Iran Admits to Printing Money to Cover Budget Deficit, Fuels Inflation Fears

The Iranian government has admitted to printing money to cover its budget deficit, sparking concerns about inflation and economic instability. According to Executive Deputy President Mohammad Jafar Qaempanah, the country's budget deficits have consistently exceeded 30% of planned figures since 2018, due in part to international sanctions that restrict oil exports.

The government has proposed capping overall budget expenditure growth at just 2% for the fiscal year beginning March 2026, a significant real-terms cut in government expenditure. However, this may not be enough to address the underlying structural issues within the banking sector, which Qaempanah attributed roughly two-thirds of Iran's inflation.

The country's official inflation rate hit approximately 52.6% in late December 2025, with food prices surging over 66%. The rial's ongoing devaluation has led citizens to seek alternative stores of value, including gold, foreign currencies, and real estate, as well as cryptocurrency adoption.