کد خبر: 121926تاریخ: 1394/4/17 19:32
Government's three-pronged mission to improve economy
Government's three-pronged mission to improve economy
President Hassan Rouhani has delegated the initial development of domestic capital market and enforcement of fiscal discipline over government spending to members of the administration's economic team.

The government has compiled a comprehensive plan to carry out reforms in the banking system and capital market and improve domestic economy.

The roadmap was mainly based on the views of a number of domestic experts in an economic conference in January, 2015 which studied ways to pull the country out of recession and spur a dynamic economy. The 11th government has notified the plan to financial sectors.

Minister of Economic Affairs and Finance Ali Tayyebnia and Governor of the Central Bank of Iran Valiollah Seyf have undertaken the mission to implement the reforms. Apparently, the government is determined to execute the structural modifications on time. The Rouhani administration has strictly urged relevant organizations to induce the desired changes in financial structures at the earliest to avoid the problems encountered by the past government.

Earlier, President Rouhani said the past government's economic problems and monetary indiscipline and the country's persistent economic crisis all were caused by the increased oil revenues. Therefore, the present government is required to revise the fiscal and economic system and support domestic producers.

Given the favorable progress of the nuclear talks between Iran and P5+1, the government has to develop effective plans to tackle economic problems in the post-sanction era and brief domestic economic sectors on the details of the projects and methods to enforce them. The government's comprehensive package for financial system indicates that the Rouhani administration has devised intelligent policies to safeguard speedy development after a deal with the sextet. Following the removal of international restrictions, people and domestic producers will have different expectations about their future welfare and economy. The government has to be prepared to live up to their anticipations and address their needs during this critical time-span.

A periodic shock to forex market is quite anticipated in this period given the smooth money transfer to or from the country, which will result in a noticeable decrease in foreign currency rates. In case the government does not intervene in the process, the downward trend will most probably continue. Given the Rouhani administration's plan to unify foreign currency rates, it is binding on the government to control the decreasing trend until it restores stability to the forex market, causing minimum tensions and fluctuations.

Two years have elapsed since the present government took office [in 2013], while the Rouhani administration has not yet calculated the amount of debts it owes to different domestic economic sectors. It has to organize back payments to contractors and Social Security Organization. Although the Ministry of Economic Affairs and Finance has set up a committee to manage the government's debts, no tangible outcome has yet been achieved in this respect.

In case the committee announces the estimated state debts, the government can settle its arrears by formulating special strategies in the draft for the Sixth Five-Year Economic Development Plan and the budget bill for the year to mid-March 2017. This will increase domestic bank's capital, end recession and boost production.

The 11th government has taken long strides towards accelerated development by addressing deep-rooted economic problems and reforming financial structures. Time will prove the effectiveness of the steps taken by the Rouhani administration. Iran will be able to become the Middle East's main economic power provided the present government stages a favorable performance in the post-agreement era.

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