The Forum for Partners in Iran's Marketplace

June 2019, No. 91


The 1398 Budget Proposal
Possible Development Impact

The nominal budget for 1398 is, essentially, expansionary in both social and economic stimulus.

Mohammad Ali Farzin,
Development Economist

The impact of recent sanctions on Iran and oil sales restrictions have forced an adverse external macroeconomic shock and austerity process; while subsequent Rial devaluation (from 35,000 R to 120,000 R within a month or so) has raised the scale of austerity through both inflation of circa 40% and demand side effects on production contraction and social welfare with cuts in purchasing power and consumption. Price increases have come from the side of costs; goods exports volumes have not increased rapidly to compensate; a rise in inflation tax, forcing savings; and imports in process of seriously being reduced.

A response of Iran’s Government has been the 1398 (2019/20) Budget proposal. A nominally huge increase of 38% from the 1397 budget to 17,032 trillion Rials (tR): an extra 4,800 tR. The budget is intended to stimulate the economy and resolve the above mentioned, to raise Iran out of it’s serious stag-flation trap, sanction related problems, zero/negative GDP growth, and falling investment rate. However, a budget that is certainly controversial on the size, composition, fiscal stimulus effects, and deficit gap financing aspects – as well as its possible money base expansion and inflationary effects. As indicator, the extra 4,800 tR is more than half the current national GDP of 9,000 tR. Very ambitious indeed. 

Performance Based Budgeting

A government budget is, in principle, an instrument for achieving national development objectives and outcomes, with limited available resources; an integrated framework for action to ensure systematic approach to performance based budgeting, and preventing unnecessary, ad-hoc and disparate activities from dominating resource allocation decisions. A budget document provides significant information on Government and people interaction; preferences and priorities; money, resources and activity.

A good budget should improve national efficiency, equity and sustainability outcomes: i) equity – minimum social protection, income distribution (Gini) and deprivation status; ii) efficiency – general productivity (or value added),  employment at national and local level and enterprise possibilities; and iii)  sustainability – usage of primary (capital, natural and human) resources and their depletion rates, as well as available ecological services (e.g. carbon emissions rates). From a development economics outcome perspective, indicators of importance include: i) expenditure on bottom 40% of population for: essential social services (education, health and social welfare), employment generation, productivity improvement and their income growth; and ii) fiscal stimulus effects on macro level: capacity growth (investment), capacity use (more output and employment), savings generation, forex generation, monetary base, deficit financing, and their sustainability dimensions.

However, in many countries the annual budget is not used so appropriately, and is more like a political cash grabbing exercise for those lobbying better, with subsequent ineffective, rentier, ad-hoc and non-sustainable resource allocation outcomes.  

1398 Budget - Size and Composition

The scale of budget has increased significantly. It is proposed as 17,032 trillion Rials. A 38% increase by 4,800 tR. Of this total, 12,770 trillion Rials (75%) is the public entities (nationalized industries, banks, etc) share, with +52% growth from 1397. This component is the fiscal instrument for economic growth stimulus. The remaining amount, 4,700 tR (i.e. 25% of total) is the central government’s own share (+9% growth), with significant restructuring towards socio-economic and social welfare expenditures.

The “social welfare affairs” payments component, with 1,130 tR allocated (a 24% share of the central budget) is the highest share ever for this item (in 1395 it was 20%; 1390, 14%; 1385, 9%).

Growth rates in budget sources-uses (income–expenditures) between 1397 and 1398 indicate the following. SOURCES : total income +39% increase, of which; taxation –3%; real asset sales +38%; financial asset sales –19%; special income sources +24%; all central Government budget sources +8%; public entities +52%. USES : total expenditure +39%, of which; current expenditure +9%; financial assets –19%; investments 0%; special sources +24%; all central Government budget uses +8%; public entities +52%. Grants and transfers will rise by 25%, social welfare by over 40% and subsidies quite significantly.

Controversial indeed. Firstly, relative to Iran’s economy, the 17,032 tR budget is huge and dominating:  it is twice the size of GDP (now at circa 9,000 tR); while central budget of 4,700 tR alone is 50% of GDP. An excessive government involvement in the economy – despite Articles 143 and 144 of the Constitution (which possibly require closer to 25%, and disbanding direct market activities).

