New Finance Minister Pledges Overhaul
“The capital market in Iran has great potential and it has significantly expanded during President Rouhani’s previous
administration but it is still far from a stable market.”
The new Minister of Finance and Economic Affairs Masoud Karbasian,
elaborated his plans for the key ministry in Parliament, emphasizing that
the ministry will join hands with the Central Bank of Iran to resolve issues
facing the banking system.
Karbasian pledged that following his confirmation, he will utilize all his
power and means to help the banking reform bills’ passage in Majlis Economic
Commission and the Parliament.
He noted that he is fully aware of current banking woes and monetary
policies, saying that he’s eager to seriously undertake banking reforms.
“Shadow banks, unauthorized credit institutions and their depositors’
concerns are some of the biggest challenges facing the Iranian banking
system, for which a comprehensive plan has been devised and will be
implemented with utmost precision,” he was also quoted as saying.
Karbasian, 61, noted that banks’ lending power should improve to boost
domestic production and grease the economy’s wheels.
The change in Economy Ministry would mark a significant change in President
Hassan Rouhani’s cabinet, as it potentially impacts both state-owned and
private lenders, and influences the outcome of the President’s central
promise of reforming the beleaguered banking system.
Karbasian, who previously served as the head of Iran Customs Administration,
has replaced Ali Tayebnia, who enjoyed the rare distinction of being popular
among both government and private sectors.
The economy minister stressed on reforming the lending practices of banks
and giving all-out support to small- and medium-sized enterprises to get a
new lease on life.
“The capital market in Iran has great potential and it has significantly
expanded during President Rouhani’s previous administration but it is still
far from a stable market. Therefore, a development plan for capital market
has been devised, which will be implemented after conferring with the
Parliament,” he said.
Karbasian noted that the previous government managed to end a critical
period in Iran’s economy through public trust and the Parliament’s help, and
established a relative stability in the market.
An economic growth of 12%, single-digit inflation rate and curbing the
liquidity growth were achieved by the government’s proper policies “and I
thank my dear friend Dr. Tayebnia who had a big share in those successes”.
Karbasian believes that the main task of the Economy Ministry for the next
four years will be to implement the overall policies and objectives of the
Sixth Five-Year Development Plan (2016-21).
In line with President Rouhani’s emphasis on job creation for the youth,
especially those with higher education, to improve domestic production, he
said weak domestic production, lack of competitiveness in the market and
high ratio of unemployment are major and old issues of Iran’s economy.
According to Karbasian, oil dependency, lack of transparency, political
interests and the heavy role of the state are other main problems of Iran’s
economy so “we don’t have any other choice but to implement major reforms in
the economic system, a highly risky and massive move that started during the
tenure of the previous [Rouhani] administration and need to be decisively
For the most part, the new minister seems to be picking up where Tayebnia
left off, promising to continue his plans that were constructive for the
banking system even if not all of them came to fruition in the projected
He pledged to reduce bank interest rates, increase the capital adequacy
ratio of banks, recover their non-performing assets and loans, and upgrade
the outdated banking system by establishing acceptable corporate governance
rules and conformity to global standards, among others.
“We will try to reduce the ratio of unemployment to a single digit, reach an
8.6% economic growth and keep the inflation rate around 8.8% by the end of
the Sixth Plan and we are obliged to do our best to achieve those goals,” he
As per Karbasian’s plan, the average annual productivity ratio ought to
reach 2.8% and investments should increase by at least 21.4% annually.
“These plans have partially failed, but the ministry will make a renewed
effort at realizing them,” he said.