Domestic Economy

8% Economic Growth Needs Huge Foreign Investment

8% Economic Growth Needs Huge Foreign Investment 8% Economic Growth Needs Huge Foreign Investment

Head of Management and Planning Organization, Mohammad-Baqer Nobakht, says the government needs 10.63 trillion rials ($361 billion at official exchange rate) to achieve the 8% annual economic growth envisioned by the sixth five-year economic development plan (2016-21).

“This is while the national gross domestic product currently stands at 10.8 trillion rials ($367 billion),” said Nobakht, noting that achieving the targeted economic growth requires serious reforms in the national economy as well as foreign investments, the Persian newspaper Donya-e Eqtesad reported.

The Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei outlined the general policies of the sixth FYDP in a letter to President Hassan Rouhani on June 30. The policies envision an average annual economic growth of 8% during the plan’s period.

“Considering that the country has experienced negative economic growth in two consecutive years from 2012 to 2014 and registered 3% economic growth last fiscal year (March 2014-15), achieving the targeted economic growth requires various mechanisms to provide the required financial resources,” said Nobakht.

He observed that under the current economic conditions, achieving 8% economic growth is not possible during the first year of the plan’s five-year period.

“Due to budget and public expenditure ceilings, only about 6 trillion rials ($204 billion) of the required amount can be funded through national financial resources while the remaining should be obtained from external sources.”

In other words, $157 billion in foreign investment are needed.

Three Models for 6th FYDP

According to Nobakht, the sixth FYDP has been prepared based on three models: “The first model is in line with the objectives of the 20-year National Vision Plan (2005-25). The Vision Plan is the guideline and roadmap for development in the coming years and the objectives defined in the sixth development plan for 2021 are in line with the goals of 2025 Vision Plan,” he noted.

The second development model is based on objectives envisioned for an ideal national economy in the book ‘National Security and Economic System of Iran’, written by President Hassan Rouhani before he was elected president, Nobakht said.

The head of Management and Planning Organization explained that the third model for drafting the sixth FYDP is based on predictions about future developments.

“The national development plans must not rely solely on current and static conditions but must be prepared with an eye on predictions for future developments,” he said.

The five-year development plans, prepared by the Management and Planning Organization in consultation with the parliament and the Guardians Council, provide broad directions for a wide range of economic reforms and social priorities. This Iranian year (ending March 19, 2016) marks the final year of the Fifth Five-Year Development Plan (2011-16) after the 1979 Islamic Revolution.