Page 10 - IRANRptApr19

Heritage, the US-based conservative think tank that released its index on January 30, said progress in judicial effectiveness, government integrity, investment freedom, property rights and monetary freedom had been recorded for Iran. However, the country lost marks on business freedom, labour reform, government spending, the tax burden and fiscal health. There was no change in financial freedom.
Heritage observed: “U.S. decertification of the JCPOA [Joint Comprehensive Plan of Action] nuclear deal in 2017 and reimposition of U.S. economic sanctions in 2018 caused inflation to soar and led to rapid currency depreciation. The sanctions will also hamper much-needed investment flows into the country.”
It further noted: “Powerful interest groups, mostly linked to the security and religious establishments, are opposed to the pursuit of economic liberalisation and reengagement with the global economy.”
The think tank added that there was concern over Iran’s excessive reliance on the oil sector, and observed that “sustainable economic growth will remain a long-term rather than short-term objective [for Iran].”
The overall tax burden in Iran equals 8.0% of total domestic income, the report said, while government spending of tax and oil revenue amounted to 18.5% of GDP over the past three years. Those percentages marked increases from last year’s figures of 6.4% and 15.5%, respectively.
Despite the downturn in Iran, Heritage noted that the government was moving ahead with plans to remove subsidies which it noted were “fiscally ruinous”. It also criticised price controls which it saw as detrimental to the overall economy.
In a commentary of Iran as regards open markets, Heritage concluded: “The combined value of exports and imports is equal to 46.1 percent of GDP. The average applied tariff rate is 15.2 percent. Iran’s intrusive state continues to hold back more broadly based economic development, undermining trade and investment flows. Stringent government controls limit access to financing for businesses. State-owned commercial banks and specialized financial institutions account for a majority of banking-sector assets.”
10 IRAN Country Report April 2019 www.intellinews.com