The Need to Pay Attention to Economic Activists in Counties in the Post-Agreement Period

Despite more than two months having passed since the announcement of the nuclear agreement between Iran and Western powers, the future of Iran's economy in the post-sanctions era remains a topic of interest for economic experts and analysts, who are addressing this issue through notes and discussions. Hussein Pirmoazn, an economic activist and member of the board of the Iran Chamber of Commerce, Industries, Mines and Agriculture, has written a note for the newspaper 'Etemad' discussing the requirements for investment in the post-agreement period. According to the board member, 'the most important issue for the Iranian society and economic activists is the fate of Iran's economy in the post-sanctions era, and the concern over the lack of improvement in the business environment and investment climate has permeated not only among private sector activists and economic actors but throughout the entire Iranian society.' This economic activist states that the government must quickly and clearly communicate the destructive and negative effects of sanctions on Iran's economy to the public. Pirmoazn also expressed dissatisfaction with the 'lack of significant presence of private sector activists and representatives in these meetings and negotiations' despite the numerous foreign economic delegations visiting Iran. He announced the Iran Chamber's readiness to invite foreign economic activists and collaborate with them, emphasizing that 'one of the Chamber's programs is to policy guide investors in the post-agreement era towards medium-sized industries and enterprises.' He also expects the government to provide the necessary infrastructure for investors to avoid creating a negative perception of the government, as failing to guide investors towards medium-sized industries and the frequent presence of investors in heavy industries owned by the government can lead to neglect of the private sector. Pirmoazn stressed that the conditions for foreign investment in counties must be facilitated, writing that 'governors, the economic deputy of the Ministry of Foreign Affairs, and the economic sections of embassies should clarify the potentials and outline the investment opportunities in medium-sized industries and counties for foreign investors.' He noted that 'the post-agreement era is the best time to move away from centralization in investment.' In a related analysis, Hamid Zamanzadeh, a faculty member at the Monetary and Banking Research Institute, referred to the announcement of the National Development Fund's value of approximately $75 billion and its foreign currency reserves of $40 billion, describing it as good news, stating that 'the Fund's foreign currency resources have faced a relatively favorable situation even during the sanctions.' He predicted that the Fund's foreign currency reserves would soon exceed $50 billion due to the openings following the agreement. However, he noted that 'the current structure of this Fund cannot play a constructive role in smoothing the flow of foreign currency revenues for the government.' Zamanzadeh also mentioned the National Development Fund's president's statement that in the sixth development plan, the Fund's accounts would be independent from the Central Bank. He predicted that in such a case, the National Development Fund, with its vast foreign reserves, could oppose the Central Bank's currency policies. He questioned how the Central Bank could guide the currency market in its desired direction if the Fund's reserve management policies were contrary to the Central Bank's currency policy. Zamanzadeh emphasized that the National Development Fund, with an active structure, could become a threat and a problem for currency policy instead of serving it. He stressed that the issue of restructuring the National Development Fund should be on the agenda of the sixth development plan to ensure that 'on one hand, this Fund becomes a strong support for facilitating the inflow of foreign currency into the country's economy, and on the other hand, its currency operations align with the Central Bank's currency policy.' In another note, Mohammad Gholi Yousofi, a faculty member at Allameh Tabatabai University, emphasized that 'the government has no choice but to increase the exchange rate.' He wrote that the highest pressure from the increase in the exchange rate 'falls on the private sector, especially those producing intermediary goods.' Yousofi described the reality that the government is facing a budget deficit due to reduced foreign currency revenues and cost pressures. To cover this budget deficit, the government either has to raise taxes or seek to source funds from elsewhere. He characterized the increase in the exchange rate as expected, emphasizing that 'by increasing the exchange rate, the government reduces its debt to the Central Bank and simultaneously obtains the necessary revenue to cover its expenses.' Yousofi concluded that the government has no alternative but to raise the exchange rate, as any other policy would have more negative consequences. It appears that the government has chosen the lesser of two evils to minimize damage to the economy.