Virus-hit Iran Urges IMF to Approve its Loan Request

By Amir Havasi

Iranian President Hassan Rouhani urged the InternationalMonetary Fund on Wednesday to give the sanctions-hit country a $5 billion emergency loan to combat its novel coronavirus outbreak.

The Islamic republic is battling one of the world's deadliest coronavirus outbreaks which it says has killed more than 3,800 people and infected more than 62,500.

There has been speculation abroad that the real number of deaths and infections could be higher.

Iran has said it needs the funds to continue fighting the virus.

But its arch enemy the United States, which effectively holds a veto at the IMF, is reportedly set to block the loan, arguing Iran will use the funds for military purposes.

"I urge all international organisations to fulfil their duties," Rouhani said during a cabinet meeting.

"We are a member of the IMF... if there's going to be any discrimination between Iran and others in giving loans, neither we nor world opinion will tolerate it."

Iran announced on March 12 that it had requested the loan.

The country has not received assistance from the IMF since a "standby credit" issued between 1960 and 1962, according to IMF figures.

According to the IMF's website, a Rapid Financial Instrument "is available to all member countries facing an urgent balance of payments need".

"If they do not act on their duties in this difficult situation, the world will judge them in a different way," Rouhani said.

'Maximum Pressure'

US Secretary of State Mike Pompeo said in a recent interview that Iran would use any economic relief to pursue nuclear weapons and back Shiite militias in Iraq that the administration blames for a wave of attacks on bases used by US troops.

"You see the way... the regime is treating their people in this time of enormous crisis. You see the way that they continue to spend money," Pompeo told conservative radio host Hugh Hewitt.

US President Donald Trump's administration has waged a campaign of "maximum pressure" on Iran since it withdrew from a landmark nuclear deal in 2018.

It has since imposed wave after wave of crippling sanctions that target key sectors of Iran's economy such as oil sales and banking.

Iran has repeatedly called on the Trump administration to reverse its sanctions policy, which has been opposed even by US allies, particularly since the COVID-19 pandemic hit.

Medicines and medical equipment are technically exempt from the US sanctions but purchases are frequently blocked by the unwillingness of banks to process purchases for fear of incurring large penalties in the United States.

"It will go down in history that the White House, which was engaged in economic terrorism so far, is now a terrorist in health issues, too," Rouhani said.

European nations have delivered medical goods to Iran in the first transaction under the Instex financing mechanism set up to get round US sanctions.

But it is more than a year since Britain, France and Germany announced the creation of Instex and Iran has questioned European governments' commitment to seeing it through in defiance of the Trump administration.

Photo; IRNA

Iran Asks IMF for First Loan in Decades to Combat Virus

Iran said on Thursday that it has sought immediate financial assistance from the International Monetary Fund to help it combat one of the world's deadliest coronavirus outbreaks.

According to a tweet by Iran's top diplomat, IMF chief Kristina Georgieva had "stated that countries affected by #COVID19 will be supported via Rapid Financial Instrument (RFI)".

"Our central bank requested access to this facility immediately," Foreign Minister Mohammad Javad Zarif added on his Twitter account.

Iran has not received assistance from the IMF since a "standby credit" issued between 1960 and 1962, according to the fund's data.

Zarif said the IMF and its board "should adhere to fund's mandate, stand on right side of history and act responsibly".

The various loans that can be granted by the IMF must be approved by the institution's executive board, where the United States practically has a veto on decisions.

The United States is currently pursuing a policy of "maximum pressure" aimed at crippling the finances of Iran's government.

In an Instagram post picked up by state news agency IRNA, central bank governor Abdolnasser Hemmati claimed to have formally requested access to RFI by letter on March 6.

"Given the widespread prevalence of coronavirus in our country and the need to continue to take strong measures to prevent and cure (the disease), and to address its economic impact," Iran was asking for "about $5 billion" in assistance, Hemmati wrote on his Instagram account.

Iran on Thursday reported 75 new deaths from COVID-19, the highest single-day toll since the Islamic republic announced the first deaths from the outbreak on February 19.

It took the overall death toll to 429 out of a total of more than 10,000 confirmed cases of infection.

The World Health Organization called for Iran to be given more support in its fight to bring the outbreak under control.

"Iran is doing its best... We are trying to mobilise more support for Iran," WHO chief Tedros Adhanom Ghebreyesus told reporters in Geneva, adding that the country needed more supplies.

According to the IMF's website, the RFI "provides rapid financial assistance, which is available to all member countries facing an urgent balance of payments need."

