‘Issuing securities more than forecast will cause runaway inflation’

January 8, 2020 - 17:37

TEHRAN- Mohammad-Qoli Yousefi, an economist, believes that the higher number of securities that Iran’s national budget bill for the next Iranian calendar year 1399 (starts on March 20, 2020) has envisaged to be issued will make the country facing a runaway inflation.

In an interview conducted by the news portal of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA), Yousefi said, “The government is faced with budget deficit and wants to compensate the deficit through selling securities, but sales of 800 trillion rials (about $19 billion) of securities will just make the national economy burdened with inflation”.

It is a temporary solution that the policy maker (the government) is suggesting, the economist lamented, adding issuance of more securities has not been suggested with the aim of collecting the liquidity from the market, while it is a decision made to compensate for budget deficit due to severe drop in the oil income and also not receiving the anticipated tax revenues.

Budget bill’s predicting issuance of more securities has been severely criticized by the private sector, as this sector says that 800 trillion rials is a high figure and if the government cannot repay on due time it will create some high debt for the next government.

Meanwhile, if the people cannot afford to buy the securities, the banks should buy them, and as the result the banks’ sources for paying facilities will decrease, so the enterprises will receive less facilities and face lack of liquidity.

MA/MA

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