Bankrupt Iran plans drastic taxes to keep afloat

Iran is bankrupt and the regime is mulling drastic measures to keep the economy afloat, an official from an opposition movement said Wednesday, citing what he claimed were leaked documents. "I have decided to publish these documents because they touch the lives of all Iranians, bear witness to the catastrophic situation in the country as well as the post-election plot prepared by the regime," Amir Hossein Jahanshahi, the founder of the Green Wave opposition group, told reporters in Paris. He distributed copies of a document which he described as a report by the Iranian central bank's governor Mahmoud Bahmani. Dated April 4, it was sent to top government officials and paints a picture of a country that is financially on its knees. Iran, which holds presidential elections on Friday, is grappling with crippling inflation. Its currency, the rial, has lost more than two-thirds of its value against the dollar since early 2012 when the United States and the European Union announced new sanctions against Iran's oil exports and access to the global banking system. The devaluation of the rial, coupled with difficulties in repatriating petrodollars, has pushed prices of imported products through the roof, forcing many buyers to turn to Iranian-made alternatives. "The banking system is contending with an impossible combination of credit and liquidity crisis, negative real interest, and a shortage of capital," the central bank report said, according to a translation into English provided by Green Wave. The report said the central bank needed 500,000 billion Rial (30 billion euros, $40 billion) to support ailing banks. "The imbalance between income and expenses in foreign currency caused by a 50 percent reduction in oil sales as well as a large injection of foreign currency into the market has exacerbated the pressure on foreign currency reserves in addition to loss of access to a substantial proportion of the foreign currency reserves due to the sanctions." The document also put the unemployment rate for those aged between 15 and 29 at 38.8 percent. Another document from Iran's Supreme National Security Council dated April 10 evoked a 20 percent tax on bank accounts, food rations and putting the banking sector directly under the charge of the Guardians of the Revolution. "The country is bankrupt," said Jahanshahi. "And the regime wants the people to pay, although it created this situation by financing terrorist movements and trying to make a nuclear bomb. "The sanctions are biting...the regime is on its knees," he said, adding that he had decided to publish these documents as none of the presidential candidates had adequately addressed the issue in their campaign. Although most candidates have pointed the finger at the government, they have been hesitant to promise a rapid economic recovery.