Economy, Business And Markets

Plea for Competitive Economy

Plea for Competitive Economy
Plea for Competitive Economy

Creating a competitive economy based on the free market will lead to decent growth rates and sustainable development, Abbas Akhundi, the minister of roads and urban development said Sunday.

He censured successive governments in Tehran for their long and unhelpful interference in the economy and price regulations claiming that the needless government role and ubiquitous presence in the economy has resulted in endless woes.

"Socialist leanings and left-wing ideologies are to blame for the underdeveloped domestic economy," he was quoted as saying by IRNA.

The minister, however, said a pattern to counter the leftist ideology is visible in the economic policies in recent years and a complete shift to the free market is yet a far cry.           

“The country should shift to a free market economy utilizing market mechanisms and potentials to be able to grow and develop.” Akhundi told a meeting of the representatives of private sector at the Iran Chamber of Commerce.

Pointing to the structural problems of the domestic economy, he said lack of  openness and transparency are the biggest obstacles to a functioning economy. “Lack of transparency is apparently fertile ground for rent-seeking and the speculative activities of those more interested in personal gain than the public good.”

Akhundi pointed to the alarming situation in Iran’s banking sector saying that the mountain of bad loans is in the region of 1.2 quadrillion rials ($39.7 billion) which is 12% of the GDP. He said with these soured loans aiming for 8% growth rates is indeed an exercise in futility.

“Our banking industry is in dire need of structural reforms. The mountain of banks’ non-performing loans and government debts to banks has hurled the economy into recession.”