Ahmadinejad Versus Statistics

“Unfair and baseless” was how the former president Mahmoud Ahmadinejad reacted to Hassan Rouhani’s report on his first 100 days in office. In a fit of pique Ahmadinejad challenged his successor to a “no-holds-barred debate”.

In a television interview last week touted as a report on his first 100 days to the people, President Rouhani criticized the performance of Ahmadinejad’s administration and the economic conditions his administration inherited. Hardline media labeled the interview as the “stealth trial of Ahmadinejad on the 101st day.”

“Bring the oil money to people’s kitchens” was the slogan that Ahmadinejad used to get elected president for two terms, but while he had the highest oil revenue in the history of Iran, he bequethed an empty treasury to Rouhani’s government.

From the first days of the new administration, figures and statistics told the story of a ruined economic infrastructure and the concealment of correct statistics by the previous administration, so much so that, appearing before members of the parliament, Rouhani promised to appoint a special workgroup to study statistics issued by Ahmadinejad’s government and later report accurate statistics to the public.

Rouhani kept his word and appeared on TV on his hundred-first day to sharply attack Ahmadinejad’s government and present the promised figures and statistics.

The Most Indebted Government

When the government changed hands, said Rouhani, treasury had funds only enough to pay  seven percent of its monthly expenses, not enough even to pay the salaries of civil servants. “An empty treasury,” he called it.

According to the present, budgetary laws require the government have 17,500 billion tomans (around $7 billion) in reserve to pay current expenses but on August 3^rd when the new administration took over there were only 1,280 billion tomans (less than $600 million). In other words, the day it started, Rouhani’s government was in the debt to the tune of billions for it its current monthly payments.

Rouhani cited “unreal statistics and budget calculations” of the previous administration as the reason. “We had to send a budget amendment with double urgency to the parliament, but the parliament has taken no action.”

The debts of Ahmadinejad’s government, however, were not limited to current government expenses. In his interview, Rouhani brought to light the debts of the government to various sectors. The government that he has inherited, he said, is the richest government but also the biggest debtor.

A partial list of debts owed by the Ahmadinejad’s government, according to Rouhani, is as follows: More than 74 trillion tomans (close to $30 billion) to the Iranian banking system, 60 trillion tomans (around $24 billion) to the retirement and social benefits funds, and around 55 trillion ($22 billion) to government and private contractors.

He added that in eight years Ahmadinejad’s government promised provinces about 211 trillion tomans ($85 billion) in various projects of which only 32 percent has been put into action and the rest left untouched for the next government.

If government revenue stays the same as it was under Ahmadinejad, it would take 16 years for his obligations to fulfilled.

Rouhani said that even in his last months as president, Ahmadinejad did not stop promising development projects without securing funds for them, so much so that the government is now obligated to spend more than 400 trillion tomans (around $160 billion) for various projects, but during the first five months of the Iranian calendar, when Ahmadinejad was still the president, only 3  percent were implemented.

Job Creation, But for the Chinese

Upon taking over, Rouhani said a major issue his government faced was the shortage of basic necessities and empty warehouses. It was assumed, he said, that the warehouses were well-stocked for three to four months, but in the very early days he received a report that showed various necessities, including wheat, were in short supply. In one province silos had wheat for only three days.

According to an act passed by Ahmadinejad’s own government, the Government Trading Corporation of Iran was required to keep three million metric tons of wheat as strategic reserve, bought either from domestic market or, if necessary, from international markets. But according to an official report by the planning office at the Government Trading Corporation, in the past two years the reserve has been only half that. The report adds that the wheat reserves at the end of the Iranian year 1390 (March 20^th, 2012) and 91 (March 21^st, 2013) were, respectively, 1.74 and 1.89 million metric tons.

These were the real numbers while government officials insisted that they had stocked enough basic necessities for six months. Ahmadinejad himself, on July 4^th in a live appearance on the Channel One of the government-run TV network, said that the government has stored enough basic necessities for three to four months and that imports were continuing daily.

​

Iran’s Grain Imports, From March 21^st 2001 to March 20^th 2012, (The years are in Iranian calendar.)

