New statistics from Iran’s Central Bank show that under Ebrahim Raisi’s administration, the government’s debt to the banking system surged by 148%. Additionally, liquidity surpassed 90 quadrillion rials (approximately $139.86 billion), more than double the amount when Raisi’s government took office in 2021.
The latest Central Bank report indicates that by August of this year, the government’s debt to the banking system had risen to 16.54 quadrillion rials (approximately $25.7 billion), which is two and a half times the level when Raisi’s administration began.
Government debt to the country’s banking system in August of this year saw an increase of nearly 39% compared to August 2023.
Of the total public sector debt to banks, about 15% is attributed to state-owned companies, while 85% is directly the government’s responsibility.
Approximately 30% of the total government debt to the banking system is related to borrowing from the Central Bank.
This massive surge in government debt comes despite Ebrahim Raisi’s promise at the start of his presidency to reduce inflation by halting borrowing and controlling liquidity.
However, Central Bank statistics show that liquidity surpassed 90 quadrillion rials by the end of the 13th government. At the start of Raisi’s term, liquidity stood at 40 quadrillion rials (approximately $62.16 billion).
In recent years, the government has engaged in uncontrolled borrowing from financial institutions, including the banking system, to address a massive budget deficit, forcing the Central Bank to print unsupported money.
As a result, the monetary base and liquidity in the country have skyrocketed, the value of the rial has sharply declined, and inflation has averaged over 41.5% annually over the past three years, placing Iran among the few countries with higher inflation rates.
The International Monetary Fund (IMF) has predicted that inflation in Iran will be 37.5% this year, placing the country among the top eight nations with the highest inflation rates globally.
The IMF has also forecast that inflation in Iran will be 32.5% next year, ranking it as the sixth-highest in terms of price increases worldwide.
