Baku, Azerbaijan, Oct. 20
By Elnur Baghishov – Trend:
The 80 percent of investments have been withdrawn from the industry sector, Mohammad Goli Yousufi, the former member of academic staff (economics professor) of Iran’s Allameh Tabataba’i University said in an interview with ISNA correspondent.
The negative influence of such a situation shall be evaluated as the large –scale loss of jobs in the economy, he added.
Only 15 percent of the government’s programs for creation of jobs have been implemented, he concluded.
He noted that due to the fact that Iran has arid climate, the country faces problems in the agricultural sector. Therefore, the country should rely on the industrial production. The favorable conditions shall be created for production in order to achieve industrial recovery. The stable laws and procedures can ensure investment security and ultimately result in development of production.
“Nevertheless, the structural environment within the community does not allow for development of production. The official circles don’t support production sector. The entry into market of the foreign currency gained from sale of oil products results in inflation and formation of liquidity. Under such circumstances, the trade will develop more intensively than the production sector,” he noted.
The economist said the banks usually issue money when the trade develops: the banks rely on the Central Bank when issuing money to the market. And this results in increase of money base in the economy. When the liquidity forms in the economy, the government is forced to request money from the Central Bank in order to pay its debts.
“The 11th government increased bank interest rate in the beginning of its tenure in order to keep under control the liquidity. In such conditions, the investors preferred to deposit their capitals into banks and to use the income consisting of the interests accrued on their deposited capitals. Subsequently, the production activity lost its attractiveness for the investors,” he said.
Yousufi also evaluated the failure of some industrialists to repay their credits as one of the reasons of growth of liquidity: the industrialists got extended the repayment period of their credits in order to be able to repay their debts to banks. And this, in turn, resulted in growth of liquidity.
The Iranian economist-expert also touched upon the negative feature of weakening of the industrial production: when the industrial production weakens, many jobs are lost, because the main potential to create jobs belongs to the industry sector.