Economy, Domestic Economy

What Kind of Gov’t Does Iran’s Economy Need?

The macroeconomic stability achieved over the past three years is a fragile phenomenon which can shatter with a single uncalled-for comment or a mistake in policymaking 
Masoud Nili Masoud Nili

The achievements of recent years, including the Joint Comprehensive Plan of Action, macroeconomic stability, Health Overhaul Plan and export of 1 million barrels of oil are all valuable but transient, if not protected by a prudent administration.

This was stated by president’s top economic advisor, Masoud Nili, in an article published in Financial Tribune’s sister publication Donya-e-Eqtesad under the title: “What Kind of Government Does Iran’s Economy need?”  The article’s translation follows:

The confluence of two events will make the five-year period starting March 2017 consequential for the country.

The first will be the long-term approach toward the country’s assets, including the natural and human capitals. Management of non-renewable resources, namely water, air, soil, oil and gas, did not create sustainable economic welfare for the people. The country’s resources were consumed rather than preserved and did not turn into productive wealth.

A day will finally come when nothing is left of natural resources and then everyone will understand the vast potential we had for making advancement was lost.  

The second event will be the wave of job-seeking youth, particularly women, hitting the labor market in millions and that is to blame on the wrong policies in the second half of the decade starting 2000.

The union of these two events will be formidable and needs sound management. If not, the country will be beset with its social and political consequences for decades.

Under the circumstances, four factors will help prevent the aggravation of this situation.

First and foremost, it is important to maintain calm and stability in economy and politics. Any change in the state of inflation will be a complete about-face; the return of the upward trend of inflation will not be around 20% anymore.

The macroeconomic stability achieved over the past three years is a fragile phenomenon which can shatter with a single uncalled-for comment or a mistake in policymaking

Second, it’s vital to discuss the problems facing the people in their everyday lives, regardless of political affiliations. Unfortunately, the golden opportunity of televised presidential debates was missed due to their flawed format and absence of expert discussions.

What we witnessed was a tense atmosphere that did not clarify issues, including water, air, pension funds, unemployment and banking system. The gravest of dangers now is wrong diagnosis of problems and a rise in unrealistic demands.  

The next government must be able to attract domestic and foreign specialized human capital. Not all the candidates are capable of doing so.

Third, a strong social capital is synonymous with a strong social integration (a dynamic and structured process in which all members participate in dialogue to achieve and maintain peaceful social relations).

These days, promises are made by candidates as if the start of the country’s development is the start of the upcoming government and the end of the country’s history is the end of the next government and no problem is going to be left for the next government.

Presidential hopefuls, who make promises for less-privileged people, should keep in mind the likelihood of being held accountable for their pledges. People who may vote for such promises will never accept “no” for an answer to their demands.   

The upcoming government must have the social support of people, particularly the youth, in order to overcome the hurdles by discussing the problems with them.

And fourth, in today’s crucial state of economy, the government is in need of a vast political backing. In a country lacking a partisan system, political capital is manifested in distinguished individuals liked and admired by the people.

In addition, time is ripe to benefit from the fruits of the nuclear deal, despite thorny international and regional issues.

We all know that a big uncertainty emerged after the US elections. Regional political problems have escalated and a minor blunder, even a slip in foreign policy, is enough to give rise to adverse effects.

The stability restored to foreign currency market and economy after the incumbent administration took office is a result of close coordination between the country’s foreign policy and economy.

Our country needs a government experienced in diplomatic skills. The role of negotiating and reaching deals in today’s world of fierce competition for attracting investment is very crucial.

In conclusion, the country’s achievements, including the Joint Comprehensive Plan of Action, stability in macroeconomics, Health Overhaul Plan and the export of 1 million barrels of oil are all very valuable but fragile.

Replacing all these with money injection by a poor management will turn Iran into Venezuela in no time.


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