Baku, Azerbaijan, Dec. 22
By Farhad Daneshvar - Trend:
Lack of proper legal and financial systems in Iran may foil the efforts made by the President Hassan Rouhani's government to lure foreign investment following a July nuclear deal reached between Iran and the world powers.
"So far, the legal and financial structures in Iran have not paved the way for international investors to cooperate in the country's development projects," an Iranian financial analyst, Alireza Kadivar, told Trend Dec. 22.
However reputable investment banks would act as a suitable option for foreign companies to cooperate in Tehran's economic projects, said the analyst calling for the reform of the country's financial system.
Given the existing economic recession in the country and considering the decreasing level of inflation, Kadivar further predicted that President Rouhani's government may adopt expansionary policies in the coming Iranian year (starting March 21) to help increasing the country's economic growth.
According to the expert, the expansionary policies can lead to the improvement of the economic growth.
However it is difficult to estimate the economic growth for the next year as the government has not prepared the draft budget yet, he added.
Iran expects the international sanctions imposed by west on its financial and industrial sectors to be lifted in early 2016 as it is adhering to the terms of the milestone nuclear accord inked between Tehran and the world powers in July.
Meanwhile, lots of foreign investors hoping for fat profits and Tehran planning to renew the country's aging industry and ailing economic systems have conducted meetings, in preparation for the lifting of international sanctions.
International Monetary Fund (IMF) released a report on Dec.21, saying that Iran's GDP growth is expected to be between 0.5 to -0.5 percent in current year. While higher oil production, lower costs for trade and financial transactions, and restored access to foreign assets, are expected to lift real GDP to about 4-5.5 percent next year.
The IMF underlined the importance of prompt and comprehensive reforms to address financial sector challenges.
The report stressed the need for a steadfast restructuring of nonperforming loans and banks and addressing unlicensed financial institutions, which would also help lower the high levels of real interest rates.
Decisive action on addressing government arrears would also help strengthen banks' balance sheets, the report said.
IMF urged the authorities to bolster the anti-money laundering (AML) and combating the financing of terrorism (CFT) framework to facilitate the re-integration of the domestic financial system into the global economy.