Second, income sources remain questionable. To finance expenditures, income from taxation and other tariffs/incomes are stated as having a minus growth from last year, yet about 2,100 tR is specified (of which ¾ are from taxation), and sales of various Government owned assets are about 2,000 tR (e.g. 1,480 tR from oil/gas, rents and real assets – with 38% growth; and 510 tR through bonds sales and financial instruments – with -19% growth). Raising taxes further (including on wealth) is possibly being considered, nevertheless; with serious doubt on oil sales; and financial asset sales in the capital market can have crowding out effects on private investment; as well as the possible monetary base expansion if financing deficit problems arise. Clearly all are also either inflationary or restrictive.

Third, the fiscal stimulus impact of expenditure items indicates that the level of nominal government investment will not change, but current expenditure will rise by 9% - and the main burden of economic investment will come from public entity budget. Again, inflationary threats are apparent. 

Fiscal Stimulus

The nominal budget for 1398 is, essentially, expansionary in both social and economic stimulus. It goes for scale in economic growth through significantly raising public entities budget, and for inclusivity in economic growth through restructuring the composition of the central budget – towards combined capacity growth and capacity use, employment generation and social welfare initiatives. Expansionary quality is hard to estimate precisely given inflationary circumstances, public entities spending processes, private sector investment response and deficit financing outcomes. Possibly aimed more at prompting the consumption multiplier effect: and certainly needed in current circumstances; however, such effects will come about firstly more through initial money circulation effect on capacity use than through initial investment in new capacity.

As example, from the total central Government budget, 3,207 tR are for current expenditures, and 620 tR are investment expenditure. Despite this 5:1 dis-proportion, in todays weak investment climate 620 tR is a good number for Government investment – once it actually happens. Also, more than 1,000 tR are allocated for public entity credit programmes on employment generation, resilient economy and new private sector investment: to be injected into the banking sector as capital increases and to enable their improved financing. As part of the additional 52% (of about 4,300 tR) in 1398 public entity expenditures an amount of investments will occur (and in tandem with the banking sector injection).

These combined may possibly lead to at least between 1,500 tR and 2,500 tR of new national income generation over two years - once the envisioned investments and bank credits happen in a timely manner. That would then possibly raise current GDP of circa 9,000 tR to about 11,000 tR. 

Social Welfare Emphasis

The restructuring of the central budget is indicated by the large budgetary increase for socio-economic institutions and components. Government Ministries will receive 1,240 tR (a +29% growth from last year): of this the Ministry of Cooperatives, Labour and Welfare (MCLW) will receive 430 tR (+35%), Education 460 tR (+37%) and Health 140 tR (+11%). These three alone receive 83% of Ministries budget. The social, welfare and employment budget shares have risen significantly far more than science-tech, defense, industry etc. The significant rise in the share of the MCLW is probably related to the employment generation, poverty reduction and re-distribution programme (including resilient economy, inclusive employment and targeted cash transfers) which it is responsible for.

In current circumstances then, “investment” quality of extra expenditure is controversial – raising worries of inflation.

The “social welfare affairs” payments component, with 1,130 tR allocated (a 24% share of the central budget) is the highest share ever for this item (in 1395 it was 20%; 1390, 14%; 1385, 9%). The composition indicates, in order: 43% share for Government employees payments; 19% share military personnel payments; 14% war veterans and religious students; 8% share for vulnerable groups (i.e. SWO transfer recipients; disabled; female headed households; special diseases; addicts; general poor; etc); 7% for general public (i.e. pensioners, youngsters and children); and 7% for the rest (i.e. rural residents, writers, artists, special insurance requirements, etc). Of this current expenditure, payments to all government employees (civil; military; pensioners; veterans; etc) alone will be approximately 870 tR.

These expenditure items (on wages, salaries, insurance, pensions and human capital) come to circa 68% share of the current budget, well indicating the consumption based fiscal stimulus of Governments own expenditure. How sustainable this is another matter altogether: as the composition in payments indicate much inefficiency and non-sustainability - e.g. nearly 50% of the payments are towards pension and insurance funds related stabilization processes, rather than for direct low income groups stimulus; while rising government employees payments further stimulates social inequalities.  

Development Impact

The public entities budgetary package, especially, is a fiscal stimulus aiming to prompt the economic multiplier effect. Given the extent of government involvement and ownership of the economy (80% of GDP; 20% of direct employment), the impact of such a large fiscal stimulus on economy may support higher output growth over the short term. Also, the central Government budget restructuring indicates that two thirds of the budget will be for direct social-economic expenditures. However, only probably 50% of the latter will have good outreach and multiple effects on the real economy; while much of it all will go into price inflation, remain in the financial circulation or go into rentier type processes.

