IMF sees 4.2% Growth, Urges Financial Sector Reform

“The amendments to the AML/CFT framework are welcome and should be passed before the end-January 2018 FATF action plan deadline. Continued progress on these fronts will facilitate re-integration into the global financial system by enhancing transparency and governance.

“The reform of the universal cash transfer scheme to target the poor secures much needed fiscal space. Nonetheless, the financial sector reform will cause government debt and interest outlays to rise substantially. Staff recommends gradual fiscal adjustment—through measures to dedicate a share of oil revenue to cover interest costs on bank recapitalization bonds, further expand tax revenue by removing tax exemptions, and implement pension reform—within a comprehensive fiscal framework that brings debt to prudent levels.

“Faster implementation of structural reforms that unshackle the non-oil private sector would lift growth potential and help address job challenges. Despite recent improvements in the business environment, Iran needs to reduce red tape, reform state-owned enterprises and improve transparency about corporate beneficial ownership to attract investment and develop the private sector. Staff welcomes the amendments to the Customs Law that should lower the cost of trade and help exports to grow. A review of labor regulation could improve incentives for firms to hire.

“Iran’s highly educated women are an untapped source of growth and productivity. Reducing legal and, social barriers and pay gaps; subsidizing child care to low income women; and tackling informality would create job opportunities for women and ultimately boost GDP.

“More timely and comprehensive data would enhance transparency, inform policy design and support the reform program.

“We wish to thank the authorities for their excellent collaboration and generous hospitality.”

(Source: IMF)

(Picture Credit: Tasnim, under Creative Commons licence)

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