Iran needs economic reforms to profit from its nuclear deal with world powers, a senior official of the International Monetary Fund (IMF) said Monday.
"The agreement on Iran’s nuclear program and the envisaged lifting of economic sanctions bring a unique opportunity to build on and broaden the achievements of the past two years," Martin Cerisola, the assistant director of the fund's Middle East and Central Asia Department, said in a statement following his 11-day visit to Tehran to assess the country’s economy.
Cerisola said that currently the country's economy was weak and called for vital structural changes.
"Comprehensive reforms are critical to ensure that the envisaged lifting of economic sanctions entrenches macroeconomic stability and leads to high and inclusive growth over the medium term," he said.
“The sharp decline in global oil prices, tight corporate and bank balance sheets, and postponed consumption and investment decisions ahead of the expected lifting of economic sanctions, have significantly slowed down economic activity since the fourth quarter of 2014/2015 Iranian fiscal year," he added.
IMF estimates that Iran’s economy may have narrowed during the first half of 2015/2016 Iranian fiscal year which begins on March 21.
"Real Gross Domestic Products [GDP] growth is projected to decline from 3 percent in 2014/2015 to somewhere between 0.5 to -0.5 percent in 2015/16, depending on the exact timing of the expected lifting of sanctions," Cerisola said.
He also said that prospects for 2016/17 were brighter for the economy if Iran could raise oil production by 0.6 million barrels a day to 1 million barrels a day; lower costs for trade and financial transactions; and restored access to foreign assets. As a result, the country's Gross Domestic Product growth rate could extend a 4 percent to 5.5 percent in the 2016-17 Iranian fiscal year.
According to IMF, wide ranging reforms are vital for macroeconomic stability, which, Cerisola said, Iranian authorities recognized.
"They have taken important steps over the past year, by preparing drafts to reform banking and central bank laws. Further reforms are now needed for the policy framework to be able to respond more effectively to shocks and achieve price stability," he added.
Six world powers — the US, Germany, France, UK, Russia, China and Iran had reached a landmark deal in July of the year to limit Iran’s nuclear ability for more than a decade in return for the lifting of international oil and financial sanctions.