Given an overall 39% fiscal increase of 4,800 tR, the economic impact can (potentially) be significant: however, the full amount will efficiently be used only once the money transmission mechanism and instruments utilised for this purpose are appropriate and lead to a competitive economics based outcome (and are not absorbed through rent seeking and non-transparency). The extra expenditure should then prompt a rise in nominal national income – at least by about the same 39% budgetary increase, and possibly more due to a economic “multiplier” effect (and depending on to what extent of the 39% is quality “invested” and not just spent disparately).

Regretably current adverse expectations will hinder this: while the multiplier in Iran is estimated now to be generally only around 2; so any extra investment will generate twice its size in income; however other current expenditures on social welfare will also have some impact on demand and money circulation.

Further, given Iran’s industrial structure, which is historically dependent on intermediate goods and capital goods imports (possibly 70% of all imports), and both being limited by foreign exchange earnings, the trade off between capacity growth and capacity usage (the two crucial indicators) will become even more pronounced; unless either greater capital inflows take place, reserve reductions happen or, increased exports occur. All are unlikely as unfortunately foreign exchange generation by significant more non-oil exports or capital inflows or fund financing are presently difficult. An output capacity growth rate of at least 3% and a capacity utilisation rate of at least 75% are minimally required to resolve Iran’s current problems.

Generally, any excess saving over investment makes output decline (if the export response is not strong), unless public action is taken to fill the gap somehow. The Government could ensure more public works programmes to prompt money circulation and rising velocity: to prompt bottom-up demand and value added generation; to fill the saving-investment gap. The local economy velocity and new income circulation can compensate significantly for any new debt burden (bond sales by Government) required to pay for the budget package.

Given the above scenario, issues and assumptions, one can expect that the incremental 39% nominal fiscal effect in 1398 of an injection of new 4,800 tR into the economy may then lead to an extra rise in nominal value added income over the next couple of years or so of about 2,000 tR (once a 30% inflation discount is applied and given inefficiency issues). Given that current GDP stands at about 9,000 tR, one would then expect it to rise above 11,000 tR within two years. Possibly a secondary similar amount over the same period after two years. That is, perhaps a total of 4,000 tR in income gains from this specific 1398 fiscal stimulus package.

How much of this new income will adjust for inequality and actually trickle through or trickle down to ordinary people ? Given a high Gini coefficient of around .40 (officially, but unofficially estimated to be above .50) and which the new inflation will probably raise even further -  will mean that probably only half the real income rise will be distributed appropriately to the bottom 75% (the remainder will become concentrated in richer groups). This indicates that only half of the extra 2,000 tR income gain over the next year or so may possibly be distributed equivalently. That is, only about 1,000 tR will be divided between the majority of the 81 million population of Iran – or about 12 million Rials per capita – or 48 million R per household. This latter is about 40% of the current average yearly wage (of circa 120 million R) and may be considered as the incremental budgetary expenditure impact on real income (over an average one-to-two year period).

In all probability, then, if the 4,800 tR huge incremental (expansionary) injection reaches ordinary people by a factor of only one eight, 500 tR will be available to share between 20 million households. That is, 25 million R each household ; or a 20% nominal income gain on the current baseline. Although highly useful, it is still below next years expected inflation rate of 40%.

Iran needs to generate nearly four million new jobs. The point of all the above is that an additional 4,800 tR injection with 50% outreach and 1,000 tR direct investment along with subsequent minimum 2,000 tR yearly nominal GDP increase may possibly be generated. This is huge scale and highly ambitious. Such a scenario will help employment generation by creating about 2 million jobs (if the overhead cost of establishing one job is 1,000 million Rials). The real challenge would be to ensure more labour intensive processes so that the overhead cost of establishing one job would be much less – e.g. 500 million Rials. The latter would then ensure going towards 4 million jobs.

Once employment generation is sustained, then pressure on increasing vulnerability and income inequality may also be reduced.  

Multiplier Limitations and Development Challenges

Challenges to this way of perceiving the economic world are, of course, also real.

