Iran's Government Debt to Banks Has Increased 'Two and a Half Times' in Three Years

New statistics from the Central Bank show that the government's debt to the banking system has surged by 148% during Ebrahim Raisi's administration, with liquidity surpassing 9,000 trillion tomans, more than double the amount at the beginning of Raisi's term in 2021. The latest report indicates that the government's debt to the banking system reached 1,654 trillion tomans in Mordad this year, which is two and a half times the amount at the start of Raisi's presidency. Compared to the same month last year, the government's debt to the banking system has grown by nearly 39%. Of the total public sector debt to banks, about 15% is attributed to state-owned companies and 85% is directly from the government. Approximately 30% of the total government debt to the banking system is related to borrowing from the Central Bank. This massive increase in government debt comes despite Ebrahim Raisi's initial promise to reduce inflation by halting borrowing and controlling liquidity. Liquidity in Iran has reached nearly 8,000 trillion tomans, and the Central Bank's statistics show that liquidity has exceeded 9,000 trillion tomans by the end of the 13th government, compared to 4,000 trillion tomans at the beginning of this administration. Over the past years, the government has resorted to rampant borrowing from financial institutions, including the banking system, due to a significant budget deficit, forcing the Central Bank to print unbacked currency. As a result, the monetary base and liquidity in the country have soared, the value of the rial has plummeted, and inflation has averaged over 41.5% annually over the past three years, with only a few countries worldwide having higher inflation than Iran. The International Monetary Fund has predicted that inflation in Iran will be 37.5% this year, placing it among the eight countries with the highest inflation rates in the world. The IMF also forecasts that inflation in Iran will be 32.5% next year, ranking sixth in terms of the highest price increases globally.