Economy, Business And Markets

Stimulus Package Fails to Impress

Stimulus Package Fails to Impress Stimulus Package Fails to Impress

The government should avoid compiling and dictating rules and regulations on behalf of banks and lending institutions, a member of Tehran Chamber of Commerce, Industries and Mines said Wednesday.

Mehdi Pourqazi, Head of the TCCIM’s Mining and Industries Commission, said that the government has been “on the right path” trying to pull the  economy out of recession, but he expressed doubts on how the government would go about achieving its goals  and financing the ambitious plan of action, ISNA quoted him as saying.

“The resources are planned to be provided by commercial banks, but the government itself should finance the economic package,” he said, referring to the incentive package announced by the government last week to help stimulate demand for domestic goods and ease the pain of extended recession.

He recalled that governments as a matter of policy have routinely tried but failed to dictate interest rates to banks as the instructions have “usually gone unheeded by lenders.”  

Pourqazi expressed pessimism over the effectiveness of the new stimulus package because it did not address a number of key issues.

“There has been talk about the government’s debts to the private sector and its impact on improving the overall economic condition…[But] this was not addressed in the package.”

Last week, the government unveiled an incentive package to help improve demand for consumer goods, and give some breathing space to domestic manufacturing units to sell their products and not cut payrolls due to the long and painful recession.

 The move, however, drew a mixed reaction with many questioning the positive impact and efficacy of the move given the declining purchasing power of consumers, especially fixed-wage earners.

Among other things, the package proposes new loans to consumers to buy new homes, domestically-made cars and home appliances all of which have for sometime lost their allure with most, if not all, Iranians disappointed with high prices and low quality.