Iranian travelers standing in front of a currency exchange bureau in Tehran, in the hope of getting dollars or euros, on Wednesday April 11, 2018. (MEHR)

May 23, 2020

The Iranian regime is facing extreme shortness in money and the situation is becoming worse day by day.

The continuation of sanctions on oil and petrochemical products has taken the Iranian government to a new level of shortness of money. Government officials make no secret of the fact that the government is weakened extremely, and that they have no income anymore.

On this subject the state-run daily Shargh wrote:

“The reduction of oil revenues and corona has reduced the government’s revenues by one hundred trillion tomans so far. Before that, we had a budget deficit of 150 trillion Tomans. Thus, even if nothing else happens, the government is still facing a budget deficit of 250 trillion Tomans. So far, the government does not have more than half of that 480 trillion Tomans to run the country this year.”

Seyed Razi Haji Aghamiri, Member of the Board of Representatives of the Tehran Chamber of Commerce, said on 19 April:

“What seems certain today is that the government have problems to provide the necessary financial resources. Along with the limitations of the day, such as sanctions, we need to look at the reasons for this in the country’s performance in recent years and decades.

“According to him, all previous governments had the opportunity to put aside with foresight a capacity for difficult days such as the one in which is created by the coronavirus, so that today it is possible to use what is available, for both the government and the people.”

Another case that is showing the regime’s lack of funds is that of non-oil exports. In a report in April, Rouhani’s government announced a 27 percent decrease in the volume of exports and imports, estimated at $3.583 billion. Non-oil exports fell 36 percent to $1.652 billion in April compared to the same month in the previous year.

As a financial resource, the regime is facing shortness of foreign markets. The regime is so isolated and restricted in foreign trade that, except for a few countries, it does not have the possibility to export large quantities to different countries, and only has a handful of receptive states. The Parliamentary Research Center states:

“In 2018, out of 147 countries trading with Iran, only three countries, China, the United Arab Emirates, and Iraq provided 52 percent of the foreign exchange earned from the non-oil exports of the Islamic Republic.”

Ironically, in the context of the global recession, and especially the unstable situation in China during the corona era, Iran’s exports have been subject to deep turmoil. The situation of exports to Iraq is even worse.

And by the oil industry, there is no doubt that the Iranian regime has no income anymore as Reuters on 14 May reported:

“Iran’s oil exports have sunk to a record low as the coronavirus crisis compounds the impact of U.S. sanctions already limiting shipments, underlining the diminishing oil clout of what was OPEC’s second-largest producer. Exports averaged 70,000 barrels per day in April, down from 287,000 BPD in March according to Kpler, which tracks the flows.”

And the state-run news agency Mehr reported on 14 October 2017:

“As oil prices fall in global markets, oil’s share of oil revenues has fallen sharply. In the years before the sanctions, the average price of a barrel of oil on the world market was $110, and the share of the National Iranian Oil Company in daily exports was 2.5 million barrels, 5.14 percent. But now the situation is different because oil is exported with $50 oil. In other words, the National Iranian Oil Company’s share of oil revenues is nominal 5.14 percent compared to the past, but officially, the figure does not even reach 5.14 percent before sanctions.”

On 21 May the U.S. Department of State tweeted:

“Two years ago today, @SecPompeo said Iran would be forced to make a choice: either fight to keep its economy off life support at home or keep squandering wealth on fights abroad. It will not have the resources to do both. Since then, sanctions have deprived the regime of $200B.”

INU

About Track Persia

Track PersiaTrack Persia is a Platform run by dedicated analysts who spend much of their time researching the Middle East, in due process we fall upon many indications of growing expansionary ambitions on the part of Iran in the MENA region and the wider Islamic world. These ambitions commonly increase tensions and undermine stability.