International Monetary Fund. Middle East and Central Asia Dept.
This staff report for the 2014 Article IV Consultation on the Islamic Republic of Iran focuses on economic developments and policies. The IMF report had achieved considerable progress in raising per capita income and living standards. Large shocks and weak macroeconomic management have had a significant impact on macroeconomic stability and growth. The external environment remains uncertain and delaying domestic reforms raise the risk of entrenching the economy in a low-growth and high-inflation scenario, underscoring the need to address long-standing weaknesses in the policy framework and the economy.
Domestic demand continued to grow at rapid rates, despite corrective fiscal and monetary policy measures. Although trade and financial sector reforms advanced and foreign direct investment (FDI) regulations were liberalized, there was less progress in improving the business environment, reducing labor market rigidities, and restructuring and privatizing public enterprises. IMF staff stressed the need for further advances in trade liberalization, improved fiscal management, financial system restructuring, labor market reform, privatization, and elimination of subsidies. The managed float exchange regime remains appropriate for Iran.
This 2002 Article IV Consultation for the Islamic Republic of Iran states that the overall macroeconomic developments in 2001/02 were marked by sustained economic activity in the non-oil sector, improved fiscal and external positions, and declining inflation trends. Against a background of improved business confidence, the authorities continued to implement economic reforms in line with their Third Five-Year Development Plan. They also successfully issued a €625 million Eurobond, marking Iran’s return to international financial markets.
Mr. Jean-Pierre Chauffour, Ms. Sena Eken, Mohamed A. El-Erian, and Ms. Susan Fennell
This is a particularly opportune time for countries in the Middle East and North Africa to implement reforms to fulfill their considerable economic potential and reap the benefits of greater globalization and integration.