Iran faces a severe shortage of medicines, with some prices soaring sevenfold, months after the government phased out cheap dollars for importing raw materials.
The health care crisis is only one aspect of the overall economic crisis, precipitated by a centralized and often mismanaged economy and, in recent years, by US sanctions.
Most medicines in Iran are produced locally by quasi-governmental companies that import the raw material from other countries. When the Iranian currency began to lose value in early 2018, the government offered a fixed exchange rate for essential goods, mainly food and medicine. However, earlier this year the new administration of President Ebrahim Raisi eliminated what was effectively a government subsidy. Now, food and medicine producers have to buy dollars at seven times higher rates to import their raw materials, which has disrupted production.
Vice-president of pharmaceutical producers, Ali Fatemi, told Aftab News in Tehran that when an economic sector is controlled by the government and is run according to “a command economy”, it is not surprising that a situation like the current shortage emerges. The government sets prices unreasonably low and then stops subsidies, which prevent its companies from buying raw materials and products, he said.
To partially alleviate the shortage, the Iranian government allows the import of medicines, such as antibiotics and simple cough syrups, from India, Fatemi explained, and as a result, the country spends much more foreign currency, in instead of importing raw materials.
Ali Fatemi, a pharmaceutical executive in Iran
Besides pharmaceuticals, the inflationary recession has gripped other sectors, according to Fararu’s website in Tehran. As prices have risen by at least 40% for two consecutive years, consumers have lost purchasing power and demand has plummeted. This has led to a “domino effect for producers and factories” which have to stop their activities. This in turn creates more unemployment and less consumer demand.
Iran’s currency has fallen more than 15% since early September, when it became clear that a nuclear deal with the West was not a realistic expectation.
Since early 2018, when the United States signaled its intention to withdraw from the 2015 nuclear deal known as the JCPOA, the Iranian rial has increased tenfold from 35,000 to the dollar to 350,000 on November 12 . When the United States withdrew from the accord in May that year, it imposed damaging oil and banking sanctions on Iran. This further devalued the rial and led to very high inflation, which, coupled with the inefficiencies of a government-controlled economy, impoverished tens of millions of people.
Ehsan Soltani, an Iranian economist, told the website that while food prices have increased eightfold since 2018, wages have at most tripled.
“In recent years, with rising inflation, economists have warned officials of ‘inflationary recession’, but the government has paid no heed to it at all,” Soltani said.
In fact, from the cautious statements of many officials, especially in the previous Iranian government led by President Hassan Rouhani, it was obvious that they were aware of the dire situation, but had no control over it. the country’s foreign policy, which had had crippling consequences. US sanctions.
But Iran’s 83-year-old anti-Western leader Ali Khamenei has the final say on foreign policy and only he could secure the signing of a new nuclear deal that would lift the most damaging sanctions.
Iran’s economic growth over the past decade has been zero, and Soltani compared Iran to its neighbor Turkey. “Just look at Turkey…and see the high growth rate it has achieved over the past ten years, increasing its foreign exchange earnings dramatically, as we have faced the deteriorating economy and infrastructure.
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