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2015 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT

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The agreement on Iran’s nuclear program and the envisaged lifting of economic sanctions have set the stage for improved macroeconomic performance, provided comprehensive reforms are implemented. Prudent policies and the interim sanctions relief improved macroeconomic performance in 2014/15. But global oil prices have declined markedly and the economy faces complex structural challenges, with still high inflation and unemployment, weak bank and corporate balance sheets, and sizable government arrears. Reforming the policy framework and addressing these structural challenges are required to ensure macroeconomic stability, unleash high, inclusive, and sustainable growth (Figure 1). The authorities have made some progress in implementing recommendations made during the

Description

The agreement on Iran’s nuclear program and the envisaged lifting of economic sanctions have set the stage for improved macroeconomic performance, provided comprehensive reforms are implemented. Prudent policies and the interim sanctions relief improved macroeconomic performance in 2014/15. But global oil prices have declined markedly and the economy faces complex structural challenges, with still high inflation and unemployment, weak bank and corporate balance sheets, and sizable government arrears. Reforming the policy framework and addressing these structural challenges are required to ensure macroeconomic stability, unleash high, inclusive, and sustainable growth (Figure 1). The authorities have made some progress in implementing recommendations made during the

2014 Article IV Consultation under difficult conditions. Further progress would require resolute action, greater coordination, and strong political support, against a complex socio-economic environment and parliamentary elections in February 2016.

Additional information

File Type

PDF

File Size

2.11 MB

Pages

67

Published by

International Monetary Fund

Table of contents

MACRO-FINANCIAL DEVELOPMENTS, OUTLOOK, RISKS AND SPILLOVERS __________________ 5

 

A. Recent Macro-Financial Developments and Outlook ___________________________________________ 5

 

B. Risks and Spillovers ___________________________________________________________________________ 10

 

POLICY DISCUSSIONS _________________________________________________________________________ 12

 

A. The Macro Policy Setting in a Post-Sanction Economy with Lower Oil Prices __________________ 12

 

B. The Policy Framework _________________________________________________________________________ 15

 

C. Unlocking Balance Sheets: an Immediate Priority to Support Growth _________________________ 17

 

D.  Structural Reforms: A more Efficient and Inclusive Economy __________________________________ 19

 

OTHER ISSUES _________________________________________________________________________________ 21

 

STAFF APPRAISAL _____________________________________________________________________________ 21

 

BOXES

 

1. The Package of Economic Stimulus _______________________________________________________ 7

 

2. The Current State of the Economy and the Growth Outlook ____________________________________ 9

 

3. Iran’s Employment Challenge and Sectoral Growth Pattern ___________________________________ 20

 

FIGURES

 

1. Business Environment Indicators, 2010/11–2014/15 _________________________________________ 25

 

2. Macroeconomic Indicators, 2010/11–2014/15 ______________________________________________ 26

 

3. Macroeconomic and Price Developments, 2010/11–2014/15 __________________________________ 27

 

4. Fiscal Developments and Outlook, 2013/14–2020/21 ________________________________________ 28

 

5. Monetary Indicators, 2002/03–2014/15 ___________________________________________________ 29

 

6. A Broad Look at Liquidity and Indebtedness Across Sectors 2012–15 ___________________________ 30

 

7.  Financial Sector Indicators, 2008/09–2014/15 _____________________________________________ 31

 

8. An Illustrative Model Simulations (G20MOD) _______________________________________________ 32

 

2  INTERNATIONAL MONETARY FUND

 

ISLAMIC REPUBLIC OF IRAN

 

TABLES

 

1.  Selected Macroeconomic Indicators, 2013/14–2020/21 ______________________________________ 33

 

2. Balance of Payments, 2013/14–2020/21 __________________________________________________ 34

 

3.  Statement of Government Operations, 2013/14–2020/21 _____________________________________ 35

 

4. Statement of Government Operations, 2013/14–2020/21 _____________________________________ 36

 

5. Monetary Survey, 2013/14–2020/21 ______________________________________________________ 37

 

6. Medium-Term Scenario, 2013/14–2020/21 _________________________________________________ 38

 

7. Vulnerability Indicators, 2010/11–2014/15 __________________________________________________ 39

 

APPENDICES

 

I. Fiscal and External Debt Sustainability _____________________________________________________ 40

II. External Sustainability Assessment for Iran _________________________________________________ 43

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