June 20, 2025
Economist Musa Ghani nejad says the biggest problem plaguing Iran’s economy is its centrally controlled, command-style structure.
Speaking at the “Market Oriented” seminar in Mashhad, Ghani-nejad said, “In the current climate, Iranian producers are facing major hurdles because prices must be set by regulators. At the same time, they struggle to secure financing from banks due to interest rates and deposit rates being dictated by the government.”
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He likened the financial sector to the nervous system of the economy, explaining, “If the physiology of Iran’s economy is dysfunctional, improving its ‘neurology’ won’t resolve anything.”
Others have asserted that Iran’s economy is more state controlled than the economies of some so-called communist states in eastern Europe, such as Hungary, in the late 20th Century.
Reflecting on the early 2000s, Ghani-nejad pointed to the relative success of private banks during that period, attributing their performance to a lack of price-setting regulations.
However, he noted that with the onset of state-imposed pricing in 2005 under President Mahmud Ahmadi-nejad, the banking system began experiencing persistent problems that continue today.
Ghani-nejad also identified credit institutions as a key driver of inflation, adding, “Wherever the government makes poor policy decisions, corruption and resource misallocation inevitably follow.”
On the topic of the Iran-US nuclear negotiations, Ghani nejad emphasized that even if a deal is reached, without broader economic reforms and liberalization, issues like investment uncertainty and poor economic predictability will remain unresolved.
He concluded by calling for a comprehensive release of the economy from state domination and excessive regulatory control. In the same seminar, economist Farhad Nili provided a mid term outlook on Iran’s macroeconomic future, cautioning that even domestic economic reforms could fall short if not supported by long-term planning. “Without a strategic vision, the main casualty of reform will be economic growth,” he said.
He argued that Iran needs internal coordination more than external negotiation, a reference to the US-Iran nuclear talks. “The Foreign Ministry should be negotiating with the Ministry of Economy—because without domestic agreement and coherent policy, reform efforts may fail. We cannot place the entire future of Iran’s economy on foreign relations alone.”
Nili concluded, “What will improve our situation is real economic growth—lower interest rates, healthier businesses, less currency shock, and a shift from an unstable to a stable economic environment. Inflation must come down, and investors need to believe in a predictable future.”
