Economy, Domestic Economy

Cost of Curbing Inflation

Cost of Curbing Inflation
Cost of Curbing Inflation

Inflation has been curbed at the expense of amortization of production capacity, the minister of roads and urban development said. According to Mehr news agency, inflation has been brought under control as a result of excessive imports and fixing the exchange rate during the past three years which has greatly hit domestic production, Abbas Akhundi said in the First Iranian Conference on the Economy on Sunday. It seems that the ongoing recession was caused by supply gap, he said. There are limited sources when it comes to financing business development in Iran, even the available sources are not efficient in order to be able to compete in the international arena, he said.

  Privatization Process Criticized

In separate remarks, the minister said that privatization has led to the expansion of rent-seeking. “Distribution of rent is what resulted from the privatization process. Those with more access to information are likely to receive more rents,” he was quoted by IRNA as saying.

An executive order for privatization, envisaged by Article 44 of the Constitution of the Islamic Republic of Iran, was issued by the Supreme Leader in July 2006. According to the Article 44, the government is assigned to cede 80 percent of the shares of major state-owned enterprises to the people in order to support the targets envisioned by the 20-Year Strategy for Economic, Social and Cultural Development.

The decree indicates that ceding 80 percent of the shares of large companies will serve economic development, social justice and elimination of poverty. “Only 0.9% of the share has been streamed into the private sector as a result of the privatization,” Akhoundi said.