Iran Gov’t Announces Corona Rescue Package
EghtesadOnline: The government has approved a large package to help low-income households and struggling businesses impacted by the rapidly spreading coronavirus.
An estimated 750 trillion rials ($4.6 billion as per current exchange rates) will be on offer. The loans will be given to small and medium enterprises hit hard by the pandemic, according to the website of the Central Bank of Iran.
The lending rate will be 12% to be repaid within two years, Abdolnasser Hemmati, the CBI governor said. Commenting on the interest rate, Hemmati said it is reasonable given the high inflation ratethe country, Financial Tribune reported.
“Even if banks set 18% interest on loans, the real interest rate would still be negative when compared to annual inflation…. Any rate below 12% would apparently impose further financial strain on banks,” he noted.
Hemmati said only businesses that did not lay off workers during the corona crisis would be eligible for the loans. He instructed banks to process the loans soon and cut red tape.
Confirmed corona cases in Iran surpassed 53,000 on Friday with the death toll rising to at least 3,300. Health officials said an estimated 18,000 patients had recovered and went home.
The pandemic has hit a wide range of businesses in Iran since its outbreak in mid-February. Conditions worsened after the government ordered mass closure of markets as part of its social distancing scheme enforced on March 27. The limitations will be in effect until April 8.
Citing statements by the Labor Ministry about pandemic losses on various sectors, the government spokesman Ali Rabi'ie said the steepest downturn would be in the services sector.
“Services sector accounts for 51% of our payroll providing jobs to more than 12 million people,” he was quoted as saying by IRNA.
Among other sectors, hospitality, tourism and transportation have borne the brunt. The infection is also taking a toll on restaurants and food businesses. Many companies have been forced to furlough workers, scale-down production or pull down shutters.
Emergency Purchase Plan
First Vice-President Ishaq Jahangiri on Thursday announced guidelines based on which credits worth 10 and 20 million rials will be made available to four million vulnerable and low income households under the government’s ‘emergency purchase scheme’.
As per the plan, the government will pay 10 million rials ($62) in credit to a single-person household and 20 million rials to families with more than one member.
People who do not have fixed incomes, such as taxi drivers, street vendors and seasonal workers fall under the low-income strata.
Low-interest loans are supposed to be repaid in 27 months with a 3-month grace period. Interest is 12%, but the government will pay 8% and the borrowers 4%.
The central bank’s financial aid is not limited to loans. In March, the bank told borrowers that they can delay their monthly installments by up to three months.
Borrowers obliged to clear their debts in lump sum were also given a grace period of three months.
The CBI singled out ten businesses unable to meet their financial commitment as a result of the virus outbreak, namely:
- food distributors, such as restaurants, reception halls, coffee shops, buffets and fast food eateries
- businesses active in tourism and hospitality sector, such as hotels, self-catering apartments, lodges and boarding houses
- transporter, including air, road, rail and shipping companies
- apparel manufacturers and distributors
- leather and footwear
- confectionaries and shops selling dried fruits
- gyms and recreational centers
- education and cultural centers
- craftsmen and handicraft shops.