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Report on Government’s Coronavirus Stimulus Packages

2020-11-07 15:44:14
The Iranian government has released a report on the measures it has adopted to support struggling businesses and affected families amid the coronavirus outbreak.

More than nine months on since the massive outbreak of COVID-19 in Iran, which harmed many businesses, a task force set up in the early days of the pandemic to tackle the economic consequences of coronavirus has drawn plans to support affected businesses and families.

Led by Mohammad Nahavandian, the vice president for economic affairs, the task force identified low-income families and struggling businesses and allocated to them multiple rescue packages, including grant or interest-free loans, low-interest loans for businesses and tenants and unemployment benefits for those who had lost their jobs due to the pandemic.

As reported by the government’s news website dolat.ir, the task force brought together executive officials of state institutions as well those active in the private sector along with experts in different social and economic arenas and after holding around thirty meetings adopted the following measures.

A. Measures to support families aimed at increasing their purchasing power and stimulating demand:

Allotting some Rls. 220 trillion: Given that families income and livelihood have been affected during the coronavirus outbreak, around 20 million households received 10-million-rial economic stimulus packages in the less than two months from the spread of the disease in the country. In the next stages, similar rescue packages were given to some other families which had not received them, increasing the number of those who had received the aid. Among the innovative measures incorporated into the plan were the speedy granting of loans, a lack of need to go to banks [to receive the loans] in which case there would have been overcrowding, a lack of need to introduce a guarantor and offer security, and the automatic deduction of installments from the families’ cash subsidies. Furthermore, a number of households in lower income brackets such as seasonal workers and families with female breadwinners also received Rls. 20 million in addition the 10-million-rial support package. It is noteworthy that that the mentioned financial aid was offered to families as loans at a 4-percent interest rate. In order to prevent losses to the banking system, the government has appropriated some Rls. 25 trillion in subsidies to banks to make up for the low interest rate for the loans.

Some Rls. 13 trillion worth of rescue packages as well as monthly cash handouts worth between 2 million to 6 million rials each have been offered to low-income families by the government over the past four months. The eligible families were identified by the Ministry of Cooperatives, Labour and Social Welfare.

Among other measures adopted to improve the livelihoods of households was to facilitate receiving loans and provide credit cards for families by leaving Justice Shares with banks as security, and considerably increase the salaries of civil servants and pensioners.

B. Measures to support businesses aimed at tackling stagnation and boosting supply:

General support for businesses: Deadlines for submitting tax returns and paying taxes was extended for three months to diminish losses to businesses. Moreover, some relief was offered in order to lessen the negative effects bounced checks for all businesses during the coronavirus pandemic.

Support for hardest-hit businesses: Fourteen types of businesses were designated as jobs which had suffered most due to the COVID-19 outbreak. The designation was based on items such as the degree that they had suffered, whether or not those businesses were offering perishable goods, how much they were able to compensate for the losses following the initial shock, and the like. Then measures were adopted to support these businesses. Of course, businesses which had to close down right from the beginning of the coronavirus outbreak due to government restrictions received more loans than others. Part of the government’s help to such businesses included offering a three-month respite for the repayment of bank loans as well as respites for the payment of employers’ share of insurance premiums, municipality fees and gas and electricity bills. Furthermore, considerable finances were set aside to allocate low-interest loans to these institutions with three months’ grace for repayment. Upwards of Rls. 53 trillion in loans had been granted to around 320 thousand economic enterprises by October, 2020. Around 230,000 enterprises have also been introduced to the banking system to receive Rls. 47 trillion in loans, which will be offered in the coming months. Hence, enterprises with around 1.1 million employees have, so far, received or will receive the loans. It is noteworthy that, in order to tackle unemployment, the loans have been designed for job-oriented activities and oblige a large number of enterprises to keep their workforce. Of course, employed people without insurance coverage enjoy the same support as well. Also, given the vulnerability of most businesses in specific domains, special privileges have been designated for them, and the amount of loans offered to them have been larger with more relaxed requirements. These businesses include major air and rail transport companies, which have received more loans. Companies in this sector have received Rls. 15 trillion so far, and the banking system is now handling the procedure to offer another Rls. 2 trillion worth of loans to this sector. Rescue programs have also been drawn up for other activities such as businesses and enterprises in the tourism, sports and arts-cultural sectors, whose incomes seem unlikely to go up by year’s end due to the prolongation of the coronavirus pandemic. These programs include different types of exemptions, offering loans with long grace periods (repayment to start as of March, 2021) and measures to stimulate demand. The loans are expected to amount to Rls. 40 billion to 60 billion. It should be mentioned that all mentioned loans (as well as financial assistance to help pay deposits for renting homes, which will be explained later here) have been offered at interest rates lower than the going rate. The finances have been provided not by pressuring banks, but from banks’ reserve funds and through cooperation between the banking system, the Central Bank of Iran and the government, which has been an unprecedented achievement.  

