Iran — Achieving its Potential in the Global Economy

By John Lee.

A senior official with the International Monetary Fund (IMF) has said that Iran must implement economic and structural reforms and tackle money laundering and terrorist financing if it is to reintegrate into the global economy.

Mr David Lipton (pictured), the IMF’s first deputy managing director, made the statement in Tehran — this is the first visit by a senior IMF official to the country since the Islamic Revolution in 1979.

The Financial Times quotes him as saying:

“The first and most basic requirement for access to international markets is maintaining good macroeconomic policies so you are viewed as a good credit … and creating an environment in which the economy has a better growth prospect.”

In a statement at the conclusion of his visit, Lipton said:

In recent years, the authorities have made considerable progress in restoring macroeconomic stability under difficult circumstances. Inflation has declined from 45 percent in 2013 to around 8 percent recently, the foreign exchange market has stabilized, and some key reforms have been implemented.

“The implementation of the JCPOA bodes well for the outlook. Higher oil exports, along with lower costs of trade and financial transactions, as Iranian banks reconnect to the international financial system, would help support the economy, with real GDP growth projected at 4 –4.5 percent over the medium term.

“Sustaining and boosting those growth rates will require important reforms. To entrench macroeconomic stability, the policy frameworks for monetary and fiscal policies need to be strengthened, with greater focus on price stability, mobilizing domestic revenues, and on building buffers.

“Unlocking the Iranian economy’s growth potential and promoting jobs, particularly for youth and women, will also require addressing many structural challenges. Central in these efforts will be promoting the private sector, by fostering private ownership, attracting foreign investment, reducing the cost of doing business, and enhancing transparency and governance.

The full text of Mr Lipton’s speech to the Central Bank of Iran can be read here, while his concluding statement can be found here.

(Sources: IMF, FT)

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