The administration should work on attracting private investors to dispel the recession in the economy, ex-presidential advisor Saeed Leylaz said.
Iran’s economy is suffering from stagflation, recession coupled with high inflation, brought about by sanctions, which halved oil revenues and caused monetary and fiscal disorder.
In mid-October, the government unveiled a package of measures to help promote economic recovery, IRNA reported.
Leylaz, an economics professor, said investment by the private sector is the best way to fuel growth.
“However, attracting the required investment requires a revolution in the government’s mindset,” he said.
“There is no other way. Investment has to increase and productivity, which has been negative in the past decade, should become positive. We mustn’t pin our hopes on foreign investment.”
Iran’s total money supply—all the currency in circulation in the economy—is around 8.3 quadrillion rials ($238.7 billion at market exchange rate). The professor reckons injecting 200 to 300 trillion rials (about $5.9-7.7 billion) in the next few months can make all the difference, and get the economy growing.
The economy expanded by 3% in 2014 on the heels of annual economic contractions of 6.6% and 1.9% in 2012 and 2013, respectively, World Bank data shows. However, due to falling crude prices, estimates for 2015 vary between 0.5% contraction or expansion.
“Of course, we can neither gain access to our foreign assets nor can we print the needed sum to stimulate the economy, as it would fuel inflation,” he said. “So the private sector is the remaining source of financing.”
In Leylaz’s opinion, the private sector should take over government construction projects and invest in them.
How a proposal to buy defunct government projects could be pitched to a battered private sector, he left unspecified.
“The only and best way to create internal economic growth without stoking inflation is to ask the private sector to invest this money in the economy,” he said.
“All state offices should prepare themselves, so we can soak in 200 to 300 trillion rials of investment from the private sector in the next few months.”
The Iranian economy has lacked proper investment for the past 10 years. “This lack of investment has brought the Iranian economy to its knees,” he said.
