Gov’t Doled Out $3.3 Billion in Covid-19 Financial Assistance

EghtesadOnline: The government has extended a total of 770 trillion rials ($3.37 billion) in financial assistance to households, businesses, the unemployed and the heath sector in the last fiscal year (March 2020-21).

News ID: ۷۸۶۴۶۸

19 May 2021

According to a report by Coronomy.ir, the government’s Covid-19 support schemes included a loan worth 10 million rials ($44) to each household, which was paid in two stages, unemployment benefits to those who lost their jobs during the pandemic, special funds to sectors such as health, tourism, culture, arts, sports and youth, deferral of tax payments, the so-called “livelihood package” worth 2-4 million rials ($8.7-$17.5) and suspension of rents paid to government agencies.

Households received an aggregate of 495 trillion rials ($2.16 billion), of which 220 trillion rials ($964.06 million) were in the form of 10-million-rial worth of loans paid to 23 million households in the first stage and 71 trillion rials ($311.13 million) in the second stage.

One million low-income households received “livelihood packages” worth 2-6 million rials ($8.7-$26.2) each (which amount to a total of 14 trillion rials or $61.34 million).

Thirty million families also received a monthly payment of one million rials until the end of last Iranian year on March 20 (a total of 140 trillion rials or $ 613.49 million).

Security deposit loans totaling 46 trillion rials ($201.57 million) were also paid, such that each household received 500 million rials ($2,191) in Tehran, 300 million rials ($1,314) in large cities with a population of over one million, namely Mashhad, Isfahan, Karaj, Shiraz, Tabriz, Qom, Ahvaz and Kermanshah, and 150 million rials ($657) in other Iranian cities were paid to 120,000 tenants at a lending rate of 12%.

The government’s financial assistance to businesses also included 66 trillion rials ($289.21 million) worth of loans at a lending rate of 12% to 14 groups of businesses hurt by the pandemic and 23 trillion rials ($100.78 million) to leading airline companies.

The government also shelled out 20 trillion rials ($87.64 million) as unemployment benefits and 170 trillion rials ($744.96 million) for financing the health sector.

Covid-19 Restrictions Eased on Businesses

The National Coronavirus Headquarters agreed last week that restrictions imposed on Group II of jobs in the high-risk red and orange zones for coronavirus transmission, including Tehran’s Grand Bazaar and shopping malls, should be relaxed.

Group I and II reopened as of May 8, but Group III and IV will remain closed until May 18th.

“Businesses violating the coronavirus containment measures will be subject to governmental orders requiring the closure of those outlets for up to three weeks,” Qasem Noudeh-Farahani, the head of Tehran’s Chamber of Guilds, was quoted as saying by Fars News Agency.

All businesses, except for those providing essential goods and services (belonging to Group I outlets such as bakeries, supermarkets, grocery stores, car shops, health and treatment centers, pharmacies, factories, transportation companies, public parking garages, post offices, internet service providers, press, nursery homes and print shops), were closed over the past month.

About 1.2 million businesses constitute Group I, 1.8 million are in Group II and nearly 30,000 units belong to Group III and IV.

The partial reopening comes after Tehran’s Chamber of Guilds said it won’t continue to comply with lockdown rules while banks, tax offices and municipalities remain open, Fars News Agency quoted Noudeh-Farahani as saying.

Stressing that cooperation between the guilds and the government is not a one-way street, he said, “We have notified the president and senior officials of the National Coronavirus Headquarters that guilds won’t abide by guidelines if the current situation persists, i.e., guilds and small businesses are required to close shop while insurance companies, banks and tax offices continue to bill them.”

Massive Losses

Businesses have suffered massive losses during the lockdown.

“The coronavirus won’t be contained by the closure of guilds and small businesses. They need to operate to avert bankruptcy. The closure of certain businesses under such a difficult time while banks and tax offices stay open seems irrational,” Noudeh-Farahani said.

Mohammad Baqer Mojtabaei, secretary-general of the chamber, said businesses, affiliated to Iran Chamber of Guilds, have suffered as much as 3,000 trillion rials ($13 billion) in losses since the beginning of the coronavirus pandemic.

