Persian Empire 1845

Chapter 612 New Proposal
Prime Minister Musharraf was currently in his office, feeling frustrated. He had finally managed to quell the internal problems, but now there was trouble at the border. And judging from the situation, the influx of migrants was only going to grow larger.

Iran's industry is still recovering, and the demand for labor is not as high as before. He also cannot close the borders, and the famine in Anatolia seems to be worsening; it's unclear what awaits him next.

"Prime Minister, this is a report from Muscat. They are planning to build a port in the Dubai area. The local terrain is suitable for development and can be turned into a transshipment port."

The secretary reported to the prime minister, but Musharraf was thinking about other things. Besides the issue of displaced people, other domestic problems also required his attention.

It's no secret that the Chancellor of the Exchequer has caused a ruckus at both the Army and Navy ministries, which has directly sparked even fiercer debates in Parliament. The question of whether to expand the military and whether to increase military spending has once again come to the fore.

Furthermore, the Treasury's move to increase tax rates on certain goods has also encountered resistance. The National Liberal Party argued that it should not increase the financial burden on the public, while the Homeland Party disagreed, arguing that it would reduce their income.

Parliament ultimately submitted a budget proposal that cut 470 million riyals, stating that the government needed to reduce subsidies to state-owned enterprises to maintain fiscal balance.

At the same time, the National Liberal Party also submitted a proposal for bank liberalization. Some state-owned factories and mines suffered heavy losses due to mismanagement and inefficiency, becoming a heavy burden on the national treasury; private capital was largely idle due to limited investment channels, or flowed overseas; and the existing national bank's credit tightening led to industrial and commercial enterprises having no way to obtain financing, resulting in rising unemployment.

Only through bold reforms, the introduction of competition, and the stimulation of private sector vitality can we turn crisis into opportunity. Their proposal would allow qualified private capital to legally establish private banks and financial institutions, with all types of banks competing freely under equal rules. This would allow them to attract depositors and investors by providing better services and lower interest rates, thereby improving financial efficiency.

The government establishes strict entry standards and risk management systems to ensure the overall stability of the financial system and prevent fraud and excessive speculation. It can also levy financial transaction taxes to fill fiscal gaps.

According to their calculations, this will free up at least 100 million riyals for investment, and will also revitalize the economies of other places, so the benefits outweigh the drawbacks.

However, this is opposed by most government officials, as banks are all about money, not people. Countries like Britain are controlled by finance; for the sake of money, they have lost all virtues. If left unchecked, they will eventually backfire.

But the Chancellor of the Exchequer recently stated that he would support the bill and said that the banking license was ready. It seems they're desperate for money.

"He really said he would support the banking liberalization proposal? And he even has the licenses ready?"

“It’s absolutely true, Prime Minister.” The secretary looked up. “People in the Ministry of Finance said privately that the Minister secretly met with several businessmen last week and heard that those businessmen promised to inject 2000 million riyals as soon as the bill passes, without requiring government guarantees.”

2000 million, that's quite generous. Musharraf seems to have already foreseen the consequences of things spiraling out of control. He's seen the powerful economies of the West, especially their banks. A few bankers can control a country's money, which doesn't fit his understanding. The Shah is the center of the country; wouldn't doing this put the bankers above the Shah?

He himself had served as Chancellor of the Exchequer and knew how difficult it was to run a budget deficit. But such thinking needed to be considered carefully, especially at this time.

"Prime Minister, the Chancellor of the Exchequer has arrived."

"Let him in!" Shahryari walked into the prime minister's office, holding the already agreed-upon documents in his hand.

"Prime Minister, this is the budget cut plan designated by the Ministry of Finance. We will sell our shares in a textile factory in Isfahan, and seven other factories in Yerevan, Baku, and other cities will also be auctioned off. In total, we can save 450 million riyals."

Musharraf glanced at the document briefly and then put it aside.

"Shahryari, when did you join the Ministry of Finance?"

"In 1852, it has been 19 years."

It's been so long already. Well, if it hadn't been so long, Musharraf wouldn't have imagined that he would become prime minister.

"Yes, it's been so many years. You've been in charge of the Ministry of Finance for several years now, so why are you causing such a big fuss in the Army and Navy departments?"

Shahryarri felt a pang of grievance; if he could, he wouldn't want to do this either. But he had no choice.

“Prime Minister, you know how dire the country’s finances are right now,” Shahryari said, pulling out the national financial statements. “Take a look. Revenue may see a significant increase in the next few years, but the current fiscal deficit must be addressed. The army is still pressing for funds to purchase new artillery, and the maintenance costs for those cruisers in the navy are like an inexhaustible hole. If we don’t cut spending and find new sources of revenue, the national treasury will be empty by the end of the year.”

Musharraf picked up the document and flipped through a couple of pages, but his brow remained furrowed: "But what about the banking liberalization proposal? Are you really going to give licenses to those businessmen? 2000 million riyals is a lot of money, but have you forgotten how the British East India Company controlled the Indian economy through banks?"

“Prime Minister, I haven’t forgotten.” Shahryarri suddenly raised his voice, then quickly lowered it again, “But now is not the time to talk about the ‘long term’! The 4.5 million from the sale of the factory will at most last until next spring. Displaced people’s resettlement and border defense both cost money. There are at least 500 million rials of idle money hidden in the private sector, either buried underground or flowing into the stock exchange. Bank liberalization is the only way to bring that money back!”

He stepped forward, his voice urgent: "I've reached an agreement with those businessmen. For the first five years, the financial transaction tax will be levied at 3%, which alone will fill a 150 million riyal fiscal gap annually. Moreover, there are strict conditions for issuing licenses. Licenses with registered capital below 1000 million riyals will not be approved, nor will those with unclear shareholder backgrounds. They also have to pay a 25% risk reserve. I will never let them run rampant like those British bankers!"

Even the Prime Minister was tempted; the benefits were indeed quite appealing. If bank liberalization could help fill the fiscal gap, that would be acceptable. The only question is whether their descendants would criticize them for being short-sighted.

“If the Prime Minister is not at ease, I have another proposal.” Shahryari pulled another document from his briefcase. “The license includes a clause that if a private bank’s bad debt ratio exceeds 8%, the government has the right to temporarily take over. Moreover, for the first three years, every large loan must be reported to the central bank. We will not allow them to pull off the tricks of British banks that allow them to get something for nothing.”

Shahryari has said enough; he hopes the prime minister will approve it immediately, as time is of the essence.

(End of this chapter)