Economy, Domestic Economy

Development Plans Under Scrutiny

Development Plans Under ScrutinyDevelopment Plans Under Scrutiny

The government is gearing up to implement the sixth five-year development plan (2016-21), bidding farewell to the Fifth Plan whose objectives, according to many experts, were not fully met.

Experts and economists have been recently scrutinizing the efficiency of medium-term development plans and some have suggested that policymakers should aim for short-term planning.

Nonetheless, as former economy minister Davoud Danesh Jafari wrote in the online economic news portal Eghtesad News, the length of the period in which the plans are implemented is not the actual problem.

“In addition to wrong approaches usually adopted by different governments for drafting development plans, there is also a lack of adherence to the plans’ outlines, because of which the plans fail to yield the desired results,” Jafari said.

“One of the reasons for the failure of these plans is that the objectives are set without assessing the means that should be used to fulfill those objectives.”

The development plans are laws drafted by the government and ratified by the parliament every five years, since 1991. The primary aim of the plans is to pave the way for the realization of the objectives enshrined in the 20-year Vision Plan (2005-25).

This is while short-term plans can focus on the business environment, foreign investment and privatization in line with long-term macroeconomic objectives.

In the Fifth Plan, for instance, the government of former president Mahmoud Ahmadinejad set objectives such as an annual GDP growth rate of 8%, a 7% cut in unemployment rate and a reduction of reliance on imports. This is while many criticized the former government that those objectives were unrealistic.

Senior advisor to President Hassan Rouhani, Masoud Nili, says a good plan is a combination of policies drafted based on capabilities to achieve a set of objectives. That, he said, was not the case with the Fifth Plan.

Referring to the 8% growth rate objective, Nili noted that the average growth back then stood at 2%.

“How could we increase the average annual growth rate by 6% without considering the real economic conditions?” he asked.

Another common problem with the development plans, Jafari believes, is that the financial resources required for the implementation of projects are not specified.

“The overall capital needed for pursuing the objectives set in the Fifth Plan exceeded $250 billion. This is while the government did not have access to such financial resources to cover those expenses,” he said.

Jafari refers to Mehr Housing Project as the epitome of short-term plans that not only did not yield favorable results, but also inflicted huge losses on the government.

Mehr Housing Project, initiated in 2007 by the former administration, was expected to provide two million low-income strata of the society with housing units through free land and cheap credits. But the nationwide scheme slowed down due to lack of funds. So far, there have been conflicting reports on the extent of the project’s progress.