By Sohaila Barghash
The country has already been trying to cope with the consequences of US imposed sanctions, yet only a few days back, Washington demanded buyers of Iranian oil to stop purchases by 2 May or face sanctions, ending six months of waivers that permitted Iran to sell its oil to eight buyers with limited volumes.
In its second consecutive year, starting where Iranian economy shrank by 3.9 percent last year, the IMF estimates that economy will shrink by 6 percent in 2019.
Jihad Azour, director of the IMF’s Middle East and Central Asia department stated that, “Clearly the re-imposition of sanctions and the removal of the waivers will have additional negative impact on the Iranian economy both in terms of growth and in terms of inflation, where inflation could reach 40 percent or even more this year.”
US sanctions against Iran have led to s decrease of more than $10 billion in oil revenue, while the Iranian currency, the rial, lost more than 60 percent last year, which both disrupted Iran’s foreign trade and increased annual inflation.
The Iranian rial’s official rate is set at 42,000 rials to the US dollar, which is why the country must work to eliminate the gap between the market exchange rate and the official exchange rate.
Azouz has also said that “By aligning the market and official rates this will help tame and control inflation and will reduce pressure on the exchange rate.”
Late last year, during currency’s slide from levels around 43,000, the value of ordinary Iranians’ savings collapsed, triggering panic buying of dollars.
The weak currency and galloping inflation have been a complaint of sporadic street protests since late 2017.