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IMF Sharply Cuts Iran, Saudi Growth Forecasts

By Omar Hassan

The International Monetary Fund on Tuesday sharply downgraded growth projections for Saudi Arabia and Iran, the two largest Mideast economies, citing the impact of US sanctions, geopolitical tensions and low oil prices.

In its World Economic Outlook, the global lender cut forecasts for almost all countries in the Middle East and North Africa (MENA) as the region is buffeted by biting sanctions on Iran and nail-biting anxiety over last month's attacks on Saudi oil facilities.

The IMF said Iran's economy will contract by a massive 9.5 percent this year, its worst performance since 1984 when the Islamic republic was at war with neighboring Iraq.

The figure is 3.5 percentage points lower than the IMF's April projections, reflecting a rapid deterioration in Tehran's economy after the US implemented tighter sanctions on its oil exports, the nation's main source of income.

This is the second year in a row that Iran's economy is mired in recession, after it shrank by 4.8 percent in 2018.

Iran has "been or continues to be experiencing very severe macroeconomic distress," the IMF said, adding that growth in 2020 will be flat.

The forecast for Saudi Arabia, the region's largest economy, was also cut to just 0.2 percent for 2019, a substantial 1.6 percentage points lower than April's projections.

The outlook is the worst since 2017 when the kingdom's economy contracted by 0.7 percent.

But the IMF raised its Saudi growth forecast for next year to 2.2 percent, slightly above April's projections, on expectations that the non-oil sectors will strengthen following subsidy reforms.

The oil giant has substantially cut power and fuel subsidies as well as imposed fees on expatriate visas and a five-percent value added tax as part of a reform programme to decrease its dependence on oil.

Fitch Ratings in September downgraded Saudi Arabia's credit rating by one notch following the devastating attacks on key oil facilities that knocked out half its production -- a strike that has been blamed on Iran.

Gloomy Regional Outlook

The IMF also cut its forecast for MENA growth to a meagre 0.1 percent this year, 1.2 percentage points lower than April projections, reflecting weakening economies in a region rattled by conflict.

The cut to MENA growth is "largely due to the downward forecast revision for Iran and Saudi Arabia," it said.

"Civil strife in some other economies, including Libya, Syria, and Yemen, weigh on the region's outlook."

The global lender said that the price of oil and gas, the main source of income for the region, dropped 13 percent between April and October and that oil prices will continue to decline until 2023.

It said the September 14 attacks on Saudi oil facilities have stoked tension and uncertainty in the region, especially following tanker attacks in the strategic Strait of Hormuz through which 20 percent of oil trade passes.

Growth projections for the United Arab Emirates, the most diversified economy in the region, was cut sharply to 1.6 percent from 2.8 percent in April, due to weak oil growth in Abu Dhabi and a general slowdown in Dubai.

The IMF also cut forecasts for other hydrocarbon exporters Qatar, Kuwait and Oman but raised the outlook for Iraq, the region's second largest crude exporter, following a 0.6 percent contraction last year.

Photo: IRNA

IMF Sees Risk of 50% Iran Inflation on More U.S. Sanctions

Tighter U.S. sanctions against Iran could fuel inflation to the highest level since 1980, according to the International Monetary Fund, as the Islamic Republic’s economy grapples with a weakening currency and tighter U.S. sanctions on oil exports.

Consumer prices could average 50 percent higher this year after the U.S. moved last week to end sanctions waivers granted to a handful of countries buying Iranian oil, said Jihad Azour, head of the IMF Middle East and Central Asia department. Before the announcement, the Washington-based lender had expected inflation to average 37 percent.

The U.S. decision aims to slash Iranian oil exports to zero, starving the government of essential revenue as Trump seeks to curb the Islamic Republic’s political influence in the Middle East. The grim outlook would put Iran’s inflation on par with crisis-hit Sudan and only behind Venezuela and Zimbabwe, two countries caught up in political turmoil, IMF data show.

Even before the removal of the waivers, the exchange rate had lost two-thirds of its value and “the economy was expected to go into a second year of recession,” Azour said in an interview on Sunday in Dubai. While it’s hard to tell how high prices could surge, “it’s clear that the situation is expected to deteriorate,” he said.

Forecasts released before the U.S. decision show Iran’s gross domestic product set to contract 6 percent this year from 4 percent in 2018 before a marginal recovery in 2020. The oil price needed to help the country balance its budget was forecast to rise to $125.6 a barrel from $113.8 in 2018 and $64.8 the previous year. Brent crude prices closed at $72.15 a barrel on Friday.