Guilds have suffered a daily loss of 50,000 billion rials ($220 million) in lost sales during the lockdown period, he added.

Lukewarm Reception of Loans

A total of 92,120 billion rials ($400 million) worth of loans have been paid to applicants of the government’s coronavirus relief package for businesses hurt by the outbreak of Covid-19, Hossein Mahmoudi, an official with the Ministry of Cooperatives, Labor and Social Welfare, said recently.

“Registration for coronavirus loan at Kara.mcls.gov.ir started on May 9, 2020. Thus far, 513,545 applications, including 953,581 occupations, have been submitted. The total value of loans requested stands at 176,770 billion rials [$770 million], of which 92,120 billion rials or 67% have been paid,” he was quoted as saying by IRNA.

Noting that the taskforce to combat the economic consequences of coronavirus had estimated receiving loan applications worth 200,000 billion rials ($870 million), the official said as per the government’s coronavirus relief package, businesses that have been hurt directly and closed down by Covid-19 will receive 160 million rials ($700) for each worker and those which were not shut down are eligible to receive 120 million rials ($525) for each of their workers.

The lending rate of these loans is 12%, he added.

“However, only 7% of them applied for the loans backed by the government under the Covid-19 relief assistance program for businesses during the first quarter of last fiscal year (March 20-June 20, 2020),” Mojtabaei was quoted as saying by ISNA.

Admitting that the volume of loans was negligible in relation to the losses suffered by guilds, Mojtabaei said, “The 12% lending rate was another reason behind the lukewarm reception of the government’s relief loan program. As the benchmark interest rate in Iran is at 18%, business owners believe that the government’s 6% interest rate subsidy is not worth the difficult application process and length of time it takes to receive the credit.”

Earlier, Iran Chamber of Guilds issued a statement expressing concerns regarding the economic implications of the recent new surge in Covid-19 cases, Mehr News Agency reported.

“Official figures suggest an increase in the number of new infections due to the decline in compliance with Covid-19 safety protocols during the Iranian New Year holidays [started March 21]. More cities and counties are falling in the high-risk red zone for coronavirus transmission and widespread closures of businesses are likely to ensue,” the statement read.

“If more cities, including Tehran, Karaj and Isfahan, move into the red zone of the country’s color-coded coronavirus framework, more than one million businesses affiliated to ICG will shut down and three million people will become jobless.”

The statement was issued before the provincial capitals were placed on red alert.

Compliance Level

A total of 5,202 sales outlets and workshops were closed down across the country for not complying with health protocols to prevent the spread of the Covid-19 pandemic from April 21 to 28, according to the secretary of Coronavirus Combat Headquarters affiliated with the Interior Ministry.

“From a total of 3.57 million businesses and sales outlets active in the country, some 310,033 [9% of the total] were randomly inspected during the eight-day period, close to 1.68% of which were shut down for flouting the regulations set by the National Coronavirus Headquarters,” Babak Dinparast was also quoted as saying by IRNA.

Based on recent figures compiled by Iran Chamber of Guilds, an average of 82% of Iranian businesses and sales outlets abide by the regulations and health protocols devised by the National Coronavirus Headquarters, the secretary-general of the chamber said on Wednesday.

“In some provinces, the figure declines to between 50% and 60%. Owners of outlets not conforming to protocols preventing the spread of Covid-19 have been reprimanded and received warnings,” Mojtabaei was quoted as saying by IRIB News.

The official noted that more than 3,000 sales outlets have been shut down across the country for flouting the protocols and regulations set to curb the pandemic.

“Unfortunately, the pandemic has been drawn out for more than a year and a half, longer than expected, and to top that, the government has failed to support businesses as it should have during this period. These have made it especially hard for most businesses to keep up with the new pandemic protocols since they have rents and other expenses to pay,” he added.

Mojtabaei concluded that Iran Chamber of Guilds implores businesses and people to keep observing Covid-19 protocols until the fourth wave of the pandemic is over in the country.