ICCIMA director expounds upon economic issues next government will face

May 24, 2021 - 14:3

TEHRAN- In a recent article, Ali Chagharvand, the planning director of Iran Chamber of Commerce, Industries, Mines, and Agriculture (ICCIMA), expounded upon the economic condition that Iran’s next government will face.

What comes as follows is a summary of his comments.

The new government is scheduled to take office in the middle of the current Iranian calendar year (began on March 21), when economic indicators do not show the desired situation, and the economic and social conditions of the country need decisions with a strong expertise.

What needs urgent action the most, and seems to be the public demand, is to improve living conditions and increase welfare.

The fact is that in recent years, sanctions, currency shocks, and 50 percent inflation have threatened the livelihoods of many households, leading to widespread poverty and inequality.

Rising unemployment has also reduced household purchasing power and welfare in an unprecedented way.

The conditions described indicate that the level of economic and social welfare in the country has significantly declined due to the threat of factors such as sanctions, chronic inflation, forex jumps, economic instability, barriers to production, market fluctuations and wrong decisions of policymakers in various markets (including in the capital market, which led to the loss of a large part of the people's capital).

Under these circumstances, and according to the principles of economics, to increase economic prosperity, per capita income, improve living conditions and sustainable employment, there is no way rather than increasing investment, economic growth and production boosting.

Chronic inflation and macroeconomic instability in recent years have led to reduced investment, increased incentives for intermediation, and reduced long-term, productive and employment-generating investment incentives.

Undoubtedly, by increasing investment, creating sustainable economic growth and improving the cycle of non-oil production and exports, promoting employment and the possibility of increasing wages and improving the welfare of households, and government tax revenues fulfilling livelihood and welfare obligations, steps can be taken to reduce inequality.

Under these circumstances, it seems that more than ever, we need a development-oriented government with a strong expert body that prioritizes economic growth and stability, increased investment, boosted production, and curbed inflation, and creates the conditions for economic stability and planning for productive private sector activity.

The government should make the institutional structure of the economy move in a direction that prevents any brokerage and intermediation activities in various ways, and in return any kind of productive and entrepreneurial activities will receive economic encouragement and bring profit.

It should be a government whose policies and decisions in all monetary, foreign exchange, financial and commercial markets are formulated with the opinion of experts and in coordination with each other and in order to remove barriers to production, investment and entrepreneurship.

In this direction, resolving tensions in international relations, improving the business environment, creating economic stability, removing barriers and cumbersome regulations, limiting market intervention, and removing entrepreneurial barriers should be a priority in the next government's plans.

Undoubtedly, in order to achieve the goal of prosperity of production and investment, it is necessary to direct the facilities of banks to production and productive activities and entrepreneurship.

Also, strengthening the principles of the capital market in order to support and finance production should be a priority in the plans of the next government and facilitating the conditions for companies to enter the stock market, and preventing any interference in this market and injection of budgetary resources for artificial growth of the stock market’s index should be pursued.

MA/MA

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