Iranian government admits it has no choice but to print money to cover budget deficit

Iran’s executive deputy president, Mohammad Jafar Qaempanah, said the quiet part out loud this week: the government is printing money because it has to. In a public acknowledgment that would make any central banker wince, Qaempanah pointed to the budget deficit and banking sector dysfunction as the primary drivers of Iran’s punishing inflation, and conceded that monetary expansion has become an unavoidable tool to keep the lights on. The admission comes at a particularly uncomfortable time. Official inflation in Iran hit approximately 52.6% in late December 2025, with food prices surging over 66% during some periods. The anatomy of Iran’s inflation spiral Qaempanah broke down the math in surprisingly specific terms. He attributed roughly two-thirds of Iran’s inflation to imbalances within the banking sector, with the remaining third driven by the budget deficit itself. Iran’s banking system has long operated as a quasi-fiscal vehicle, extending credit in ways that blur the line between monetary policy and government spending. When banks lend beyond what deposits and reserves support, the Central Bank eventually steps in to backstop the system. The practical result is new money ente...