Page 41 - bne Magazine Apri20

bne April 2020 Cover story I 41
Iran
VIRUS UPDATE
ECONOMIC MEASURES
• Iran has gone to the IMF for the first time since the 1960s to tap the IMF’s new Rapid Coronavirus Financing facility (RFI), designed to help countries cope with the economic impact of the coronavirus. It has requested $5bn of emergency funding. However, European sources have briefed media that the US may veto the request.
• Iran said on March 28 it has allocated 20%, or around 1,000 trillion rial, of its 2020/2021 state budget to fighting the outbreak. Facilities for grants and low-interest loans to those affected by COVID-19 have been written into the budget.
• The Central Bank of Iran (CBI) has given a commercial loan repayment holiday of three months to businesses. Banks have been instructed to remove restrictions and limits on cheque payments for businesses.
• Citizens can defer health insurance, income tax payments and utility bills for up to three months starting from March 17. In addition, the monthly stipend sent to the poorest deciles of Iran has been increased for the period of the outbreak.
• Banks were instructed to raise the transfer limit on card- to-card financial transfers to cut down on close contact between people requiring visits to bank branches and the exchanging of paper money.
ECONOMIC FORECASTS (where available)
• There is little available analysis as yet as to how badly the outbreak will hit Iranian growth, but in the face of
US sanctions Iran suffered GDP contractions of 4.9% in 2018 and 8.7% in 2019 according to the World Bank and it seems impossible that the institution’s forecast of 0.0% stagnation in 2020 can now be met.
• The oil price crash is another big worry for Iran, considering how it is struggling to even make “grey economy” sales of crude as the US attempts to drive Iranian oil off world markets. The IMF last October predicted that Iran will have a fiscal deficit of 4.5% this year and 5.1% next year. Iran would need oil priced at $194.6 a barrel to balance its budget in 2020, it said. These forecasts clearly need a big revision in the light of events.
• The value of the Iranian rial (IRR), already ravaged by what Tehran refers to as the “US economic war” in the past two years, had sunk to around 160,000 to the dollar on the free market by March 24. That compares to the 139,000 rate seen in early January after the US assassination of second most powerful Iranian official Major General Qasem Soleimani. That rate was marked down as the weakest seen in six months.
• Number of cases as of March 24: 24,811
• Number of deaths as of March 24: 1,934
• Comment: Iran got off to a terrible start in squaring
with its population of 82mn just how bad its coronavirus outbreak was, but it subsequently earned praise from the World Health Organization (WHO) for big efforts in getting its act together in addressing the crisis. Iran
is the epicentre of the pandemic in the Middle East and an outbreak danger to the South Caucasus and Central Asia. Attempts to source medical equipment to fight the pandemic have been hindered by ongoing US sanctions. several countries, including the UK and Russia, have called for the lifting of sanctions during the public health crisis. Washington claims it does not get in
the way of humanitarian supplies, but has imposed more sanctions during the crisis. To make things more difficult the Persian Nowruz New Year holidays started on March 20 and will last until early April, causing large movements of people trying to reach their extended family. A study carried out by Tehran's prestigious Sharif University of Technology concluded that in a worst case scenario there will be four million coronavirus cases “and 3.5 million people will die".
PUBLIC HEALTH MEASURES
• On March 24, Iran reported 122 new coronavirus deaths in 24 hours. An update that was followed by President Hassan Rouhani announcing that half of all government employees were staying at home in a bid to slow the outbreak and added a temporary release of 70,000 prisoners, would be extended until the end of the current Iranian month of Farvardin on April 18.
• “Testing zones” have been set up at entrance points to cities. Mass production of facemasks has been ramped up, but there have been reports of respirator and oxygen shortages.
• Iran’s parliament has been meeting via video conferencing. Several senior officials have died after contracting
the virus.
• Turkey, Azerbaijan and Armenia were among neighbours relatively quick to implement closures at their borders with Iran. Saudi Arabia protested that Iran was allowing visits by Saudis and then not informing Riyadh of the details of those who had visited.
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