CBI’s Stopgap Measures Rebuked
Economy, Business And Markets

CBI’s Stopgap Measures Rebuked

As debate on the much-anticipated economic stimulus package of the government continues among business leaders and economists, a finance and banking expert has criticized the central bank and commercial lenders for initiating small loan schemes, a task that he believes, should instead have been delegated to leasing firms.  
Heidar Mostakhdemin Hosseini refrained from using the term “economic policy package” for the recent government plan. “A policy package is a set of policies that encompasses large markets including money, foreign currency, manufacturing and finance and eventually impact economic growth. The present package looks rather superficially at the economy by addressing only two industrial sectors, namely auto and local manufactures,” he complained.
He welcomed the idea of credit policies, however, but warned that “the current measures can only help clear bulging inventories which have not been sold due to either low demand or weak purchasing power of consumers.”
“Upon the completion of the six-month life of the stimulus plan, other decisions should be forthcoming, he told ISNA.

 Housing Sector
Hosseini argued that apart from oil, the housing industry with over 500 subsidiary sectors could be the next strong driver of economic growth as it can lift several other industries along with itself. Thus, it would have been wiser if credits were allocated to this sector instead of home appliances and auto sectors where the manufacturers are not taken seriously by consumers. “No desire had been expressed by the people for loans to buy cars or home appliances,” he added.
The prominent expert recommended that the central bank and commercial banks get ready for the post-sanctions period instead of venturing into stopgap policies. “In other countries, such credit policies are implemented by leasing firms.” He called for the empowerment of companies that can be designated the task of handling such schemes.
About 600 to 1,000 leasing companies are estimated to be active in Iran, the majority of which are unlicensed. The CBI has so far deferred the decision to organize these firms.  
Hosseini warned that oft-changing positions and statements by officials within the past few days on loan repayment period which ranged from 7-4 years, or the dismissal of claims of agreement among lenders over interest rate cuts could negatively impact decisions by businesses and provoke an air of distrust among them.
The analyst acknowledged that credit policies could raise inflation but said that it is inevitable when policies target higher manufacturing and decent growth. But he refused to make any estimation of the possible increase in inflation in the absence of concrete data on the exact volume of credits that are to be offered. Meanwhile, he also warned that the new policies could increase the debts of lenders even if the central bank monitors them closely.
Last week, the CBI Governor Valiollah Seif, defended the government’s stimulus package, saying his bank is cautious about any inflationary effects the policies could entail. He also said the program targets the right goals, especially by tackling the credit crunch.
The government last month unveiled a rare incentive package valid for six months to help improve demand for consumer goods, including new cars in a bid to help domestic manufactures who face sliding demand and rising inventories.

Short URL : http://goo.gl/wBXIMI
  1. http://goo.gl/51FT7L
  • http://goo.gl/I1rYlZ
  • http://goo.gl/ycMZvi
  • http://goo.gl/YPuLU2
  • http://goo.gl/nVVwyB

You can also read ...

EU Rushes to Protect Economic Interests in Iran
With a reputation of a slow-working institution that only gets...
Google Stands to Lose Up to $4.3b in UK Privacy Suit
Google appeared in a UK court on Monday to argue against a...
Swiss Firms Preparing to Quit Iranian  Market Over US Sanctions Risks
Several Swiss newspapers on Sunday reported that Swiss firms...
German Companies Cannot Be  “Totally Shielded” From US Iran Move
The German government will help German firms with business in...
HTC’s Next Flagship Specs Leaked
A testing subdomain on HTC’s website has confirmed the already...
Tehran Stocks Unshaken by US Nuclear Deal Pullout
Iran nuclear deal seems to be on life-support these days, as...
Chabahar’s Shahid Beheshti Port: Cheapest Business Option in Region
With new moderated prices for services offered at Chabahar’s...
New Report Reveals Banks’ NPL Ratio Gap
A senior member of Majlis Article 90 Commission presented the...