The mystery of wages and inflation in Iran's economy / Samsami's account of the role of exchange rates and bank overdrafts

Hossein Samsami, a member of the Parliament's Economic Commission, criticized the government's refusal to increase salaries in line with inflation, emphasizing that the growth of the exchange rate and the imbalance of banks are the main factors of inflation.

Hossein Samsami, a member of the Economic Commission of the Parliament, emphasized that the payment of salaries and wages should be based on the law and proportional to inflation, and said: the main source of inflation is not wages; The main source of inflation is the growth of the exchange rate. Governments say that raising salaries leads to an increase in the monetary base and inflation, and for this reason, raising salaries is avoided; But it should be pointed out that the central bank imposes inflation on the society through increasing the exchange rate. Also, the deficits that banks have, such as Bank Sepe and some other banks that have overdrafts, increase the monetary base and liquidity.

He emphasized: the places where we should control inflation have been abandoned; Like bank debt. But with the wrong policy, the central bank creates liquidity growth through the supply of currency. At the same time, where it is necessary and social capital is lost if we do not implement the policy, we easily skip it and stop implementing it, arguing that it will cause inflation.

Bank dissatisfaction and budget deficit; Wrong policies that exacerbate liquidity growth

Criticizing the country's monetary and financial policies, this member of parliament said: We implement wrong policies, the result of which is the growth of liquidity and inflation. Today, we see that banks' overdrafts from the central bank cause the monetary base to grow, but governments say that if the salaries of employees and workers increase in line with inflation, the monetary base will increase. In fact, the disharmony of banks is inflationary, because it is taken from people's pockets and it is not prevented.

He added: As soon as we say increase the salaries, they say that a budget deficit will be created and the monetary base will rise and cause inflation. But a bank that bought two billion dollars of currency from the central bank this year creates inflation, raises the exchange rate, and increases the monetary base and liquidity. How come it doesn't cause inflation, but an inflation-adjusted wage increase does? Here we have a contradiction.

This member of parliament stated: We have to do several things in the current situation. First, banks should be prevented from overdrawing from the central bank. Second, the central bank approves the exchange rate at a suitable rate. Third, the purchase of currency from the open market and smuggling should be prohibited. Also, according to Article 125 of the Civil Service Law, salaries should be increased in accordance with inflation, and if this increase is faced with the government's budget deficit, this deficit must be compensated by the Central Bank. By far, the effects of this action in the society will be more positive than its costs.