Proposed Economy Minister Pledges Overhaul

Economy minister-designate, Masoud Karbasian, elaborated his plans for the key ministry in parliament on Wednesday, emphasizing that the ministry will join hands with the Central Bank of Iran to resolve issues facing the banking system.

Karbasian pledged that following his confirmation, he will utilize all his power and means to help the banking reform bills' passage in Majlis Economic Commission and the parliament.

He noted that he is fully aware of current banking woes and monetary policies, saying that he's eager to seriously undertake banking reforms.

"Shadow banks, unauthorized credit institutions and their depositors' concerns are some of the biggest challenges facing the Iranian banking system, for which a comprehensive plan has been devised and will be implemented with utmost precision," he was also quoted as saying by IBENA.

Karbasian, 61, noted that banks' lending power should improve to boost domestic production and grease the economy's wheels.

The change in Economy Ministry would mark a significant change in President Hassan Rouhani's Cabinet, as it potentially impacts both state-owned and private lenders, and influences the outcome of the president's central promise of reforming the beleaguered banking system.  

If Karbasian, who previously served as the head of Iran Customs Administration, manages to get the parliament's confirmation vote, he will replace the outgoing minister, Ali Tayyebnia, who enjoyed the rare distinction of being popular among both government and private sectors.

Boost for Small Business

The economy minister proposed for the new Cabinet stressed on reforming the lending practices of banks and giving all-out support to small- and medium-sized enterprises to get a new lease on life.

"The capital market in Iran has great potential and it has significantly expanded during [President Hassan Rouhani's] previous administration but it is still far from a stable market. Therefore, a development plan for capital market has been devised, which will be implemented after conferring with the parliament," he said.

Karbasian noted that the previous government managed to end a critical period in Iran's economy through public trust and the parliament's help, and established a relative stability in the market.

 An economic growth of 12%, single-digit inflation rate and curbing the liquidity growth were achieved by the government's proper policies "and I thank my dear friend Dr. Tayyebnia who had a big share in those successes".

Karbasian believes that the main task of the Economy Ministry for the next four years will be to implement the overall policies and objectives of the Sixth Five-Year Development Plan (2017-22).

In line with President Rouhani's emphasis on job creation for the youth, especially those with higher education, to improve domestic production, the nominee said weak domestic production, lack of competitiveness in the market and high ratio of unemployment are major and old issues of Iran's economy.

According to Karbasian, oil dependency, lack of transparency, political interests and the heavy role of the state are other main problems of Iran's economy so "we don't have any other choice but to implement major reforms in the economic system, a highly risky and massive move that started during the tenure of the previous [Rouhani] administration and need to be decisively continued".

For the most part, the new ministerial hopeful seems to be picking up where Tayyebnia left off, promising to continue his plans that were constructive for the banking system even if not all of them came to fruition in the projected timeframe.

Should he manage to gain the vote of confidence from lawmakers, the ministerial nominee pledged to reduce bank interest rates, increase the capital adequacy ratio of banks, recover their non-performing assets and loans, and upgrade the outdated banking system by establishing acceptable corporate governance rules and conformity to global standards, among others.

"We will try to reduce the ratio of unemployment to a single digit, reach an 8.6% economic growth and keep the inflation rate around 8.8% by the end of the Sixth Plan and we are obliged to do our best to achieve those goals," he said.

As per Karbasian's plan, the average annual productivity ratio ought to reach 2.8% and investments should increase by at least 21.4% annually.

"These plans have partially failed, but the ministry will make a renewed effort at realizing them," he said.