President Wants Deep Economic Reforms

President Wants Deep Economic ReformsPresident Wants Deep Economic Reforms

President Hassan Rouhani, in a letter to his First Vice President Eshaq Jahangiri Saturday called for the preparation of comprehensive plans to reform the banking system, develop the primary capital market as well as effectively manage government debts in line with the legislation on ‘removing barriers to competitive production and improving the financial system'.

The presidential instructions, among other things, reemphasized "A return to economic growth and development as one of the main objectives of the government. To this end, the government has focused its efforts over the past two years, in addition to removing the sanctions and improving international relations, on stabilizing the country's macroeconomic atmosphere."

Regarding the much-awaited reforms in the banking system, the president outlined six major areas, namely  short and mid-term financing by banks, funding the activities of small and medium-sized enterprises, reducing outstanding debts, creating a competitive environment for economic activities, organizing the money market and increasing the lending capacity of banks.

On the capital market, President Rouhani outlined three avenues: Funding long-term financial demand through the domestic capital market or foreign capital; funding large enterprises through the capital market; and revising laws and regulations guiding capital markets. Economic experts and senior officials have often been quoted as saying in recent years that most of the existing laws related to the economy, banking, finance… are outdated and have outlived their usefulness.

As for the government's fiscal discipline, the president highlighted two main areas. First, estimation of the government debts to contractors and banks and the method of repayment; and second, putting in place appropriate and effective mechanisms to deter the creation of new debts.