The IMF’s latest analysis of Iran warns that the country is at a “crossroads”, and must draft a quick plan to arrest inflation.
Of course, crippling Western sanctions have radically altered Iran’s economic prospects, but the IMF also believes Tehran has failed to implement reforms.
“Large shocks and weak macroeconomic management over the past several years have had a significant impact on macroeconomic stability and growth,” said the IMF in its Article IV Consultation with the Islamic Republic on February 12.
The fund noted that a combination of shocks, associated with the implementation of the first phase of the subsidy reform, ambitious social-programs inadequately funded and a marked deterioration in the external environment stemming from the intensification of trade and financial sanctions, have weakened the economy.
“Inflation and unemployment are high, while the corporate and banking sectors show signs of weakness. These shocks have exposed structural weaknesses in the economy and in the policy framework,” the IMF said.