Regime

    Government budget

    Budget imbalances in the Iranian economy are growing. Rouhani’s cabinet faces a budget deficit by $ 19 billion in 2017-2018, that oil and taxes cannot recover it as well as experts say. The only way is Debt Securities which the state should prınt banknotes, whereupon, the inflation would be skyrocketed more.


    90% of Iranian animal reserves have been destroyed. Official statistics show that forest area gradually declined since 1979. Air pollution is another environmental problem. Motor vehicles are the main cause of air pollution in many major cities, including Tehran, according to reports.


    The head of the Environmental Protection Agency warned that 70% of the problems are related to water crisis. 80 percent of Iranian wetlands dried up. 95% of Iran's area is affected by the drought crisis. The Middle East has been stuck by the worst drought in its 900 years, NASA says.

    "Water and Pension Funds" two main challenges for the future of Iran, as World Bank reported.

    The Oslo Times International News Network


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