Economy, Business And Markets

Gov’t Downsizing Emerges as Priority

Gov’t Downsizing Emerges as Priority Gov’t Downsizing Emerges as Priority

President Hassan Rouhani said Tuesday the time has come for government downsizing and reducing its footprint in economic affairs. So long as the government maintains its strong grip on the economy, the present woes will persist, he told an economic conference.

 "A competitive, corruption-free economy and a vibrant private sector are the keys to resolving the economy problems the country is facing. The ministries seem unwilling to loosen their hold on state-run firms," Mehr News Agency quoted him as saying at a conference to review opportunities for economic revival in the post-sanction era.

Governments in Tehran have traditionally clung to the lion's share of the economy in Iran, he said, and reiterated calls to create more voice and space for  private enterprise as the locomotive of growth.

He stressed the need and importance of reconnecting to the international business community saying that to achieve decent growth rates the country has no option but "to utilize domestic potential and foreign investment and technology".

Restoring ties economic ties with the outside world will help lift the economy as "foreign investment and advanced technology" find their way into the country. Normal ties will also increase demand for domestically-manufactured goods by opening new markets to Iranian manufacture, the president told the conferees.

"We should increase non-oil exports by at least 15% in the coming years," as expanding the non-oil export sectors would translate into demand for domestically-manufactured goods.

Iran faced more than a decade of international restrictions that deprived its businesses and banks from accessing international markets. During the embargo Iran's FDI fell sharply and international companies left the country to avoid heavy fines, especially by the US, for doing business with the Islamic Republic.

"Now is the time for entrepreneurs and businesses to seize the momentum in reviving the economy and creating jobs and they have the government's full backing," Rouhani said suggesting that the time has come for hard work and innovation to help improve the quality of life in the country of 80 million.

Iran's economy has the potential to emerge as a new regional economic power and compete with other economies, the president stated.  "A strong economy brings with it power, independence and jobs."

Sustainable Growth

Rouhani emphasized the need for sustainable growth, especially long –term employment. "We should strive for the 8% growth mentioned in the sixth five-year development plan." However, he said achieving such high growth rates is impossible by depending solely on domestic financial sources and credit. "We  need at least $50 billion in foreign investment to be able to achieve such a feat and build a vibrant economy."

The International Monetary Fund issued a report earlier this month predicting Iran's growth rate to reach 8% as the sanctions are lifted. The World Bank has set the rate at 5-6% saying that Iran's economy is on the way to recovery.

Pointing to the government's mounting debts to banks and contractors, Rouhnai said his government would find a way out of the bad debts. "One of our plans is to settle the problem of government debt to the private sector, banks and contractors by the end of the government's first term in office (2016) and we proposed measures to this effect in next year's budget bill."