The Government cannot push through on its own: nor with monetary expenditure and extra fiscal stimulus alone. Much of this development impact will depend on the implementation capacity of the Government, its economic expenditure quality and timely disbursements – of much worry in the past. It will also be restricted by the strength of the forces opposing such a fiscal stimulus: international sanction’s regime; devaluation; local adverse expectations; inflationary dynamics; local institutional capacity to perform; rent seeking; and local productivity and financial gain opportunities. If the strength of these forces (as a whole) are significantly greater than the fiscal stimulus package, then the current low 0% GDP growth rate may become an economic trap difficult to break out of. It will lead to significantly more unemployment, add to the business crisis and raise vulnerability, poverty and inequality - consequences that would be very worrying.

The plan to finance over 1,000 tR through asset and bond sales will, in any case, result in subsequent further involvement of the Government in the money and capital markets, and the possible further crowding-out effects for private investment and initiative; of course, unless indirectly and strongly compensated by downstream public works schemes to prompt employment – demand – and subsequent crowding-in effects that also prompt private sector investment and initiative.

The budget’s development impact, however, will mainly be constrained by conventional expenditure channels that are inflationary, and working mechanisms that are inefficient (generating expectations not conducive to the Government’s plans). In general, there will be a low “multiplier effect” accordingly; and more leakage/inflation than value added or employment generation. The historical problem is that such incremental expenditures will be wasted, leaked, used up in current expenditure and go for inflationary activities due to an extensive top-down, “rent type” and “inequality” structures that is built to consume easy oil income. Expenditures also takes time (a year or so) to work through, mainly due to an untimely government financial disbursement system. Due to these constraints, probably only 30%-50% of fiscal injections and expenditure have useful, quick final development impact.

The Government also probably believes that in the historical “rent” environment, monetary injections are a necessity to just keep the basic financial system from functioning (without any institutional change). Given that no significant institutional change (or performance based change) is expected to take place, a weak multiplier effect is to be expected over the short term.

Unless transmission mechanisms and methods change, the budget will, probably, also prompt significant new distribution issues. It will not be able to reduce “rent structures” “rent-seeking” or “rent-protection-activity” – and, conversely, will prompt inequality to rise through the initial inflationary shifts of wealth towards the richer, and before any new productivity gains set in; and something the devaluation has already undertaken by making dollar holders very wealthy. Economic mechanisms have not, on their own, been able to resolve distribution problems either: so only slow improvements in both competitiveness and sustainable productive employment generation are to be expected. Given the existing income inequality, it is highly probable, then, that the aggregate real GDP growth noted above will not all trickle through to everyone (and equally): and will not be proper inclusive growth, unless specific Government measures are in place to ensure that this happens.  

Inflation, Deficit Financing and Money Expansion

In current circumstances then, “investment” quality of extra expenditure is controversial – raising worries of inflation. Given both fiscal scale increase and possibly conjoint rise in cost-prices of products, the inflationary effect in the coming year is expected to be at least a 20 percentage-point rise (bringing inflation close to 40%). How true these expectations are, one cannot say for sure. The Government believes, nevertheless, that it can manage inflation, perhaps as not all revenue generated from asset sales or taxation (that is expected to rise) will be re-injected into the economy; or the policy to strictly keep the Rial at an 80,000 R value (rather than allow it to further devalue) may be a dampener on inflation; while imports of cheap consumer products through barter may flow in; money supply may not be expanded significantly; and inflationary expectations may also change (if society “buy’s-in” to the effects of new budgetary policy).

Tax rises have also been mentioned; as have asset sales in the budget – as means to prompt extra expenditure. What other initiative may take place? Initiatives to reduce cost-based inflation by price freezes may possibly be forthcoming; but any cost-inflation reducing programme to be successful  has to be accompanied by funding (other than mere force) – through either increased forex income from abroad, or more fiscal saving. However, circumstances indicate funding constraints in the short term, and so we can expect further rises in inflation.

The funding gaps recorded in the document include: a 1,120 tR deficit in operational activities (a 45% rise from last year), indicating tax and tariff income is already in shortfall; a 860 tR surplus in assets (with a 88% growth indicating an expected higher oil revenue relative to Government investment expenditure plans); both indicating only a 260 tR total deficit. Good news – if happens as expected. However given asset sales probabilities, one can expect more pressure on tax increases and tax collection efforts on the horizon. The document remains probabilistic on the extent of the circa 2,000 tR deficit financing required, as it’s assumptions about revenues and sales are probabilistic. One can expect, possibly, a gap of above 1,000 tR required to finance just central budget expenditures of 4,700 tR – let alone the public entities funding gaps and requirements.

