The Iranian Economy

The government of Iran practices the so called Islamic economy, based upon three sectors: public, cooperative and private providing the most essential needs: housing, food, clothing, public health, medical treatment, education and the necessary conditions for establishing a family for all. Respect for freedom of choice in selecting one's occupation and refraining forcing people to a particular job and preventions of the exploitations of the work of others. Private property acquired through legitimate means, is respected. The relevant criteria shall be determined by law.

The main economic wealth of Iran is, of course, petroleum. It is the fourth among the countries of the World, after Saudi Arabia, Russia and Kuwait, and is ranked second in the world in view of its natural gas reserve, after Russia's, totaling seven hundred trillion cubic feet. Almost one-tenth of the world's oil and one-fifth of the world's natural gas reserve are in Iran. Besides this, Iran has large mineral deposits and considerable amount of forest wealth, in addition to zinc, lead, chromite, iron ore, copper, red oxide and manganese, nickel, cobalt, tungsten, uranium, gold and silver.

In the past few years there has been a series of development plans initiated by the Iranian government to rehabilitate the country, and in spite of decrease in national revenues because of swift changes in global oil prices, the first 5 year plan for Economic and Social development was carried out and the economic institutions as well as the infra-structure of the national economy were reconstructed or strengthened. The Iranian government reports mention that although there have been some consequences of such plans to daily life of the people, such as inflation, they are supposed to be of short-term in nature and are not that much significant compared with accomplishments made in energy, transportation, ports, general and higher education, social welfare, agriculture and industrial strategic productions. The realistic politics adopted to privatize economy have been instrumental in economic growth and prosperity. The G.D.N.P. has been increased during a period of 4 years from 10,664.9 billion Rials to 13,464 billion Rials, and the average growth rate during the first four years in agriculture sector was 6.3%. The value added in the industrial sector during the first Five-Year Economic Development Plan was 9.2 percent at constant prices and the share of income from this sector in the GDP rose from 10.5% in the beginning to 16.5 at the end of the plan.

According to the Central Bank of Iran (CBI) Iran's economy shows a 5.5% increase in fiscal year 1996-97 as compared to 4.5% increase in the previous fiscal year. Apart from the oil sector, the economy in the 1995-96 fiscal year registered growth of 19.5% in foodstuff industries, 17.1% in paper production, 22.5% in chemical products and 11.4% in non-metallic mineral products.

The Iranian government has been imposing restrictions on foreign-exchange movements in an effort to check inflation. The national currency, rial, has been fixed at 3,000 Rials to one U.S. dollar, as compared to 70 Rials in 1978-79, before the Islamic Republic was established. CBI report shows that Iran's foreign debt has dropped to $20.36 billion on Sep. 21, 1996, compared with $22.56 billion at end of fiscal 1995-96. The inflation rate in the first half this fiscal year declined to 27%, compared with 53.6% in the same period a year earlier.

Iran has about 4,847 kilometers of network of main roads and about 1,184 kilometers of secondary commercial and industrial roads that traverse 16 provinces. Presently, 3706 kilometers of main roads are also under construction. In the past four years, road cargo transportation has increased from 19.4 million tons to 19.8 million tons, and passenger transportation has claimed from 8.7 million to 9.16 million person during last year. Presently, about 2,000 kilometers of railways are under construction and plans for 8,000 kilometers of railways throughout the vast area being studied. Bafq-Bandar Abbas and Sarakhs-Mashhed railway projects link East Asian and independent Certral Asian republics to Iranian railways network which will connect European network to Asia, and the East Asian network will link with the sea of Oman and the Persian Gulf. This rail road network revives the ancient Silk Road and benefits not only Iran but also the Central Asian countries that are linked to international and free waters conveniently.

Iran has established free trade zones in Persian Gulf and Caspian Sea and offers incentives for investment and distribution of good in the domestic and regional market.

There is a shift from oil consumption to natural gas in households and industries. More than 265 cities in Iran are connected to the country's gas pipeline network. The number of cities on the network is expected to reach 300 by the end of the five-year development plan in 1999. Iran's domestic gas consumption is around 40 billion cubic meters. Iran also has gas-export facilities and annual revenue of $3 billion from gas exports to neighboring countries and Europe is expected.

The capacity of installed electrical power has reached 17,863 megawatt during past five years. Furthermore, projects for construction of 19 additional power plants with the capacity of 14,163 megawatt are under construction.

Iran has a population around 62 million. It had an odd population growth rate of 3.2% during the early 1980s. However, the population growth rate has declined from 3.2% to 1.8% in the recent years.