Iran’s economy has long been shaped by policy inertia, accumulated imbalances, and a persistent reluctance to undertake difficult reforms. For years, experts and policymakers have warned that the status quo is unsustainable.
Yet the more fundamental challenge has not been the presence of problems, but the absence of national consensus to address them. Despite widespread recognition that the current path is flawed, reform efforts remain slow, fragmented and overshadowed by short-term political calculations.
A recent statement by the head of the Plan and Budget Organization captured the scale of dysfunction: with current resources, completing Iran’s unfinished development projects would take 101 years. This figure is more than a technical estimate; it symbolizes a deep failure in planning, prioritization and allocation.
Projects meant to be completed within a few years now stretch across generations, reflecting how resources have been scattered without clear strategy and how the burden of poor decisions has been pushed onto the future.
Energy policy offers another striking example. Iran, once a $6-billion gasoline exporter in 2019, has become an importer in recent years. This shift points to persistent pricing distortions, insufficient investment, and weak long-term strategy.
Yet the situation also underscores a major opportunity: Iran possesses vast energy reserves, technical expertise and an experienced refining industry. With forward-looking and depoliticized policymaking, the country could regain its exporter position and use the energy sector as a driver of broader economic growth.
A Troubled Landscape
The weight of explicit and implicit subsidies further complicates the landscape. Massive financial resources have been channeled into poorly targeted support mechanisms that disproportionately benefit higher-income households. Structural weaknesses in the budget have produced chronic deficits, increased borrowing from the banking system and entrenched high inflation.
Inflation is no longer a cyclical issue—it has become a defining feature of daily life, steadily eroding purchasing power and narrowing living standards.
This inflationary environment is reinforced by interest rates that neither reflect inflation nor incentivize productive investment. As a result, capital flows into speculative activities instead of industry, constraining economic growth and widening social inequality.
For many lower-income households, the combination of high inflation and weak economic stability has eroded the basic ability to plan for the future.
Environmental pressures add another layer to the challenge. Iran’s natural resources—from water and soil to forests and wetlands—are under severe strain. Environmental degradation threatens food security, public health and long-term development. Yet across the country, civil groups, local communities and academic institutions are increasingly engaged in restoration efforts. With targeted support, these initiatives could help reverse the trajectory of ecological decline.
Iran’s current difficulties are the cumulative result of decades of postponed decisions and short-term responses. But reaching the point where “the current path is no longer viable” can also mark the beginning of structural reform.
The first step is acknowledging realities without justification. Continued adherence to existing policies will deplete financial, natural and human capital; change, however, remains possible and within reach.
Sustainable economic reforms would not only strengthen domestic resilience but also enhance Iran’s leverage in international negotiations.
