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Economists Call on the Government to Modify Interest Rates

Unemployment in Iran

Iranian economists have criticized the local banks and financial institutions for offering high interest savings accounts over the past few years. Economists believe that immoderate interest rates increase the inflation and unemployment rate in the country.

Valiollah Seif, the new governor of Central Bank of Iran, announced on Saturday that he will modify interest rates according to the country’s inflation. Mohammad Hossein Adib, an Iranian economist, says Seif should make serious decisions with regard to irregular interest rates in Iran.

“Iranian banks and financial institutions should halt offering high interest savings accounts to clients. Unfortunately these interest rates are actually destroying the economy in Iran. Currently, Iranians are reluctant to invest their cash money on businesses and productions because of this problem,” Adib told the Herald Boy on Sunday.

He also asked the Iranian government to strengthen the private sector in Iran. “The government should always support business in the country. However, the public sector is currently playing the most important role in Iran’s business. The Iranian government should accelerate privatization according to the country’s regulations in order to fortify the role of the private sector in economy,”

In recent years, a large number of Iranian companies and factories were forced to close down due to irregular volatilities in Iran’s foreign currency exchange markets. Iranian plants mostly rely on imports of raw materials. The excessive fluctuations have literally disabled many businessmen from importing their necessary raw materials.

“In my opinion, the Iranian government should allocate low-interest loans to the affected companies and factories. By offering financial supports to these plants, the unemployment rate in Iran will gradually decrease over the next few years.” Mohammad Hossein Adib concluded.

Independent statistics suggest that more than 30% of Iranians are jobless. On the other side, there are over 8 million students in Iran’s local universities. The unemployment rate will increase significantly, if the Iranian government fails to create enough job opportunities for graduates.

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