Time Up for Trial and Error

Mohammad Reza Pour-Ebrahimi, the head of the Majlis Economic Commission has warned against the return of the command economy saying that the country can no more bear with the seemingly unending trial and error policies.

Pour-Ebrahimi said that the consequences of fixing the exchange rate at USD1=285,000 rials is not dissimilar to the controversially subsidized USD1=42,000 rials of two years ago which opened the door wide open to rent-seeking and rampant corruption, SENA quoted him as saying.

"When a producer wants to bring his goods to the market and the government sets the price through its [unwanted] interventions, the profit margin for the investor or producer simply disappears and obviously harms production growth," the MP noted.

Regarding the allocation of cheaper currency for importing basic products, he said the multiple exchange rates in practice lead to rent-seeking and corruption and such approach has done nothing to improve the struggling economy or fight inflation.