Covering Iranian economy,
business and current affairs.

News & Events

Overview: Iran Analysis Weekly Report July 10, 2016

10 July, 2016

Vistar Business Monitor

On July 2nd President Hassan Rouhani promised to pursue salary reform “to the end” and announced a plan to “reorganize” the country’s banking system in the wake of leaks that government employees have received excessive benefits and salaries.

President Rouhani, whose administration has been criticized for the exorbitant benefits, noted that details on the plan to “reorganize the banking system” will be revealed soon. Rouhani has taken several steps to address the controversy over the benefits, including ordering First Vice President Eshagh Jahangiri to conduct an investigation and ousting the heads of four public banks. National Development Fund (NDF) Head Safdar Hosseini, whose salary was leaked in mid-June, and four NDF executive board members also resigned from their positions on July 2.

First Vice President Eshagh Jahangiri presented a report to President Hassan Rouhani on steps taken to address Iran’s ongoing salary scandal, in which leaks revealed that certain senior officials have been receiving exorbitant salaries and benefits. Jahangiri created a committee at Rouhani’s request to investigate the controversy, which has sparked public outrage and criticism of the Rouhani administration. Jahangiri blamed supervisory mechanisms in the political system for not being sufficiently attentive to public salaries and asserted that officials implicated in the scandal should be ousted and their salaries “refunded” to the government.

Supreme Leader Ayatollah Ali Khamenei called for additional repercussions against government officials who have profited from excessive benefits and salaries. Senior officials at public banks and the country’s National Development Fund have already resigned over the scandal, which broke after media outlets leaked pay slips revealing that some government employees have been receiving benefits and salaries far above the mandated cap. Khamenei, who spoke after Eid al Fitr prayers in Tehran, warned that failure to address the controversy adequately could “erode public trust” in the Islamic Republic and stated that “those payments must be reimbursed, the violators of law should be punished, and those abusing the regulations should be dismissed.” President Hassan Rouhani has vowed to pursue salary reforms “to the end.”

Khamenei also addressed Bahrain, which has experienced protests by the country’s Shia majority after the ruling Sunni family revoked the citizenship of a leading Shia cleric and suspended the largest Shia political group in June. Khamenei stated that Iran will not “intervene” in Bahrain but warned Bahraini officials not to “turn a political conflict into a civil war.”

Iranian officials criticized UN Secretary General Ban Ki-moon’s report calling Iran’s ballistic missile tests “inconsistent with the constructive spirit” of the nuclear deal. An anonymous Foreign Ministry official called on Ban Ki-moon to instead release a “realistic and fair report” on America’s “shortcomings” in fulfilling its obligations under the nuclear deal. Expediency Discernment Council Secretary Mohsen Rezaei called Iran’s tests “defensive” and said that the “missiles and bombs of the Zionist regime and Saudi Arabia” are “inconsistent” with regional peace and security.

On the economic note, the government of President Hassan Rouhani has sent an amendment to the budget bill for the current Iranian calendar year of 1395 (21 March 2016-2017) to the Parliament. This came about 40 days after the previous Parliament – whose tenure ended last month - approved it and forwarded it to the Guardian Council to become a law.

The most important amendments that the government has carried out include one that concerns increasing the capitals of banks as well as another that concerns allocating higher payments to the bans from converting foreign currencies. In the second article of the amendment, the government has called for publishing bonds – a measure which is meant to provide the resources necessary to repay its debts to different organizations, institutions and contractors.

There was a gradual increase in the key index of Tehran Stock Exchange (TSE) in the week ending 5 July 2016. The main index saw a rise of 109 units over four working days and reached the channel of 74,000 units. The value of weekly transactions exceeded IRR 93 trillion even though there was a single-day holiday thus registering a rise of four percent.

The currency market index saw an increase of 2.1 percent last week. However, it has been on a decline and has posted a drop of 1.5 percent ever since.

On Tuesday, which was the last working day in Iran before Eid-ul-Fitr holidays, the dollar was down by IRR 20 and reached IRR 34,880 thus registering a decline of 1.5 percent over the week.