IMF, Iran discuss need to beat inflation, grow economy

The International Monetary Fund said Monday that it held high-level discussions with Iranian officials on the need to combat inflation and undertake reforms to get the economy growing. The IMF said the Iranian economy, which has been crippled by UN-backed sanctions over its nuclear program, faces domestic challenges as well and that the new government was aware of the need of reforms. Ten days of discussions that ended Thursday "focused on the need for Iran to tackle high inflation and restore economic growth, as well as on the need for Iran to begin addressing long-standing policy and structural challenges in the economy," the Fund said in a statement. Those challenges include reforming subsidies, the banking and corporate sectors, and monetary and fiscal policy frameworks, the IMF said. The brief statement focused on domestic policy issues and suggested the authorities were aware of some of the things they needed to do. But it also made a glancing reference to the impact of the sanctions, set by a coalition of leading economies, which have tightly constrained Tehran's ability to export oil and other products and to purchase many products and services from abroad. "The authorities' understanding of the challenges and the high expectations of several sectors in the economy provide a timely opportunity for advancing such reforms, notwithstanding the difficult external environment," the institution said. The lack of ability to earn foreign exchange has sent the Iran rial plummeting since 2011 and pushed the prices of many household staples like rice, cooking oil and chicken out of reach for many people. Recent official Iran figures put inflation at 39 percent, and Economy Minister Ali Tayyebnia warned in August that the official figure of 3.5 million unemployed, or 11.2 percent of the workforce, could jump with a wave of young people on the verge of entering the job market. The election in June of reputed moderate President Hassan Rouhani has brought hopes for a deal with Western powers on restraining Iran's nuclear program that would allow the sanctions to be lifted and the economy to recover. Talks last week in Geneva came close to a breakthrough, and will resume on November 20 in hopes of achieving a deal. Meanwhile the IMF said it will undertake a formal review of Iran’s economy, known as an Article IV Consultation, early next year, the first such review in two years.