In a ridiculous manner, Iran’s Minister of Industry, Mines and Trade said that the country witnessed seven percent industrial growth, while even the most developed countries in the world did not claim such a thing, especially at a time when the coronavirus epidemic has hurt many industries.
Now the question is, while we are witnessing a very low economic growth and the dollar price which is now 24,000 tomans, which is a large figure for Iran’s stressed industries, how can the regime’s government and especially its minister can make such a claim. It should be noted that previously the regime’s supreme leader Ali Khamenei claimed that Iran is ranked 18th in the table of the developed countries which led to many ridicules on the social media.
Below is an interview with the title, ‘95% of people are not able to increase consumption’ and published by the state-run news agency ILNA about this subject with an economic expert of the regime Ehsan Soltani.
Q: “Is it possible to extract positive growth in the field of industry from the economic conditions of Iran?
A: “We must first keep in mind that the irrational increase in the exchange rate is done to protect the interests of rent-seeking enterprises. The figures I refer to here are based on exporting countries. In 2011, we had $56 billion in imports of food, raw materials and intermediates and capital goods. Only $32 billion of that was industrial raw materials.
“Sanctions have been easing ever since, but before the start of the raise of the exchange rate, that figure reached $48 billion, of which $25 billion is industrial raw materials. In 2019, the import of food, raw materials, intermediate goods, and capital reached $30 billion, and the share of raw materials decreased from $25 billion to $15 billion.
“Definitely this statistic has decreased in 2020 as well. According to the statistics we obtained, in 2020, compared to 2017, the import of raw materials and industrial parts has halved. So, what has happened is that the volume of Iran’s industrial production has decreased in three years, but some give statistics that Iran’s industrial production has increased by 7% in the first nine months of last year!”
About the people’s decrease in purchase power, he added:
“On the other hand, we are seeing an increase in stock because people do not have the purchasing power. This means that consumption is not increasing. According to statistics, 2.98 million tons of steel ingots were traded on the stock exchange from November 3, 2020 to April 3, 2021, i.e., a period of five months, of which 1.67 million tons were traded and the rest were not sold. This means there was a reduction in the volume of transactions.
“These statistics show that what has happened in the Iranian economy is a significant reduction in the level of purchasing power. On the other hand, exports have not grown, and workers’ wages have not increased in line with rising prices.”
Q: “The Ministry of Industry, Mines and Trade claims that it was able to save at least 1,500 stagnant industrial units in 2020 and even exceeded its previous pointed target. What is your impression?
A: “The central bank does not publish statistics and publishes a set of general and selected statistics. If an official or the central bank claims that a 7% increase in the industrial growth rate has occurred and they are on their word and defend it, announce the production growth statistics in each of the industry sub-sectors so that I can see and believe that growth has taken place. Otherwise, it is easy to claim.”
About the corruption in all sectors of the government, he added:
Q: “Economic experts consider the behavior of rent-seeking enterprises as one of the obstacles to the formation of production in Iran. Like the case you mentioned in the context of the exchange rate, but it seems that the issue is beyond the distribution of hundreds of thousands of billions of tomans of foreign exchange rents among upstream industries.
A: “Yes, economic power is in their hands. At the moment, the price of currency should go down, but why is it always going up despite the temporary cuts? Private-Government and Government companies and upstream industries are preventing the exchange rate from falling under the pretext of defending production, But which production?
“From 1978 until now, the value of the rial is one four thousandth lower. In fact, every 6 Tomans (dollar) has reached 24,000 Tomans. That is, it has increased 4,000 times. On the other hand, the value of 24,000 Tomans in 2021 is one-fifth or one-fourth of 1978. While the real price of the dollar is 10,000 tomans.
“From 1961 to 2021, that is, within 60 years, the growth of non-oil exports and the growth of industrial GDP occurred for periods when the dollar exchange rate was stable. Its examples are from ‘66 to ‘76, and from ‘99 to 2001. Even if it was because of the price of oil, it happened anyway. But why is Iran’s industrial production not increasing?”
And about the hopeless situation of industrial entities and their dark fate, the interviewer added:
Q: “In the seven years and a few months that have passed since the 11th government, there has been a lot of talk about increasing the working capital of production and industrial units, but many of these units could not survive after a few injections of liquidity and gave up their lands and production tools to the creditors. Why is it that injecting liquidity does not meet the growing needs of the industry?
A: “We know that the circulation of capital has doubled over the past year. That is, this increase in circulation capital is not responsive to the dying industry. Suppose a plastic manufacturer has previously bought petrochemicals in a 2 to 3 months payment deadlines, and also sells this period to bring back the petrochemical’s money, but now the price of raw materials has increased six times and the working capital of units is multiplied but does not meet the costs.
“On the other hand, the total banking network facility has fallen and has halved in the last three years based on the dollar rate. On the other hand, the price of selling raw materials and intermediate goods is halved, which is closer to the purchasing power of the people, but the government’s statistics are not coordinated with the level of people’s purchasing power.”
And finally, about the government’s disorganization, the interviewer added:
Q: “Why does the industrial growth referred to do not have specific and detailed executive mechanisms?
A: “Those who say that seven percent growth has taken place must explain what the mechanism for achieving this growth has been. I can say that for 10 years, the growth rate of our capital formation has been lower every year than the previous year.
“Is it possible to extract production boom from the decrease of this rate? This is not magic! What technological masterpiece has occurred to witness industrial growth? A province branch of the Industry, Mines and Trade ministry, at the beginning of the year, claimed and estimated that they will revive 50 industrial units this year. These statistics are then aggregated from province to province at the end of the year, and at the end of the year the Ministry of Industry, Mines and Trade reports that, for example, 1,500 units have been rehabilitated.”
