IMF: Iran Should Safeguard Stability in Face of US Sanctions

EghtesadOnline: The International Monetary Fund said on Thursday that Iran should implement policies to safeguard its macroeconomic stability after the reimposition of US sanctions that will cut Iranian economic growth by reducing oil exports.

News ID: ۷۴۶۱۷۹

03 November 2018

In its latest World Economic Outlook report, IMF has predicted that Iran's economy will contract this year and in the following year as a result of the renewed US sanctions.

"Prospects for 2018–19 were marked down sharply for Iran, reflecting the impact of the reinstatement of US sanctions," the report carried by the IMF website reads.

US President Donald Trump announced on May 8 his withdrawal from JCPOA and promised to return harshest sanctions in history against Iran.

The first round of renewed US sanctions reimposed on August 7 prohibits Iran's purchase of US dollars and precious metals, part of a larger move that attempts to cut the country off from the international financial system. A second tranche of US sanctions on Iran's oil and gas sector are set to go into effect on Nov. 4.

"The downward revisions reflect to an important extent the worsening of growth prospects for Iran, following the reimposition of US sanctions. The economy is now forecast to contract in 2018 (1.5%) and especially in 2019 (3.6%) on account of reduced oil production, before returning to modest positive growth in 2020–23," the IMF report added.

IMF Spokesman Gerry Rice told a regular media briefing that the fund was urging Iran to strengthen its anti-money laundering and anti-terrorism financing frameworks to comply with international standards by a deadline in February 2019, Reuters reported.

Executive secretary of the Financial Action Task Force recently said that while Iran's Action Plan with global anti-money laundering body is mostly incomplete, it cannot be firmly said whether Iran will stay or be removed from the group's blacklist when the group convenes in February.

David Lewis told IBENA that Iran has completed only one out of nine plans put forward by the inter-governmental organization that the country should have completed nine months ago.

He said FATF is disheartened by the fact that Iran is lagging behind schedule and expects the country to undertake the reforms within the required timetable.

"[However] there is no definite decision regarding Iran [on whether or not to remove the country from the blacklist]," Lewis added.

"The truth is that Iran reached an agreement with FATF and all the timetable was specified in the plan."

The Paris-based FATF announced earlier this month that Iran had until February to complete reforms that would bring it into line with global norms or face consequences.

Iran’s Parliament has approved some measures against funding terrorism last month but most of them have to be okayed by the constitutional watchdog the Guardians Council and FATF said that it could only consider fully enacted legislation.

According to the Statistical Center of Iran's latest report, Iran's economy grew 1.7% during the first quarter of the current fiscal year (March 21-June 21) compared with last year's corresponding period.

The economy saw 1.9% growth without taking into account oil production, the report added.

SCI released the report a few days after the Central Bank of Iran put the GDP growth for the same period at 1.8%, including growth in the oil sector, and 0.7% excluding it.