Economy, Business And Markets

Construction Loans More Effective

Construction Loans More EffectiveConstruction Loans More Effective

The government’s plan to support the housing sector through 900-million-rial ($30,000) construction loans will be more helpful than loans for buying homes, said Ali Nemat Chahardoli, a lawmaker.

He said banks should offer loans attractive to businesses involved in production and “refrain from charging exorbitant interest rates that could discourage entrepreneurs.    

The member of the Parliament’s Commission for Civil Affairs commended the government for its recent measures to help stimulate the economy and ease the lingering recession in the housing sector. However, he claimed that the government’s economic incentive packages and supportive measures should seek to also offer loans at lower rates and longer repayment periods.

 “Two stimulus packages released by the government and other supportive schemes can have a substantial role in lifting the ailing economy.” he was quoted by ISNA as saying

Chahardoli opined that one of the main objectives of the administration from the very start has been curbing inflation. Checking galloping inflation calls for curbing liquidity and the volume of money in circulation, he noted. The MP, however, warned that credit crunch which can be a by-product of curbing inflation would slow the economy and bring about recession.

“To find a way out of recession we have no choice but to inject more liquidity into the market. What matters is the sector that receives the liquidity. Allocating all the credit to the auto industry does us no good. If the government pumps money into the housing sector it can simultaneously revive several other sectors, create jobs and improve growth rates,” he said, criticizing the government’s recent $900 million loan package to 110,000 buyers of new domestic cars.