Government tries to cope with resurgence of inflation after sharp drop in Iranian currency

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Iran’s Rouhani Government is considering introduction of rationing to deal with growing economic problems.

Vice-President Mohammad Baqer Nobakht, the head of the Planning and Budget Organization, said that five economic packages will be introduced to deal with internal issues, expanding US sanctions, and the decline of the Iranian currency.

Anoshirvan Mohseni Bandpey, the caretaker Labour Minister, said on Saturday that plans under consideration include the introduction of “electronic coupons” for the “fair” distribution of essential commodities.

Nobakht said $13 billion has been allocated to provide 25 essential commodities to low-income people through March 2019. The money will be used for essential commodities from abroad at the heavily-subsidized exchange rate of 42,000:1 v. the US dollar — almost 70% below the open-market rate of 128,000:1.

The Vice President did not say whether the Government will purchase the goods or whether subsidized currency will be provided to private firms.

The Government’s attempts to cope with the fall of the rial by 70% this year have been plagued by allegations of companies and individuals exploiting the subsidized rate to make large profits without providing lower-price goods. The regime has begun public trials of “economic corruptors” in special Revolutionary Courts, with no appeal of long prison sentences.

The rial’s devaluation has fed a resurgence of inflation, which had fallen to single digits from more than 40% in 2013. Production, investment, employment, and trade have been hampered by new US sanctions after American withdrawal from the 2015 nuclear deal, with comprehensive restrictions — including on Iran’s energy and financial sectors — scheduled for November 5.

Last week MPs ruled out a plan for paper coupons, possibly because of the reminder of rationing during the eight-year Iran-Iraq War in the 1980s. Iranian officials have spoken about cards with microchips.

There was a bit of relief for the Government on Saturday with a recovery of almost 10% in the rial after a sharp plummet of almost 30% in the previous week.

Having fallen as low as 140,000:1 — compared with an already-historic floor of 45,000:1 in January — the rial stands at 128,000:1 on Sunday morning.

Revolutionary Guards Kill 11 Iranian Kurdish Separatists in Northern Iraq

The Revolutionary Guards have killed at least 11 members of an Iranian Kurdish separatist group in a missile strike in northern Iraq.

The Kurdistan Democratic Party of Iran (KDPI) said they were holding a meeting in their headquarters in Iraqi Kurdistan when the missiles hit.

“Eleven KDPI members were killed and 30 wounded by Katyusha rockets fired on their headquarters in Koysinjaq,” Kamran Abbas, director of the city’s hospital, said.

The group said on Twitter that nearby refugee camps were also hit.

The KDPI, which occasionally carries out attacks inside Iran from its bases in Iraq, is listed as a “terrorist” group by Tehran. Several of its leaders have been killed in operations blamed on the Islamic Republic.

The faction conducted a guerrilla war against Iranian forces from 1979 to 1996, when it declared a cease-fire. In 2016, it announced a resumption of armed resistance.

The Iraqi Kurdistan Regional Government considered the Iranian raid, “We reiterate our rejection of using the Kurdistan region’s land to attack neighboring states, which is in no way acceptable and can lead to instability in the Kurdistan region.”