Abdolnaser Hemmati, the former governor of Iran’s Central Bank, has wasted no time setting up his stall for the June 18 presidential election. Amid fiery rhetoric during the first televised debate, he has sought to portray himself as an experienced, wise and logical technocrat who is being forced to participate in a tribal polemic.
Hemmati has claimed he has solutions for all the crises Iran is facing, and that he can change the “existing equations” to benefit the economy. Meanwhile, at the first debate last week, competitors repeatedly and stingingly sought to paint him as a symbol of the failed economic policies of the Rouhani administration.
Before stepping down, Hemmati had served as the governor of Iran’s Central Bank for two years, 10 months and six days: the shortest tenure at the helm of this institution after Tahmasb Mazaheri, who lasted just 12 months. How did he perform during this period?
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In normal conditions, Hemmati might well have had a good run as governor of the Central Bank. At the very least, he was no less qualified than any of his predecessors. But based solely on the changes to monetary and economic indicators in Iran during his tenure, his performance was indeed the weakest in the bank’s recent history.
Hemmati was appointed to the role on July 25, 2018 at a time when the dollar was trading on the open market for somewhere between 10,000 and 12,000 tomans. But by May 30, 2021, the day he signed up as a presidential candidate, one dollar cost around the 23,400-toman mark.
Between these two milestones, at certain points before Hemmati’s resignation, the exchange rate even broke the 30,000-toman ceiling. From the beginning of his official governorship through to the end, we can see that the price of the dollar soared to 2.3 times its original value.
Before Hemmati, ex-Central Bank governors Mahmoud Bahmani (2008-2013) and Valiollah Seif (2013-2018) had seen the value of the dollar increase triplefold during their tenures. But each of them served for five years, whereas Hemmati held the role for less than three.
Inflation Skyrocketed as Iran’s Economy Tanked
Hemmati’s record also looks questionable if evaluated on the basis of inflation. During his time as governor, Iran experienced two successive inflation surges that were almost unprecedented in the past 50 years.
The Central Bank has yet to publish inflation data for the Iranian calendar year 1399 (March 20, 2020-March 20, 2021). But based on figures already published by the Statistical Center of Iran, the overall rates of inflation last year and in the preceding one were the second and third highest, respectively, since the end of WWII. Point-to-point inflation also reached 50 percent or more twice during Hemmati’s tenure: the worst in 25 years.
Inflation is bearable if accompanied by economic growth. During a recession, central banks usually try to spur the economy out of recession through liberal fiscal policies and the injection of capital into the system. But Iran’s Central Bank, under Hemmati, was never able to achieve an equilibrium between inflation and economic activity.
The Statistical Center’s monthly indicators show that during Hemmati’s tenure, the accumulated rate of inflation stood at over 144 percent. The average cost of a basket of commodities and services rose 4.2 times in total, while Iran’s economy shrank by 10 percent during the same period.
According to official statistics, during the less than three years of Hemmati’s tenure at the Central Bank, the Iranian economy witnessed two serious negative growth rates of six and seven percent. It has been announced that the Iranian economy grew by 2.2 percent last year but Iran has yet to leave its 10-year recession behind.
Can we Judge Hemmati Based on the Figures?
Of course, Hemmati’s governorship coincided with an extreme political and economic situation in Iran. He was appointed to the Central Bank exactly as the US reimposed the most drastic sanctions on Iran following President Trump’s exit from the nuclear agreement, and these sanctions naturally directly affected the Central Bank too.
Iran’s revenues from oil exports fell to their lowest levels in history in the last two years. This has posed an unmitigated catastrophe for a country whose economy is dependent on oil and whose central bank has maintained its foreign currency reserves through petrodollars.
Moreover, the sanctioning of the Central Bank, wider trade with Iran and the tangled web of actions by the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, has seriously disrupted the process of normal trade with Iran.
Hemmati’s dismal record at the Central Bank can perhaps be defended based on all of these unprecedented issues. His supporters might indeed feel that the Central Bank might have come off a lot worse without him; Iran, for instance, might have fallen into the abyss of hyperinflation after 2018, as Venezuela and Zimbabwe have done.
Supporters might also point to the Central Bank’s recent reord in managing securities and providing low-risk funding sources to offset the unprecedented budget deficit, or its initiative to prevent the inflation rate from exceeding 22 percent – which, although unsuccessful, demonstrated that Hemmati did at least have plans for reforming Iran’s fiscal policies.
Related Coverage:
Amid Old Jokes and Fake Tears, Hemmati Outshines Raisi in the First Presidential Election Debate
Hemmati Promises a More Humane Islamic Republic if he Becomes President
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