European powers that signed the 2015 nuclear accord with the Islamic Republic have criticized the U.S. actions. Officials in Tehran said reducing oil exports to zero was impossible.

Azour said Iranian authorities should take steps to alleviate the economic pain in the short term, including bringing the official exchange rate in line with market forces and address weaknesses in the financial system by complying with anti-money laundering and terrorism financing laws.

Authorities also need to “fix or expand their social protection mechanisms to address the additional vulnerabilities” for the poor, he said.

Photo: Bloomberg

IMF Sees Deeper Iran Recession Hitting Regional Growth

The International Monetary Fund on Tuesday worsened its forecast for Iran's recession as US sanctions bite, with Tehran's slump denting overall growth in the Middle East and North Africa. 

The global lender's World Economic Outlook projected Iran's economy will shrink by a massive 6.0 percent this year, its worst performance since it contracted by 7.7 percent in 2012.

The latest figure represented a sharp deterioration from October's prediction of a 3.6 percent contraction, as US sanctions batter the Islamic Republic's crucial oil sector. 

The report also estimated that Iran's economy, the second largest in the region behind Saudi Arabia, shrunk by 3.9 percent in 2018, as opposed to 1.5 percent projected earlier.

The prediction of deeper pain for Iran, lower oil growth and civil strife saw the IMF cut its overall forecast for the Middle East and North Africa to 1.3 percent, down 0.9 percent from January.

"The outlook for the region is weighed down by multiple factors, including slower oil GDP growth in Saudi Arabia... US sanctions in Iran and civil tensions and conflict across several other economies, including Iraq, Syria, and Yemen," the IMF said.

It maintained its projections for Saudi Arabia, saying the region's leading economy is expected to grow by a muted 1.8 percent this year and 2.1 percent in 2020.

The IMF said it expected the kingdom's growth, which reached 2.2 percent last year, to stabilize at a modest rate in the medium term due to the subdued outlook for oil prices and output. 

Overall the wider regional economy is projected to improve in 2020 to a healthy growth rate of 3.2 percent, the IMF said.

The international lender expects oil prices to average around $59 a barrel this year and next, down from its October projections of above $65 a barrel.

Photo Credit: Wikicommons

IMF Reverses Iran Growth, Lifts Saudi Forecast

The International Monetary Fund on Tuesday predicted Iran's economy will sink deep in the red due to renewed US sanctions but forecast increased Saudi growth on the back of higher oil production.

In its World Economic Outlook, the IMF said the oil-dependent economy of the Islamic republic is expected to shrink by 1.5 percent this year and by 3.6 percent in 2019.

In May, before US President Donald Trump announced reinstating sanctions against Tehran, the IMF had projected Iran's economy would grow by 4.0 percent in 2018 and again next year.

The IMF said the Iranian economy was now expected to contract over the next two years "on account of reduced oil production, before returning to modest positive growth in 2020-23.”

Trump withdrew the United States from the 2015 nuclear deal between Iran and world powers in May, and his administration reimposed a round of sanctions on the Islamic republic in August.

Iranian crude exports, which reach some 2.5 million barrels per day normally, have plunged by over half a million bpd and are expected to dive further when expanded sanctions on oil take effect next month, depriving Tehran of its main source of income.

The IMF also sharply slashed growth forecasts for the whole Middle East and North Africa region due to the slump in the Iranian economy and increased energy costs.

It now projects the MENA region to grow by 2.0 percent this year and 2.5 percent in 2019, 1.2 percent and 1.1 percent lower, respectively, than it forecast in April.

"The downward revisions reflect to an important extent the worsening of growth prospects for Iran, following the reimposition of US sanctions," it said.

The IMF, however, lifted its projections for economic growth in Saudi Arabia, the region's biggest economy, and its oil-rich neighbours in the Gulf.

It said the Saudi economy, which contracted by 0.9 percent last year, is expected to grow by 2.2 percent in 2018 and 2.4 percent next year, raising previous projections by 0.5 percent.

The growth is being "driven by a pickup in non-oil economic activity and a projected increase in crude oil production in line" agreed by the Organization of the Petroleum Exporting Countries and independent producers, the IMF said.

Oil prices, which account for about 80 percent of Saudi public income, have increased by more than 70 percent since June last year to over USD 80 a barrel.

The London-based Capital Economics think-tank said last week that revenues of Saudi Arabia and the five other Gulf states are expected to rise by USD 200 billion this year compared to 2017 due to high oil prices and output.

Photo Credit: IMF