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Domestic Economy

Coronavirus Loan Payments to Businesses Exceed $390 Million

Seventy-five percent of businesses that applied for the government’s relief package for enterprises hurt by the coronavirus have received their loans, Hossein Mahmoudi, an official with the Ministry of Cooperatives, Labor and Social Welfare, said on Saturday.

A total of 94,360 billion rials ($393.16 million) worth of loans have been paid to the applicants. Registration for coronavirus loan started at Kara.mcls.gov.ir on May 9, 2020. Thus far, 519,165 applications, including 959,606 jobs, have been submitted. 

“The total value of loans requested stands at 137,040 billion rials ($571 million), of which 94,360 billion rials have been paid,” he was quoted as saying by IRNA.

Noting that the taskforce to combat the economic consequences of coronavirus had expected loan applications worth 200,000 billion rials ($833.33 million), the official said, “In general, 18.8% of manufacturing enterprises have applied for these bank facilities.”

As per the government’s coronavirus relief package, workshops that were affected directly and closed down by Covid-19 will receive 160 million rials ($666) for each worker and those which were not shut down are eligible to receive 120 million rials ($500) for each of their workers. With the repayment period of 24 months, the lending rate of these loans is 12%.

 

 

Lukewarm Reception

Only 7% of businesses hurt by Covid-19 applied for the loans backed by the government during the first quarter of last fiscal year (March 20-June 20, 2020), Mohammad Baqer Mojtabaei, secretary-general of Iran Chamber of Guilds, was quoted as saying by ISNA.

Noting that the volume of loans was negligible compared to the losses suffered by guilds, Mojtabaei said, “The 12% lending rate was another reason behind the lukewarm reception extended to the government’s relief loan program. As the benchmark interest rate in Iran is at 18%, business owners believe that the government’s 6% interest rate subsidy is not worth the difficult application process and length of time it would take to receive the credit.”

Businesses affiliated to Iran Chamber of Guilds have suffered as much as 3,000 trillion rials (about $12.5 billion) in losses since the beginning of the coronavirus pandemic, the official said recently.

Guilds suffered a daily loss of 50,000 billion rials ($210 million) in lost sales during the lockdown period, according to the official.

The National Coronavirus Headquarters agreed last month that restrictions imposed on Group II of jobs in the high-risk red and orange zones for coronavirus transmission, including Tehran’s Grand Bazaar and shopping malls, should be relaxed. 

Group I and II reopened as of May 8 but Group III and IV remained closed until May 18.  

“Businesses violating the coronavirus containment measures will be subject to a governmental edict ordering the closure of their outlet for up to three weeks,” Qasem Noudeh-Farahani, the head of Tehran Chamber of Guilds, was quoted as saying by Fars News Agency. 

All businesses, except for those providing essential goods and services (the so-called Group I of jobs, namely bakeries, supermarkets, grocery stores, car shops, chain stores, health and treatment centers, pharmacies, factories, transportation companies, public parking garages, post offices, internet service providers, press, nursery homes and print shops) were closed for a month prior to the decision. 

About 1.2 million businesses constitute Group I, 1.8 million belong to Group II and nearly 30,000 units are in Group III and IV. 

“The partial reopening came after Tehran Chamber of Guilds said it won’t continue to comply with lockdown rules while banks, tax offices and municipalities remain open,” Fars News Agency quoted Noudeh-Farahani as saying. 

“Cooperation between the guilds and the government is not a one-way street. We have notified the president and senior officials of the National Coronavirus Headquarters that guilds won’t be capable of abiding by guidelines, if the current situation persists, i.e., guilds and small businesses are required to close shop while institutions such as insurance firms, banks and tax office continue to bill them.”

Noudeh-Farahani stressed that coronavirus won’t be contained by the closure of guilds and small businesses. 

“They need to operate to avert bankruptcy. Their closure during this hard time of certain businesses while banks and tax offices stay open seems irrational,” he added.  

Earlier, Iran Chamber of Guilds issued a statement expressing concerns regarding the economic implications of a new surge in Covid-19 cases, Mehr News Agency reported.

“If more cities, including Tehran, Karaj and Isfahan, move into the red zone of the country’s color-coded coronavirus framework, more than one million businesses affiliated to ICG will shut down and three million people will become jobless,” it said. 

The statement was issued before the provincial capitals were placed on red alert.

 

 

Compliance Level

A total of 5,202 sales outlets and workshops were closed down across the country for not complying with protocols to prevent the spread of the Covid-19 pandemic from April 21 to 28, according to the secretary of Coronavirus Combat Headquarters affiliated with the Interior Ministry.

“From the overall of 3.57 million businesses and sales outlets active across the country, some 310,033 [9% of the total] were randomly inspected during the eight-day period, close to 1.68% of which were shut down for flouting the regulations set by the National Coronavirus Headquarters,” Babak Dinparast was also quoted as saying by IRNA.

Based on recent figures collected by Iran Chamber of Guilds, an average of 82% of Iranian businesses and sales outlets abide by the regulations and protocols set by the National Coronavirus Headquarters, secretary-general of the chamber said on Wednesday.

“In some provinces, the figure declines to between 50% and 60%. Owners of outlets not conforming to protocols preventing the spread of Covid-19 have been reprimanded and received warnings,” Mojtabaei was quoted as saying by IRIB News.

The official noted that more than 3,000 sales outlets have been shut down across the country for flouting the protocols and regulations set to curb the pandemic.

“Unfortunately, the pandemic has lingered for more than a year and a half, longer than expected, and to top that, the government has failed to support businesses as it should have during this period. These have made it especially hard for most businesses to keep up with new pandemic protocols since they have rents and other expenses to pay.” 

Mojtabaei concluded that Iran Chamber of Guilds implores businesses and people to keep observing Covid-19 protocols until the fourth wave of the pandemic is over in the country.