Loans offered to businesses (the figures are in billion Rials):



Name of Business

Amount Paid

Amount Requested

Driving schools, barber shops, beauty salons and public baths



Production and distribution of garments



Production and distribution of prepared food, including restaurants and the like



Production and distribution of bags and shoes



Public transport for inter-city travel, including air, road, rail and sea transportation



Urban public transport



Travel agencies



Cultural, educational, arts and media centres



Gyms, sports clubs and recreational centres



Centres for distribution of nuts, dried fruit, confectionary, ice-cream and fruit juice



Tourism centres



Handicrafts productions and distribution centres



Private institutes licensed by health ministry



Centres breeding chickens and centres producing greenhouse products




C. Social support aimed at cushioning the social effects of the economic shock caused by COVID-19;

Supporting the unemployed during the coronavirus pandemic: Despite efforts made to maintain employment at enterprises, part of the workforce became jobless due to a drop in demand during the coronavirus outbreak. So, some Rls. 50 trillion from the National Development Fund was allocated for the payment of unemployment benefits to these individuals. The drawing up of special directives to pay unemployment benefits to and the rapid payment of this financial assistance bears witness to the proper performance of the government. In recent months, more than 990 thousand people per month have been eligible to receive unemployment benefits and they have received the approved amounts. Work is underway to pay benefits to around 110 thousand others. It is noteworthy that the benefits for the second quarter of 2020 amounted to more than Rls. 10 trillion, and almost as much was appropriated for the third quarter, too.

Supporting families that are tenants: Fluctuations in prices of houses caused by a ripple effect from the new rise in the exchange rate between the greenback and the rial and, consequently, the pressure on tenants, led the government to draw up new plans in addition to its previous measures which included the automatic extension of lease contracts for three months and setting a ceiling for increasing rents (maximum 25 percent for Tehran, 20 percent for major cities and 15 percent for other towns). The new measures included offering low-interest loans with rather long grace periods to help tenants pay their rents. The loans amounted to roughly Rls. 12 trillion, in total. As these loans have been much welcomed, it is predicted that a great part of the finances will have been disbursed by the end of 2020 (its legal deadline). The beneficiaries could receive loans equal to Rls. 500 million in metropolises, Rls. 300 in major cities and Rls. 150 million in small towns. It should be noted that a major part of the process of registration and checking the validity of the document of tenants applying for loans as well as those requesting loans for affected businesses will be conducted online using the electronic infrastructure available. Even the process to pay some loans have been completely online and innovations such as electronic promissory notes have been used. All these measures have been in line with reducing overcrowding and decreasing the number of people going to relevant authorities in person, not to mention the development of digital economy.

D. support for the health and treatment sector:

Given the necessity of equipping the health and treatment sector and appreciating the efforts made by its diligent personnel to effectively contain the spread of coronavirus, some Rls. 150 trillion in finances from the National Development fund have been appropriated for the health and medical treatment sector. Of that amount, some €1 billion was disbursed from the finances of the National Development Fund with the permission of the Supreme Leader. Another €5 billion in loans from the International Monetary Fund (which has not materialized yet due to the US pressure) could have obviated the need for Iran to use resources of the National Development Fund.

E. Other cases of support: In addition to the cases mentioned above, the government offer other types of support, namely facilitating online sales for businesses, backing knowledge-based companies and start-ups, gradually reopening businesses while obliging owners of businesses and enterprises to abide by health protocols, easing requirements for importing commodities in the domain of health and treatment, encouraging and organizing the activities of benefactors, delaying the carrying out of the means test and continuing to pay health insurance subsidies to low-income families, extending the law which authorizes a respite for the repayment of debts to banks to support and encourage production, increasing the ceiling of the amount of money which can be transferred daily via online financial transactions in order to reduce overcrowding, adopting measures to receive loans from the Islamic Development Bank (€120 million), supporting businesses in free trade zones, conducting extensive expert studies with the cooperation of different ministries (economic affairs and finance; cooperatives, labour and social welfare; and information technology and communications)  in order to introduce a new rescue program in the post-coronavirus era to increase employment and support and monitor the production and distribution of masks. As for masks, a great many measures have been adopted since the coronavirus outbreak in Iran to boost production and imports and also to monitor distribution networks. After the initial critical days following the virus outbreak, there has been no shortage for masks in the country. Also in recent weeks, it has become all the more obligatory to use face masks in public places due to the coronavirus outbreak, accordingly, measures have been adopted to supply enough masks, namely easing the import of raw materials and production equipment, pumping up production, making sure that several million standard and high-quality masks are supplied to the health and treatment sector on a daily basis, keeping a close watch that distribution networks supply masks at designated prices, making sure that masks are distributed on a large scale from depots and warehouses in order to satiate the market, especially in Tehran and other cities which are in critical condition in terms of COVID-19 spread (around 60 million), adopting the necessary measures to mass-produce a great deal of cotton and reusable masks and increase the supply of masks through internet shops. Moreover, the Comprehensive Trade System will keep monitoring this process in order to keep a close and constant watch on the process of production and distribution of masks. Currently, some 21 million three-layer masks are produced and distributed in the country.