New statistics from the Central Bank indicate a 72% jump in the government’s debt to the Central Bank this June compared to the same month last year.
Furthermore, the total debt of the government and state-owned companies to the Central Bank and other banks in the country surpassed 1.5 quadrillion tomans (approximately $25 billion) this June, which is 37% more than last June.
Of this amount, more than 1.3 quadrillion tomans (approximately $21.6 billion) is related to the government’s debt, while the rest pertains to the debt of state-owned companies to the banking system.
The government’s debt to the banking system is equivalent to six months of the national budget, and it is unclear how the government intends to repay this massive debt.
Moreover, the government’s bank debt is only a small part of its total debt; the National Development Fund also claims more than $100 billion from the government, an amount equivalent to 2.5 years of the national budget.
The International Monetary Fund (IMF) in its spring report stated that the total debt of the Iranian government last year amounted to 28.5% of the country’s Gross Domestic Product (GDP).
This significant increase in the government’s debt to the banking system comes despite the fact that the 13th government, under the presidency of Ebrahim Raisi, had promised at the beginning of its term to stop borrowing from the banking sector to control liquidity and inflation. However, over the past three years, the government’s debt to domestic banks has doubled.
Central Bank statistics show that liquidity in the country surged by 27% in June this year compared to June 2023, reaching an astronomical 8.5 quadrillion tomans (approximately $141.6 billion).
Economic experts have identified uncontrolled liquidity as the main factor behind inflation in Iran.
In recent years, the Iranian government has forced the Central Bank to print unbacked currency to cover budget deficits, enabling it to borrow directly from the Central Bank and other banks. As a result, inflation in Iran has consistently remained above 40% over the past three years, and the value of the national currency has more than halved.
