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Iran Gov't Bailout Package Opts for Inflation Instead of Recession

The 750-trillion-rial ($4.41 billion) rescue package that the government has prepared following the outbreak of coronavirus in March includes 400 trillion rials ($2.35 billion) in loans to help prevent small- and medium-sized enterprises from collapsing
Iran Gov't Bailout Package Opts for Inflation Instead of RecessionIran Gov't Bailout Package Opts for Inflation Instead of Recession

Coronavirus bailout loans will ultimately increase money supply but that’s the lesser evil when it comes to making a choice between inflation and recession.
The 750-trillion-rial ($4.41 billion) rescue package that the government has prepared following the outbreak of coronavirus in March includes 400 trillion rials ($2.35 billion) in loans to help prevent small- and medium-sized enterprises from collapsing. 
As the payout process enters its final stage, experts have expressed concerns whether recipients will definitely use the money to shore up production. 
Zahra Karimi, economist and university professor, believes that companies receiving the loans are highly likely to spend a part of the money in high-yield markets such as stock market rather than channeling it into the production cycle. 
“Economic stability has declined; the outlook for production is gloomy. There is no guarantee that all loans will enter the manufacturing sector because on the one hand, some financial markets like the stock market, gold coin, housing and car markets are proving to be stronger money-spinners and on the other hand, manufacturers might argue that by investment in high-yield markets, they intend to raise money and recoup some of their losses,” she said. 

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