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Mismanagement Leaves Iran's Economy Vulnerable


(Washington Institute for Near East Policy) Patrick Clawson - On March 29, the IMF released a report highlighting Iran's economic vulnerabilities, at a time when the Iranian rial has been under sustained pressure. The IMF report discussed a host of grave dangers to Iran's banks. Their capital-to-assets ratio continues to decline (currently 4.9%), while nonperforming loans continue to grow (11.4%), and "the cost-to-income ratio for banks in Iran is amongst the highest in the world." The report also discussed the problem of maintaining a pension system in a country with a rapidly aging population. "The three largest [public] pension schemes (90% of the system) are insolvent." In short, Iran's economy is highly vulnerable to external shocks such as oil price drops or toughened international sanctions. The writer is director of research at the Washington Institute.
2018-04-05 00:00:00
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