In all, given the constraints, non of the financial side methods will easily be possible. The expected fiscal deficit may probably be larger than 1,000 tR, of course, if the expenditure targets are to be kept to. And certainly, if real and financial asset sales face a problem: a large potential gap eventually requiring monetary expansion and an excess money supply growth through quantitative easing. To what extent though?

First of all, the new expansionary general budget will itself be potentially inflationary. Given the historical circa 25% annual growth rates in all the three dimensions of inflation, budgetary growth and money supply growth, and their correlation (and cointegration) a reading of the budget document suggests continuation along these same lines:  probably a large deficit involved that cannot easily be financed; money base expansion; etc (the same story).

If the main part of the deficit financing eventually falls back on money supply creation, it will prompt inflation. Given the circa current 1,900 tR base money volume in Iran, there is also additional reason to worry due to the near equivalence of the possible annual deficit and the monetary base level. The Central Bank of Iran (CBI) recently announced monetary expansion of circa 22% in the past year (a figure also in line with the long term average growth rate). Base money volume was circa 1,900 trillion Rials (growing at over 19%); total liquidity close to 16,000 trillion Rials (up by 22%); and total banking sector liabilities about 21,000 trillion Rials (of which around 50% are private sector deposits). Liquidity is, therefore, more than one and half times GDP.

These monetary aspects indicate both possibilities and real red lines for the 1398 Budget packages deficit financing channel. Unless wisely programmed and implemented, significant money (liquidity) expansion will probably happen by end of 1398: at a conservative 25% growth rate (on existing liquidity baseline of 16,000 tR) it would result in at least another 4,000 tR rise, while inflation levels of above 40% are then possible. This is a significant increase. Further, financial capital and debt burden will even more increasingly dominate (constrain) the workings of the real economy – especially with the high level of interest rates prevailing. Unless something serious is done to reduce adverse impact.

Heterodox Solutions

The above suggest that constraints will exist in financial and money markets, resulting in varying capability to mobilise appropriate funding for expenditure required to raise Iran’s capacity growth and capacity use. How can a budgetary (fiscal) approach ensure both? How can it ensure improved development finance dynamics - enabling new money to reach the periphery, new small business development? As stag-flation is a combined production-distribution problem, how can the budget alleviate root causes of this problem? Can Government facilitate fiscal policy conjoint with public investment and monetary policy to help resolve the stag-flation dynamics?

Given the financing gap problem, the alternative (heterodox) possibilities in the stagflationary climate of 1398 would, in principle, include deploying simultaneous fiscal restraint in current transactions, increased capital formation through public investment, intelligent manipulation of import quotas, and more export incentives to offset external shock. Through the following possibilities: i) an expansionary policy and increased public investment – which will speed up capacity growth and subsequent investment crowding-in from private sector, but at the cost of higher inflation; ii) more fiscal restraint in the required gap financing – which may actually permit faster capacity growth and reduced inflation, but with lower capacity utilization and employment (although such austerity is politically difficult); iii) or somehow more higher exports – which can help release forex but  again difficult; iv) more import quotas and controls to coordinate that both capacity growth and capacity utilisation rise in conjunction with other policies.

The extent which the 1398 Budgets financial programming has appropriately considered such structural macroeconomic relationships is unclear. But it seems to have adopted such a heterodox position.

The key to fiscal success, generally in such circumstances, would be in prompting the macro savings-investment differential gap (now estimated to be at leats at 1,000 tR), the huge quasi-money base (now circa 21,000 trillion rials), their conjunct debt generation issues, and the actual money circulation, to move away from the tendency for pure financial transactions, bank account holdings, asset speculation and asset intensive processes that they are currently trapped in. A move towards something smaller, networked, real, productive and more employment generating activities (e.g. micro and SME production) - that can actually realize local relative comparative advantage and utilize the existing potential capacity for domestic production growth and more employment.

Unlike orthodox programming and assessment of capacity growth prospects, that believe output is predetermined by supply sided capital accumulation, in such circumstances as Iran faces today policy cannot assume that private sector consumption and saving alone will (or could) appropriately adjust to make the national income and product balance out and assure full employment. That is, programming as if we are in an “equilibrium” environment to start with. There is a need, therefore, to introduce adjustment mechanisms such as short-run output changes that are prompted from fiscal stimulus, via which the various gaps can be resolved consistently with the current institutional structure. The 1398 Budget seems to have taken such a first step.

