Iran Drains Sovereign Wealth Again as Inflation Surges and Jobs Vanish

29/04/2026

TEHRAN, April 29: Iran has once again drawn on its sovereign wealth reserves to finance essential imports, underscoring the mounting pressure on an economy strained by war, soaring inflation, and a rapidly weakening currency.

The government’s Task Force for Food Security and Livelihood Improvement said $1 billion from the National Development Fund will be used to import basic goods, including sugar, rice, red meat, and animal feed.

The decision comes as authorities continue subsidizing critical imports despite earlier plans to scale back support. It is the second time in two years that the fund has been used to help finance basic imports.

With the fund’s reserves estimated at $40 billion, part of the money is also expected to go toward rebuilding war-damaged industries, including steel and petrochemicals, intensifying debate over how the resources should be allocated.

For many Iranians, the economic strain is already severe.

Nader, a 42-year-old film industry worker, said he has had no income since January, when nationwide protests began, and is preparing to leave his rented home and move his family in with his parents in another city.

“My wife’s job depended on the internet, and she has also become unemployed,” he said. “We’ve been using our savings to pay rent, but if we continue, soon nothing will be left for food or unexpected medical costs.”

The latest move also reverses the government’s “economic surgery” policy introduced four months ago to reduce import subsidies.

Authorities are still providing foreign currency for essential imports, including medicine, at a fixed rate of 285,000 rials per dollar — far below the open market rate of about 1.5 million rials and the official budget rate of 1.23 million rials.

The subsidized rate, capped at $3.5 billion, covers vital imports such as wheat, medicine, pharmaceutical ingredients and infant formula. An additional $1 billion withdrawal from the sovereign fund is intended to help sustain the system.

Wheat and infant formula remain top priorities for the government, given fears that shortages or sharp price increases could trigger unrest.

After January’s subsidy cuts on goods such as meat and cooking oil, the government reintroduced a coupon system. Around 87 million people now receive monthly vouchers, initially worth 10 million rials per person.

But the value of those vouchers has eroded quickly. Monthly inflation stood at 7 percent, while point-to-point inflation reached 67 percent, according to the Central Bank of Iran.

Consumers say the prices of basic goods and services are rising almost daily, leaving many households struggling to afford essentials.

Unemployment has also risen sharply.

War-related damage to steel and petrochemical facilities has left large numbers of workers jobless and disrupted downstream industries dependent on their output.

A prolonged internet shutdown, now in its third month, has deepened the crisis by cutting off income for millions. Tourism has also slumped, with airlines, hotels and local accommodations largely inactive after the 12-day war.

Even those still employed are seeing their purchasing power collapse.

At a petrochemical terminals company in Bandar Mahshahr, representatives for more than 700 workers say the employer has cut overtime, holiday pay and welfare benefits.

In some cases, workers say salaries have gone unpaid for months.

Political analyst Shahin Shahid-Saless warned that a naval blockade restricting oil exports and broader trade could accelerate the currency’s collapse.

“The national currency will collapse at an unbelievable speed, and hyperinflation will emerge,” he said. “The country may face hunger riots whose intensity and violence would be entirely different from recent movements.”