Economic Anxieties, Anticipations Outlined

People’s informed choice in the presidential election has pulled the country back from the brink of populism, but the government needs to implement radical economic reforms for the next four years.

This was stated by eminent economist Mousa Ghaninejad in his editorial in Financial Tribune’s sister publication Donya-e-Eqtesad, titled “Future of Iran’s Economy”. Below is a free translation of the editorial:

Economy was the keynote of presidential campaigns this year. Rouhani’s challenger went the extra mile to present the government’s performance as dismal, claiming that the president has failed to deliver on his post-JCPOA promises.

It is important to call to mind two issues when assessing the government in this regard. First, the scale of carry-over economic issues from the previous government, which the critics were not willing to accept. Second, the government’s procrastination in employing clear, coherent policies, for which officials refused to assume responsibility.

Thanks to the wise choice the Iranian nation made on Friday, the country is out of the woods, for at least four years. Yet it is time to take note of the mistakes the administration made in the past four years. Failing to redress such issues might take the country to the brink of populism in the following four years.

Any reform in this regard depends on the government’s economic team adopting an integrated economic approach.

Lack of a unified approach dealt a heavy blow to the economic performance of the government and led to incompatibility or even contradiction in state machinery.

Rouhani took office under the slogan of fighting populism and creating a competitive economy. Determining the fate of two harmful projects of “Cash Subsidies” and “Mehr Housing” was essential to that end.

Although the government put into order the Mehr Housing project, it came short of discontinuing the flawed plan of universal cash payments.

The cash subsidy payment is not justifiable, neither economically nor socially, and suggests nothing but purchasing people’s vote.

The government should pull the plug on this abortive project and instead identify people who truly need subsidies via national humanitarian organizations, such as State Welfare Organization and Imam Khomeini Relief Committee.

Economizing on universal cash payments would enable the government to help less-privileged individuals considerably and offset populist sloganeering.

The government that presents itself as the true advocate of competitive economy should not turn its ministry into an agency that supports inefficient businesses by allocating more than 150 trillion rials (about $4 billion) of financial resources to them.    

The government who claims to root for competitive economy should not erect high tariff walls to back failed economic entities. Rather, it should gradually reduce tariffs and set the stage for the entry of new domestic and foreign rivals into the domestic industries.

As the president rightfully said in the third debate, the only way to solve the problem of unemployment is by improving the business environment, but the government’s conduct have proved to be unproductive.  It is three years now that the government talked of removing restrictive regulations and redundant permits.

The government will hopefully safeguard the curbed inflation rate and resist the temptation to manipulate the market to stimulate demand.

It is possible to guarantee the future of Iran by taking momentous decisions.