Economy, Business And Markets

Economist: Banks Failed to Contribute to Resistance Economy

Economist: Banks Failed to Contribute to Resistance Economy Economist: Banks Failed to Contribute to Resistance Economy

A Tehran-based economist has criticized commercial banks for having failed to act in accordance with Resistance Economy, a set of guidelines introduced by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei.

The doctrine seeks to make the economy less reliant on oil revenues by empowering domestic producers and diversifying non-oil exports. Since the guidelines were released in February 2014, the Hassan Rouhani administration has come up with plans to help achieve the set goals and make the economy resistant against external shocks.

In the past few years, Iran’s economy has come under the pressure of western sanctions and, more recently, by plunging oil prices. Policymakers believe the country must find other sources of income to be able to buffer the economy against external shocks.

Citing Mehdi Zaribaf, Banker news website said earlier this week that the structure of banking system “is not conducive to the set objectives as they are unable to create wealth.”

He dismissed efforts made by the previous administration to reform the banking system and considered them “ineffective.”

“Banks should shift attention from investment undertakings to manufacturing activities to contribute to Resistance Economy,” he said. To that end, he called on experts to develop banking models compatible with the concept so that banks are directed towards manufacturing which he considers a “good start.”

Zaribaf also criticized the perception that any economic improvement is tied to the result of the nuclear negotiations, saying, “The current situation is an opportunity to reform the ailing economic structure, and Resistance Economy seems to be the best solution.”

Regardless of the final result of nuclear negotiations, officials and experts must prepare the public opinion for any sudden shocks to the macro economy.

Iran and six world powers known as P5+1 are in the final round of negotiations to reach a comprehensive deal over Iran’s nuclear energy program. If the deal is signed, all nuclear-related sanctions will be lifted in exchange for Iran to limit parts of its nuclear program.