Prepare a comprehensive financial package for economic growth/ short-term and long-term plan to curb inflation

In an interview with the economic reporter of Fars news agency, Hadi Qavami said: “When we control inflation, it will affect production, because when inflation becomes single-digit, The cost of production is also reduced. Inflation is caused by two parts: cost pressure and demand pressure. When the cost of production is reduced, that is, the cost of production is reduced, and it causes the boom in production and economic growth, and these two are necessary for each other.

In response to how inflation can be reduced and whether inflation can be overcome only with monetary policies, he said: To deal with inflation, short-term, medium-term, and long-term plans must be formulated. Monetary and financial policies should be aligned. Also, we have to form the production infrastructure, and a long-term inflation control plan must be developed.

According to the Deputy Minister of Legal Affairs and Parliament of Economic Affairs and Finance, the government must prevent the creation of liquidity by banks and also the government’s own budget deficit in order to curb inflation, and the brake on the growth of current expenses in the government must be pulled, which these three actions will slow down the speed Inflation is effective.

Qavami said about long-term inflation control: We should move towards resistance economic policies and value chain as well as supply network of goods and services and think about the added value of production. For example, in the steel industry, from iron ore to sponge iron and then stainless steel, and then the production of valuable goods such as surgical scissors, we must consider that we can provide the added value of this industry inside the country and from the raw sale of ingots. Avoid steel.

He added: When we follow the path of raw sales, that means we export steel ingots at the price of foreign currency, and then they produce stainless steel from the same ingot, and we sell products such as surgical scissors made of stainless steel. We import several times the price.

The Deputy Minister of Legal Affairs and Parliament of Economic Affairs and Finance said: Our imports include consumer goods, capital goods, and intermediate goods, of which 80 percent are intermediate goods, and of this amount, 80 percent are imports of processed goods in the country, which should be corrected. And we should import intermediate goods into the country that we can process inside the country and have employment and added value.

Qavami said: We convert iron ore into sponge iron and then into steel ingots, we sell each ton of steel for 700 euros. European countries import steel ingots and produce stainless steel from it and export finished products to us, the added value of which goes to foreigners, this issue makes our trade balance negative.

He added: We should be able to produce value-added products from raw materials and turn our science into techniques and technology and produce added value. Because the added value of manufactured goods can be 10 times more profitable for us. We give 10 steel ingots so that we can buy the final product of one steel ingot from them, and in this exchange, one side becomes Golestan and the other side gets caught, and our trade balance with crude sales will be negative.

In response to the fact that government officials regularly promise to make the economy predictable, the Deputy Legal Affairs and Parliament Minister of Economic Affairs and Finance stated: If price stability occurs, predictability will occur. Until a few years ago, the average inflation rate in our country was 20%, now this amount has reached 40%, we must be able to reach the previous average of 20% in the long term, and after that to an average of 10%, and then the inflation will become a single digit so that the economy becomes predictable.

Qavami said about exchange rate fluctuations and curbing inflation: When conditions are created for the production of added value inside the country, we will not have to import a series of consumer goods, as a result, the demand for imports will decrease and currency fluctuations will be prevented automatically. Instead of the final product, we should import products that we can process inside the country, as a result, the demand for imports will decrease and the trade balance will be positive. On the other hand, we need to strengthen the country’s infrastructure with the dollars we earn from imports.

This professor of economics said: During the Safavid period, the country’s trade balance was positive, because we built aqueducts with the currency obtained from exports, and investments were made on agricultural land, and the trade route was in the service of production, but during the Qajar period, it was reversed with the plans of England. The trade route was used for imports, which harmed the country’s economy.

The deputy of legal affairs and the parliament’s minister of economic affairs and finance said whether domestic investment is sufficient for economic growth or whether we should use foreign capital as well. Foreign investment should also be partnered with domestic investors. Technical knowledge and technology will be transferred and added value will be produced inside the country.

Qavami said: Direct foreign investment alone is not enough, but foreigners should also be able to invest in our country’s stock market and international accounting and auditing standards should be based on IFRS so that foreigners can buy shares and we can invest in foreign stock markets.

In response to the fact that foreign investors are entering in fields such as cigarette production, he said: Foreign investment should be made based on land use policy and produce added value, rather than engaging in activities for wealthy people that are far from the main needs of the country.

The Deputy of Legal Affairs and the Minister of Economic Affairs and Finance said: Foreign investment should be directed towards the essential needs of the economy and bring technology with it.

Qavami said about the role of joint investments at the borders and creating security for economic growth: Free trade zones, especially economic ones, are a good opportunity for joint deployment with neighboring countries that can carry out sustainable production at the borders, which will improve the security of border points and the employment of border areas. it helps.

Regarding the summary of the policy of curbing inflation along with economic growth, he said: both the capital market should be activated, banks should be in the service of production, and we should prepare a comprehensive package for financing the economy, which has diversity, and the financing includes banks, stock exchanges, foreign investment, domestic investment, quality companies and insurances, and let’s move in the direction of adding value and completing the production value chain, and this package is in line with the land development policy.

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