Iran's economy enters 2013 significantly worse than a year ago, particularly with higher inflation and unemployment than at the beginning of 2012. The past year was probably the most tumultuous economically for Iran since 1994, when an external debt crisis triggered a serious inflationary shock and a recession.
Under the current circumstances, the Subsidies Targeting scheme --- in its January 2010 form --- is to all intents and purposes dead. Given the current official inflation rate of nearly 25% (caused mainly by excess domestic liquidity as well as international sanctions), the banking system’s latest record of non-performing loans and the growing current budget deficit, no prudent legislature would dare allow further drastic increases in the price of basic consumer staples.
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The Latest from Iran (7 October): "The Devil Has Disrupted Our Economy"
2035 GMT: Economy Watch. HRANA reports that the Saipa automobile factory in Kashan has dismissed more than 10,000 employees --- 75% of its workforce --- and only 1 of 3 shifts is assembling now.
The site says Saipa in Tehran is also down to 1 in 3 shifts.
2025 GMT: Ahmadinejad Watch. Mansour Haghighatpour, the deputy head of the National Security Council, has said that interrogation of the President will only be dropped if the Supreme Leader opposes it.
What's the story behind this lion cub? See last entry in the round-up....
The 20th of June marked the third anniversary of the violent death of Neda Agha Soltan, caught on film.
Neda’s family was never allowed a decent memorial service because of “security concerns,” but her grave has now become a site of pilgrimage for many activists and dissidents in Iran. Last week, despite pressure, Neda’s family and some of her friends and relatives gathered at her grave in Behesht-e Zahra cemetery outside Tehran to remember a girl who, as recounted in this piece from our civil society magazine, was “unlike most of the national heroes of Iranian patriarchal society”. She was a young woman who “became the face of the nation. She was special because she was not special at all. She was the Iranian girl next door; one world apart from the image endorsed by the Islamic Republic.”
Central Bank Head Bahmani & President Ahmadinejad The Central Bank is losing its battle with the local Iranian gold and foreign exchange markets. Central Bank governor, Mahmoud Bahmani, has been struggling futilely with market forces for a few months now, to prevent potentially profound devaluation of the Iranian rial. For years monetary policy has been based on clutching the rial against the USD despite double digit inflation and directive bank deposit rates lower than the rate of inflation. It seems that at last people are losing their confidence with the rial and exchanging their rial based capital to non-rial liquid asset classes such as gold and foreign currencies to safeguard their resources.
The reasons for this devaluation may be sought in four serious immediate threats to Iran's economy.
Last month we reported that a team from the International Monetary Fund had visited Iran and issued a statement declaring the "success" of Iran's economy, specifically praising the Government's subsidy cuts programme.
We noted doubts about the statement with the simple observation of a "sharp contrast to much of the economic news we have posted on the Iran LiveBlog", but left it at that. After all, this was only a statement and not a full report.
Well, an IMF "working paper" has emerged, albeit with little fanfare. In the expectation, however, that Iranian officials will be hoping that it gets headline attention, we will be blunt....
This supposed analysis is shockingly bad.
An article from Iran's leading economic newspaper establishes that the decision on subsidy cuts for milk has not been resolved. With the prospect of rising prices, dairy producers using that milk will be allowed to raise their prices 10%, but --- as they anticipate the cost of milk to them may rise sharply --- that is far less than the increase they are seeking.
So, amidst the diversion of International Monetary Fund statements that all-is-well, this snapshot offers two realities: 1) the implementation of the subsidy cuts programme is haphazard, if not chaotic, and 2) inflation in Iran this year is likely to be well beyond the official 14.2% figure currently being put about.
Subsidy Cuts 
Owners of industrial and agricultural enterprises who initially welcomed Iranian President Mahmoud Ahmadinejad's plan to reduce subsidies by lifting the price-support system for basic goods have now become its chief critics.
Six months after the controversial plan took effect, these producers are still awaiting the promised financial support for their companies and worry that, with the sharp rise in fuel prices, they will not be able to stay afloat.
"What do people think? That we make so much profit that despite astronomical cost increases we can still produce?" asked one food producer in exasperation, who spoke to IPS on condition of anonymity. "The reality is that sectors of production can't continue and are reducing their production, if not being shut down altogether."
Iran’s parliament has warned President Mahmoud Ahmadinejad that resentment is building over sharp increases in the price of natural gas, which has risen at least 10-fold on average in recent weeks, and that public protests could follow.
Official media have reported on crowds complaining in the offices of the National Iranian Gas Co. since a two-week national holiday ended April 4. In Tehran, many people are refusing to pay their bills.
Photo: David Mercado (Reuters)Faced with spreading civil unrest, the Bolivian president has scrapped a government decree that significantly raised fuel prices and provoked violent protests.
Evo Morales, the Bolivian president, presided over back-to-back government meetings on Friday aimed at crafting a strategy for quelling civil unrest in La Paz, Cochabamba and other major cities sparked by the decision to remove price controls.
Alvaro Garcia, the Bolivian vice president, filling in for Morales, had issued the decree on Sunday removing subsidies that keep fuel prices artificially low but cost the Bolivian government an estimated $380m per year.
As a result fuel prices went up by as much as 83 per cent in the sharpest increases since 1991.
