Will the government increase 14 times to increase inflation / housing facilities?

According to Tejarat News, based on Central Bank data The payment facilities of banks to the economic sectors during the first ten months of 1400 amounted to 2294 thousand billion, which has increased by 59.4% compared to the same period last year. In the first 10 months of last year, 855 thousand billion tomans of facilities have been paid.

From the beginning of April to the end of January this year, 125 thousand billion tomans were paid to the housing sector. The share of housing loans is 26 thousand and 544 billion tomans, in fact, 21.1% of the facilities of the housing sector have been paid to the applicants.

In a situation where the share of housing construction loans is about 26.5 thousand billion tomans, the government has instructed banks to increase the loan repayment ceiling by about 14 times this amount next year.

According to the law of the National Housing Movement plan, the country’s banking network must allocate 360 ​​thousand billion tomans of its resources to this plan annually. The gap between government lending facilities and the power of banks is very significant.

On the other hand, while the share of housing facilities in the total bank facilities is 5.4 percent, the government in the 1401 budget bill also obliged banks to allocate 20 percent of their facility resources to the housing sector.

The government has not specified how the sources of payment of 20% of the facilities to the housing sector and 360 thousand billion tomans of loans in the framework of the National Housing Movement plan will be provided.

Although the government intends to implement these policies to house tenants, it does not seem to lead to anything but an increase in inflation.

Increased inflation with mandatory facilities

The Governor of the Central Bank confirms that the wrong policies of the government for the banking network are inflationary. Salehabadi said at the end of January: part of the inflation is due to imbalances in the banking system; In this way, banks borrow from the central bank, which increases the monetary base and increases inflation.

He has explicitly stated that one of the reasons for the imbalance in the banking system is due to the mandatory facilities under the budget law. That is the same plan that the government has for the banks next year.

How does the government increase inflation?

Government banking policies can be described as a chain. In the first round, the government forces the bank to pay the facility. Because banks do not have liquidity, they are forced to overdraft from the central bank, meaning that banks borrow from the central bank. In doing so, the government is indirectly taking money from the central bank to carry out its plans.

Government borrowing from the central bank creates money. Money printing increases the monetary base and then increases liquidity. In the last circle of this cycle, the prices of consumer goods and services increase, which manifests itself in the growth of inflation in the economy.

In fact, the government goes into their pockets to solve the problem of the people who live here. If these two government policies are implemented next year, we will probably have to wait for the inflation rate to rise.