Ahmadinejad claimed that under him watch Iran had become self-sufficient in wheat production and had even become an exporter, but the numbers show that during his terms of office grain imports grew significantly as did, logically, Iran’s dependency on foreign countries.

Commenting on this dependency, when Iran faced strict international sanctions, Rouhani said that “when we are standing against a number of Western world powers, we must be prepared. Unfortunately under the previous administration, our slogans and our actions were not consistent.”

He also commented on the unrestrained imports of goods during Ahmadinejad’s presidency, most of which were imported from China. “Just when we were approaching the sanctions,” he said, “and the government was saying that the sanctions were just a piece of paper, it was intensifying its dependency on foreign countries.

Imorts in the Past 12 years, Source: The Iranian Chamber of Commerce, From March 21^st 2001 to March 20^th 2012, (The years are in Iranian calendar.) The chart on the left shows total imports in US dollars, while the one on the right illustrates imports from China.

Iran's imports from China since Ahmadinejad took office has grown fourfold. Rouhani quipped that under Ahmadinejad many jobs were created but for the Chinese, South Koreans and others. When confronted by massive sanctions, he said, Iran must rely on its own domestic resources because you cannot stand up to the world with mere slogans.

Inflation Is a Tax on Poverty

In 2012, the last full year of Ahmadinejad’s presidency, Iran had the highest rate of inflation in the world, according to a report from the World Economic Forum. Last October, the Iranian Central Bank reported that the inflation rate in Iran has reached 40.1 percent, unprecedented in the past 18 years.

Inflation in Iran During the Past 12 Years, Source: The Iranian Center for Statistics
From March 21^st 2001 to March 20^th 2012, (The years are in Iranian calendar.)

As a contributing factor in the increase of liquidity and, as a result, inflation in Iran, Rouhani cited the debt to the banking sector incurred by Ahmadinejad’s government. In the Iranian year of 1384 (started March 21^st 2005), he said, the liquidity was 68 trillion tomans (a little over $ 27 billion) but increased to 470 trillion tomans (around $188 billion), an increase of about seven times.

Increase in Liquidity During the Past 12 Years, From March 21^st 2001 to March 20^th 2012, (The years are in Iranian calendar.)

To implement a national network of projects (called Maskan Mehr) for affordable housing, Rouhani pointed out that Ahmadinejad’s government borrowed 43 trillion tomans (more than $17 billion) from the banking sector. He added the total liquidity of the country had been 100 trillion tomans ($40 billion) of which Ahmadinejad entered the above-mentioned amount into the monetary system and emphasized that it has greatly contributed to the inflation.

The inflation-inducing policies of Ahmadinejad’s administration in the past years coincided with a very low level of economic growth. When he came to power, the growth rate was %6.19 percent; when he relinquished the helm, it was minus 5.8 percent.

Rate of Economic Growth in Iran During the Past 12 Years, Source: The Iranian Center for Statistics, From March 21^st 2001 to March 20^th 2012, (The years are in Iranian calendar.)

The high inflation rate under Ahmadinejad is not without precedent in Iran—under President Hashemi Rafsanjani in 1995 it reached 49 percent, highest in the history of the country—but, according to Rouhani, the combination of such a high inflation and a negative economic growth or recession was never experienced in the past 50 years.

Rouhani said that a negative 5.8 percent growth meant the both the economy of the country and the economy of households grew smaller by the same measure.

Subsidies for Everybody

Ahmadinejad claimed that he wanted to narrow the class divide between the wealthy and the poor by his transformative economic policies and targeted subsidies. So the subsidies were supposed to act as government assistance to the “society’s low-income groups” to narrow the gap with higher-up classes.

To implement this policy, he launched a national project to gather economic information about households, during which millions of people spent countless hours in line to fill long questionnaires about their income, property and the assets of each individual.

But, Rouhani says, he did not succeed in identifying the needy households and as a resul, everybody received subsidies. “Meddling in private lives,” he added “results in the loss of trust on the part of the people and damages economic prosperity.”

Rouhani maintained that interference in people’s private lives such as inspecting their bank accounts and what they own might be useful in short term but harmful in the long haul.

What Rouhani's government can do to repair the country's broken economy remains to be seen. But he has been candid with the Iranian people about the challenges he faces, and put the real numbers before the public.