Economy, Business And Markets

Bank CEO: Buy Debt to Exit Recession

Bank CEO: Buy Debt to Exit RecessionBank CEO: Buy Debt to Exit Recession

Ending the long recession is the talk of the town and has been making news headlines ever since the government unveiled its much-hyped quantitative easing program last weekend.  In the meantime economists, entrepreneurs and the private sector have proposed schemes to get the economy back on track, keep businesses up and running and save jobs.

Ali Ashraf Afkhami, CEO of the Bank of Industry and Mine is among those who have a strong opinion about the thorny issue of recession. Pointing to stimulating demand as a key measure to tackle recession, he has put made some proposals, the Tehran Chamber of Commerce website reported.

Buying debt, a scheme already approved by the Money and Credit Council, is Afkhami’s first strategy as he believes it can help stimulate demand and serve as an important first step and spur the weak economy out of recession.

“It is not a comprehensive solution. However, if the banks and businesses help implement the scheme it can partly inject money into the economy,” he said.

Reimbursement of government debt to contractors, banks and other bodies by issuing government bonds is his next recommendation.

“The government can provide contractors and businesses with the bonds, which    they can submit to the banks to cash in their debts and the banks can in turn receive the bond money from the central bank. I believe by doing so we can stimulate the flow of money into the economy,” he added.

The senior banker in fact was echoing the publicly stated position of

President Hassan Rouhani on the critical subject of repaying government debt to the banks said to be in the range of $28 billion and mostly inherited from the past administration.

In a live TV interview he had said his administration is aware of the critical situation and would issue the bonds to reduce its mountain of debt that has reportedly hurled many contractors into the red.