SAEDNEWS: One year into the Seventh Development Plan, the government’s performance in some areas has fallen short. Recent reports show targets are being lowered, raising the risk of turning real progress into mere “scorekeeping.”
According to the political news service of Saed News, Iran boasts abundant macro-level data positioning it among the world’s top countries in terms of natural capacities. Ranking in the top ten for mineral reserves, fifth for natural resources, third in global oil reserves, and among the nations with high potential for solar energy production demonstrates that, if physical, financial, institutional, and bureaucratic barriers are removed, the country could increasingly capitalize on these assets.
However, recent reports indicate that, a year into the Seventh Development Plan and despite the urgent need for extraordinary momentum to break free from the cycle of low growth, the government is preparing a bill to revise the plan’s quantitative targets. While presented as “realistic,” in practice, this move may signal a departure from both endogenous and outward-looking growth strategies.
Is Iran’s Macroeconomy in Neutral?
The recent amendments to the Seventh Development Plan, issued by the Planning and Budget Organization, suggest the government intends to reduce the annual growth rate target from 8% to 2.5%, cut annual productivity growth from 2.5% to 0.5%, lower the employment creation target from 1 million to 300,000 jobs per year, reduce non-oil export growth from 23% to 8.8%, and shrink the share of development spending in the general budget from 25% to 12%. Additionally, the clause aiming to reduce soil erosion by 20% has been completely removed.
Although the Planning Organization’s projections reflect existing and historical trends, these revised targets closely mirror Iran’s long-term average economic performance. Essentially, even without the Seventh Development Plan, the economy would likely follow this trajectory under natural cycles. The implicit message: the government need not undertake substantial efforts to accelerate the economy, remove production obstacles, or address inefficiencies; protecting it from decline would suffice.
Risk of Returning to a Housing Policy Recession
A more concerning issue is the government’s apparent intent to reduce its housing obligations. Reports include attempts to:
Eliminate tax penalties on banks that fail to allocate 20% of annual loans to the housing sector.
Remove Article 50 of the Seventh Development Plan, which required the Ministry of Roads and Urban Development to expand residential areas by at least 0.2% in small towns, villages, and border regions, and allow 99-year land leases.
Although the Ministry issued denials or clarifications, repeated reports and subsequent news—such as reducing the housing construction target from 5 million to 3 million units—suggest the government is still considering this approach. Given weak progress reports from the National Housing Movement over the past year, these developments heighten concerns. Moreover, despite housing’s strategic importance, the Supreme Housing Council has convened only three times since the current government took office, clearly insufficient relative to sector needs.
Housing has historically been a driver of economic growth and a key factor in enabling related sectors. Reducing housing targets in the Seventh Development Plan, coupled with weak implementation, risks reviving the stagnation experienced in the eleventh and twelfth administrations, a period when support for housing sharply declined, silencing one of the economy’s endogenous growth engines.
Low Performance Scores in the First Year of the Plan
The government’s recent revisions come amid reports by the Parliament Research Center, which have not commended the administration’s performance in implementing the Seventh Plan. For example, regarding economic growth, the Center highlighted a negative 0.3% growth rate in the first half of the year, noting that failure to achieve roughly half of the plan’s first chapter goals stems from insufficient willpower, managerial capacity, and regulatory frameworks—essentially linked to executive branch shortcomings.
Similarly, an energy report showed that despite a focus on resolving gas and electricity imbalances, key goals like energy optimization and regional energy trade largely remain unmet, emphasizing challenges such as Iran’s exclusion from regional energy calculations and lack of financial transparency in oil and gas, warning that continuation of these trends could jeopardize the plan’s ultimate objectives.
The Need to Break Past Patterns
The government must reconsider its revisionist approach to the Seventh Plan. Current corrective targets suggest maintaining long-term economic trends rather than actively pursuing reform. This approach incorporates the decades-long underperformance of the tenth and eleventh administrations, whereas the Seventh Plan was meant to disrupt entrenched patterns.
For instance, changes to the banking sector’s capital adequacy ratio following the revocation of Bank Ayandeh’s license—raising the ratio 3.5 times to within 3 percentage points of the target—demonstrate that breaking past inefficiencies can produce tangible improvements. Another indicator is the relatively low liquidity-to-GDP ratio of about 55%, far below developed countries exceeding 100%. While not a prescription for boosting liquidity indiscriminately, it illustrates that addressing bank imbalances, refining credit allocation, and separating banking operations could channel funds into productive investments.
Other measures to support economic growth include tax reform, activating government assets, and leveraging private capital in large-scale projects. Overall, the recent amendments suggest a retreat from initial development ideals rather than a genuine course correction. With Iran’s economy needing bold decisions to escape low growth and negative productivity, scaling back quantitative goals risks entrenching stagnation and promoting “statistical achievements” over real progress.
