Country Listing

Iran Table of Contents




Overall trade contracted in 1986, with import restrictions matching falling export earnings. The trade statistics did not, however, reflect the flourishing black market for foreign goods. Gasoline was available on the black market for five times the official rate; food and other goods were available at similarly inflated prices. Rising prices and fixed salaries (among civil servants, for example) compounded the rate of inflation, which ranged between 10 and 50 percent, depending on the kind of goods purchased.

Capital and consumer goods imports decreased after the 1979 Revolution, with capital goods falling from 30 percent of total imports in 1979 to 15 percent by 1982. Importation of luxury goods was restricted to conserve foreign currency and preserve the balance of payments. Food imports increased to more than US$2 billion by FY 1983, despite the emphasis on agricultural self-sufficiency. Rice imports alone increased by 200,000 tons in 1986, despite increased rice production.

Food imports in early 1986 consumed as much as 20 percent of total foreign exchange. Iran had become one of the largest per capita purchasers of wheat in the world, buying 3.4 million tons annually. The nation spent about US$3 billion per year on food items such as wheat, rice, meat, vegetable oil, eggs, chicken, tea, and sugar. By December 1986, Iran's imports of meat and dairy products alone exceeded the value of the country's entire industrial output.

Between March and June 1986, imports declined to US$2.6 billion, a drop of 16 percent compared with the same period the previous year. Shrinking imports reflected a conscious government effort to contain the financial crisis by further restricting the entry of luxury goods into the country. Discretionary imports for private consumption were expected to be halved in FY 1987 to US$5 billion, from the FY 1986 low of US$8 to US$10 billion.

Iran resorted to barter agreements with some countries in 1986 and 1987, trading oil for goods such as tea from Sri Lanka, rice from Thailand, wheat from Argentina, and various foodstuffs from Turkey. Failure to pay its debts caused Iran to lose its contract with Peugeot- Talbot for automobile assembly kits. Although the contract was suspended officially in November 1986, no new kits had been shipped since January 1986, and Iran lost business worth US$190 million per year as production of the Peykan automobile ceased. Iran also lost its barter agreement with New Zealand after failing to pay cash debts for imported goods; thus, in 1987 Iran paid for 90,000 tons of imported lamb in cash rather than with oil, as it had for 135,000 tons of New Zealand lamb imported in 1986.

Data as of December 1987