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Iran's 'throw money' economic strategy failing

Among its many other problems, Iran's economy is suffering because of poor and brash decisions of the past and needs to get back to the basics.
A money changer displays U.S. and Iranian banknotes at the Grand Bazaar in central Tehran October 7, 2015. REUTERS/Raheb Homavandi/TIMA ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY. REUTERS IS UNABLE TO INDEPENDENTLY VERIFY THE AUTHENTICITY, CONTENT, LOCATION OR DATE OF THIS IMAGE. FOR EDITORIAL USE ONLY. NOT FOR SALE FOR MARKETING OR ADVERTISING CAMPAIGNS. NO THIRD PARTY SALES. NOT FOR USE BY REUTERS THIRD PARTY DISTRIBUTORS. THIS PICTURE IS DISTRIBUTED EXACTLY AS RECEIVED BY REUTERS, AS

Having access to working capital is considered the most basic requirement of manufacturers in Iran. Under normal circumstances, industry generally obtains liquidity from four main sources: financial institutions, the National Development Fund, the capital market and, ultimately, credit lines and foreign investment.

Accessing capital is becoming more vital, but also more difficult in the presence of barriers imposed by Washington's "maximum pressure" sanctions campaign on Iranian banks and companies. The Iranian government seems to be left with perhaps two options to sponsor domestic industries: the stock market and the banking system. But the Iranian equities market is not deeply developed or investor-friendly. As such, Iranian firms currently are largely reliant on domestic lenders to meet their day-to-day cash requirements. However, the failure of the Central Bank of Iran (CBI) to implement modern monetary policies in past years complicates the situation.

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