Government's 100-Day Track Record

EghtesadOnline: One hundred days into his second term, Iran’s President Hassan Rouhani outlined his government’s performance and reaffirmed his commitment to fulfilling his campaign promises on live television on Tuesday.

News ID: ۷۸۰۸۵۵

13 December 2017

Rouhani was reelected as Iran's president on May 19 with more than 23.5 million votes, or 57% of the total votes cast, on a platform of "economic development, creating jobs, promoting social freedoms, normalizing relations with the outside world, removing the remaining US sanctions" and putting the country back on the global economic map.

He started off his briefing on the economy by saying that there was zero job creation from 2006-7 to 2013-14 whereas from the third quarter of 2014-15 to the second quarter of 2017-18, an average of 685,000 jobs were generated annually, President.ir reported.

"The figure is insignificant in view of the level of unemployment in the country and the growing economically-active population ready to enter the labor market," Financial Tribune quoted him as saying.

“I promised to help improve women's employment that was negative before the 11th government. From 2014 to 2017, about half of the 685,000 jobs added to the economy, i.e. 307,000, were landed by women. The government is enjoying the services of more women in executive positions as we speak. A high-ranking position (deputy minister) in the Oil Ministry is now occupied by a woman [Marzieh Shahdaei]; the chief executive of the country’s flag carrier airline company [Iran Air] is a woman [Farzaneh Sharafbafi].”

Rouhani stressed that the progress made by his administration in the first 100 days in terms of job creation is more impressive than that of the past two to three years.

"All ministers of economic sectors have been asked to boost employment in cyberspace, industries, services and agriculture. Our plans have become operational in the first 100 days. Nearly 120,000 job-seekers (and counting) have registered for [the Labor Ministry's] Internship Plan, and 20,000 of them have started their internship," he said.

"We aimed at a lower unemployment rate through different plans and despite not being out of the woods yet, the unemployment rate reduced to 11.7% in the current fiscal year compared with 12.7% in the last year.”

Based on the Labor Ministry’s Internship Plan, unemployed university graduates in the 23-32 age bracket in all disciplines at any level will be introduced to relevant bodies to do an internship for four to six months and receive one-third of the minimum wage, which now stands at 9.3 million rials ($232) per month as well as accident insurance coverage.

Rouhani noted that although his government does not intend to increase cash subsidies to people (except for people covered by the State Welfare Organization and Imam Khomeini Relief Committee), it has increased subsidies to different sectors.

He referred to the budget allocated to the guaranteed purchase of wheat from local farmers, which has doubled in the past four years.

A record high of 14 million tons of wheat were domestically produced last year, more than 11.76 million tons of which worth over $4 billion were purchased by the government from local farmers at guaranteed prices, which helped Iran achieve self-sufficiency in wheat production after about a decade.

More than 8.87 million tons of wheat worth 116 trillion rials ($2.83 billion) have been purchased from local farmers by the government since the beginning of the current Iranian year (March 21). Considered as a staple in Iran, wheat is purchased every crop year by the government from domestic farmers to build up its reserves and supply the market over time.

> Single-Digit Inflation Coupled With Economic Growth

The president said the government will continue to keep inflation rate in the single-digit territory and couple it with positive economic growth.

"Economic growth registered for Q1 of the current fiscal (March 2017-18) was 6.5% including oil and 7% excluding oil. The only sector that did not post any growth last year was housing, whereas the first half of the current year (March 21-Sept. 22) saw a positive growth in housing and a 7% growth in investment,” he said.

Iran’s economy emerged from recession in the fiscal 2014-15 with a 3% growth after two years of recession when the economy contracted 5.8% and 1.9% back to back, according to the Central Bank of Iran.

Inflation in Iran reduced to a single digit for the first time after about a quarter century in June 2016. It then followed a downtrend until it bottomed out at 8.6% in the middle of fall. It then rose above 10% in the 12 months ending June 21 this year before starting to go down since August.

The average goods and services Consumer Price Index for urban areas in the 12 months ending Nov. 21, which marks the end of the Iranian month of Aban, increased by 9.9% compared with last year’s corresponding period, the latest report released by the Central Bank of Iran showed.

Noting that the government managed to win foreign finance deals worth $23.1 billion and finalize foreign deals worth than more $5 billion in its first 100 days in office, the president said, “A total of 250 trillion rials ($6.25 billion) has been allocated for development projects, which is a significant figure compared to the same period of last year.”

According to Government Spokesman Mohammad Baqer Nobakht, foreign investment in Iran has seen a tenfold increase following the 2015 nuclear deal reached between Iran and six world powers.

According to Nobakht, the rail route between the two Iranian cities of Qazvin and Rasht, which is the missing link in the International North-South Transport Corridor, will become operational by the end of the current fiscal year (March 20, 2018).

The INSTC project is a major transit route designed to facilitate the transportation of goods from Mumbai in India to Helsinki in Finland, using Iranian ports and railroads, which the Islamic Republic plans to connect to those of Azerbaijan and Russia.

"Chabahar-Zahedan Railroad will be completed by the end of the 12th government. Qazvin-Rasht-Astara Railroad is under construction. Qazvin-Rasht will become operational by the yearend. Rasht-Astara Railroad will be constructed in participation with Azerbaijan Republic. Half of the Russia-bound cargoes from India will reach there and Northern Europe via Bandar Abbas and Rasht-Astara Railroad," Rouhani said.

> Addressing Pension Fund's Problems

Referring to the state of pension funds, Rouhani said, “One of the measures the government took during the first 100 days was to ask the Social Security Organization to transfer the ownership of their economic entities to the private sector. Non-governmental public organizations and armed forces should sell their economic entities to the people as well. The Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei has completely agreed with this direction.”

The SSO is “the biggest fund in terms of members in both its pension account and health insurance services” covering 42 million Iranians who constitute more than half the population of the country, according to a recent report by the research arm of the Iranian Parliament.

A rapid growth in the ratio of pensioners to the insured in tandem with a decrease in support ratio–workers to pensioners–has caused SSO expenses to outpace its income, a gap that will only widen by the time the second term of President Hassan Rouhani ends in 2021.

Majlis Research Center believes that “the probability of financial collapse of SSO within the next decade is very high” and, “the scale of the crisis is so big that the government will not have the required economic capacity to intervene”.

A comprehensive report on government’s performance over the first 100 days plus detailed plans for the current year and principal objectives for the next four years is available on Dolat.ir.