IPRC Predicts Stagflation for the Country

TEHRAN – Islamic Parliament (Majlis) Research Center (IPRC) has predicted the country will face stagflation this year and government’s budget is facing with challenges of rise in expenses and decline in revenues.

IRAN NEWS ECONOMIC DESK IPRC in its recent report has reviewed the economic condition for this year and has forecasted a tough year for the government and the nation.

The report claims the government in the current Iranian calendar year will face with different types of budget deficit problems. The IPRC, even before the outbreak of the Coronavirus and in its previous reports, had warned the government about its budget bill.

It claimed Iran’s economy has faced with the problem of revenues while the government expenses cannot be reduced in accordance with the fall in revenues and this problem has led to the sustainable budget deficit which has been one of the national economic woes in recent years.

The report claimed that the outbreak of the Coronavirus will have its own expenses and will intensify the problem of budget deficit in the current year.

The IPRC in its report pointed that the outbreak of the virus will increase the costs in the health sector and the government’s financial support during the social distancing period.

It also pointed to the decline in revenues as the major factor in the budget deficit, adding that the government’s oil sales and tax earnings will drop drastically. The report claimed that the national economy in the current year will face recession and the fall in demand due to the virus will slow down production and consequently government’s earnings from tax will drop.

The parliament report also warned that the government may resort to the Central Bank to cover its budget deficit and it will lead to the rise in the liquidity in the society and inflation.

It also reiterated that because of decline in demand in the country, the velocity of money in the economy will slow and one can say the current year can be one of those years when the velocity of money will be at its lowest level and the inflation rate will not match the growth in liquidity.

In early April, the IPRC in another report had warned that the government’s delay in extending financial support to low-income people hit by the coronavirus outbreak might entail “painful consequences.”

In an elaborate allusion to the possibility of dissent and protests in Iran, the report charged that what President Hassan Rouhani’s administration has done so far to support “the poor and vulnerable people” has been “belated, passive and non-proactive.”