Iranian government’s demand stimulation policies fail
Tehran, Iran, December 1
By Mehdi Sepahvand -- Trend:
It is an established fact that under current situations the policy of demand stimulation cannot set Iran's economic downturn right, Iran's Minister of Transport and Urban Development Abbas Akhoundi said.
Speaking at a conference about economic downturn, Akhoundi said that the country needs a systemic view of the problem to be able to handle it, Mehr news agency reported December 1.
"If we do not have a systemic view, we will get nowhere. Therefore we need to evaluate three main approaches to economic downturn," the minister said.
He further pointed out that Iran's economy is currently afflicted by monetary problems, governmental debts _amounting to 2500 to 3000 trillion rials ($82.5 - $99 billion), and an entrepreneurial system prevailing in the country at different levels.
The government debt is 3.1 times the country's national budget for the current year, he regretted.
While government debts have amounted to 30 percent of the GDP, issuing debt bonds with high interest rates will also fail, he said.
The Central Bank of Iran, in its July report, announced that the government's debt to the Iranian banking system grew by 37 percent to reach 1,040 trillion rials, with over $35.3 billion of each dollar being equal to 29,437 rials on the day of the announcement, for the previous Iranian fiscal year, which ended March 20.
Some 1,004 trillion rials of this amount belonged to the government and 35.54 trillion rials to government companies and institutes.
At present, the banks lack enough capital while there are toxic assets as well, Akhoundi further stated.
In the meantime, he added, the rivalry among banks has diminished and a multisided monopoly is prevailing. This caused a problem.
Illegal financial institutes have also sprung, playing a regulatory role, Akhoundi further noted.
Iranian president Hassan Rouhani has criticized former President Mahmoud Ahmadinejad for abusing around $100 billion of the country's annual revenue.
It should be noted that Iran's oil and gas export incomes during Ahmadinejad's two-term presidency (2005-2013) reached some $800 billion.
The administration spent some $640 billion on importing goods, until the end of the last solar year ended March 21.
Later in July, Rouhani's advisor and caretaker of the High Council of Iranian Affairs Abroad, Akbar Torkan said that some $800 billion of spent assets is Ahmadinejad's gift to Rouhani.