The Iranian government has unveiled a policy package to stimulate the stagnant economy through higher investment in production and boosting consumer spending.
The measures are envisaged for a duration of six months in the run-up to the lifting of sanctions. Expectations of the sanctions relief have deepened the market doldrums as consumers hold off on purchases of domestic goods and wait for an influx of foreign brands.
Government officials are in panic amid warnings that the economy might be set for zero growth or even slip back into recession.
Since coming to office in 2013, the administration of President Hassan Rouhani has ridden out recession and presided over a growth rate of about 3% by following a tight monetary and fiscal policy.
It has also brought down inflation rates from above 40% to 15% and pledged to hit single digits before his tenure is over.
The government is now ready to paddle back partly on those measures, opting for some deregulation.
For public spending, the government plans to use the banking sector to offer credit cards at concessionary rates for purchase of homemade goods. Loans up to 80% value of cars with repayment period of seven years are also on offer.
To boost production, the government will plough in $10 billion into the sector. It also plans to cut interest rates in order to lower borrowing costs for producers.
Minister of Economic Affairs and Finance Ali Tayebnia said there is an anemic demand for Iranian goods in the market which is the biggest challenge of the local producers.
Meanwhile, Iranian banks and financial institutions are faced with a credit crunch amid piled-up heavy debts owed by the government and defaulting private borrowers.
By Press TV