In stag-flation periods, inflation takes off even while output is well below capacity use as the inflation rate is usually coming from the side of costs (and business mark-up’s – as we have recently witnessed following devaluation) and are usually prompted by Government entities. Therefore, saving, investment, forex, credit and inflation restrictions on potential output capacity growth and capacity utilization rates are very real, and once devaluation and external shock happen, the affect on the real economy becomes more complex (as we witness).

A good performance based budget (fiscal) programme needs to factor in usually at least three capacity growth restrictions (i.e. savings, investment and forex) and two inflation processes (cost-push and demand pull) - and which all interact. The linkage between the domestic capacity of potential output growth and actual capacity utilisation (employment) in Iran has in the past been unavoidability linked to: i) capital goods and intermediate goods imports to support both investment and production; ii) local savings supply (and credit); and iii) foreign exchange availability. The recent sanctions have changed this structure and are forcing a restructuring towards domestic goods, more local supply of funds and monetary base expansion.

The solution would be to not only have more economic growth and per capita productivity (and through better monetary transmission paths and channels), but to have this growth rate and pattern in a manner that improves human capital, employment, diversification, technological improvement, increased alternative green livelihoods, and improvements in the resource base. These need innovation in financing towards more smaller, inclusive and labour intensive project financing outcomes that can ensure all together (in an integrated manner).

Such heterodox approaches also are preventative measures against significant growth rate in rentier capitalist processes that not only produce financial distortion and bubbles but also engender finance/banking monopolies and larger debt burdens that arise when excess deregulation takes place: all of which are increasingly causing problems and prompting both financial crises cycles and increase income inequality – along with possible risks in banking institutions possibly needing to be bailed out through devaluations, money supply easing, cash transfers and similar actions (all against the principle of economic prudence and discipline). 

If Iran is to ensure such a sustainable development economics outcome through implementation of the 1389 Budget mechanism, apart from the rise in scale by 4,800 tR, and not having to face a 4,000 tR liquidity expansion, it would also require at least a two pronged strategy that can programme for the above mentioned targets in an integrated manner, with own appropriate Standard Operating Procedures, to compensate for the financial adversity, as follows:

I) By promoting a general policy and a complementary programme approach that targets the local level, so as to shift production and money circulation to where the relative comparative advantage is (1); by supporting productive, entrepreneurial, creative, innovative, micro-small sized enterprises ; and doing it through a combined monetary-fiscal policy approach that backs targeted public investment in a) low overhead cost per employment generated, b) high value added per unit output, and c) labour intensive employment generating projects. This is a temporary, SMART type approach for starting up stagnated systems.

II) Through a restructured monetary policy that enables increased access to inclusive financial services, with more weight given to the financing of I above (e.g. 15% of all financing). Through strengthening the capacity of domestic financial institutions to encourage and expand access to inclusive banking, insurance and financial services (i.e. services for all) that ensure the appropriate investment projects and packages are financed – investment projects that can result in value added generation and trickle up growth (rather than trickle down) by generating money circulation and multiplier impact.

That is, a combined fiscal and monetary policy is required in Iran so as to achieve a joint objective – and with own (new) criteria and operating procedures. An appropriate combination of monetary policy and fiscal policy would both complement the new domestic oriented restructuring policy and also alleviate the current austerity process; at the same time prompting local effective demand to alleviate and mitigate the adverse effects. This is a new development oriented inclusive finance approach which has own criteria, systems, approaches, procedures and outcomes (2). It may be programmed for either a temporary period of time, or for the short-term, for medium term and/or as a long term architecture – as necessary.

The main lesson of all this is that complementary programmes, mechanisms, targeting, operating procedures and detail matter for the 1398 Budget fiscal programme to succeed. It is not just about spending. Meanwhile, commitments to experimentation, innovation, assessment and evaluation are continuously required to ensure that annual budgetary requirements are met and expenditure is results based and there is performance in achieving targets.


1 Remembering that where there is relative comparative advantage, the overhead costs for start ups can be lower.

2 The above concepts are also more fully developed in an article by this author entitled Central Banking and Inclusive Finance: Lessons from Global Experience.


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  June 2019
No. 91