Financial Tribune- Lawmakers in an open session on Sunday ratified new articles related to the sixth five-year development plan (2016-21), obligating the government and the Central Bank of Iran to take initiatives to steer the economy for the next five years.
The parliament convened on Sunday morning to discuss details pertaining to Article 57 of the five-year development plan, according to the parliamentary news website, ICANA.
The plan offers a medium-term roadmap designed by the government and Majlis to help achieve sustainable growth, outlining strategies in its budget planning for the next five years.
Parliamentarians first approved Clause IV of the aforementioned article that obligates the government “to adopt measures in the annual budget to provide risk coverage for fluctuations in exchange rates up to 10% for businesses receiving foreign exchange loans”.
Articles 57 is focused on improving production, renewing industries and iranian lawmproviding targeted support for industries prioritized in the Resistance Economy framework and for the expansion of non-oil exports.
Resistance Economy refers to a set of principles outlined by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei for bolstering domestic production, curbing dependence on oil exports, improving productivity and encouraging Iranians to buy domestic products.
The coverage for fluctuations in foreign exchange rates is not without precedent in Iran as the Export Guarantee Fund of Iran, the state-owned credit agency, announced earlier this month that it will help offset the risk of forex hedging.
The decision seems well-timed as unease in the Iranian currency market has been a hot-button topic of discussion during the past few weeks with the US dollar exceeding the 40,000-rial threshold last week.
The greenback’s rally has since lost momentum with its rate dropping to 39,000 rials on Sunday. The $5.8 billion the CBI says it has injected into the market has been hailed as a major factor in balancing the currency market.
Support for Industries
Lawmakers also approved the contents of Clause 9 of the article, which obligates the government to support the Export Guarantee Fund of Iran and the SMEs Investment Guarantee Fund, back the development of electronic industries, provide insurance coverage for the mining industry and support marine industries during the five-year development plan.
These measures are aimed at strengthening non-oil exports, supporting the troubled small- and medium-sized enterprises and helping marine industries.
Clause 7 of the article states that the National Development Fund of Iran must reserve 10% of its foreign exchange income for allocation as loans to SMEs and non-government cooperatives. State banks will help allocate these loans.
Another clause of the article requires the central bank to revamp loan allocation to the industrial and mining sectors.
Lawmakers approved Clause 3 of Article 57 that asserts: “The Central Bank of Iran is obligated to devise regulations pertaining to loan allocation in a way that the industrial and mining sectors receive at least 40% of the loans annually.”
The Money and Credit Council is the highest policymaking body of the central bank led by CBI Governor Valiollah Seif.
Last week, the parliament named the members of MCC also as part of the sixth plan. Members of parliament approved the measure with 120 votes in favor.
As approved, the economy minister (Ali Tayyebnia), governor of the Central Bank of Iran (Valiollah Seif), the head or deputy head of the Planning and Budget Organization of Iran, the president of Iran Chamber of Commerce, Industries, Mines and Agriculture (Gholamhossein Shafei) and the industries minister (Mohammad Reza Nematzadeh) will be among the MCC’s ranks.