What are the pros and cons of increasing loan grants in the absence of a budget? economical answer
Earth News / Mazhar Muhammad Salih, the economic advisor to the Prime Minister, explained today, Tuesday, the pros and cons of increasing loan grants in light of the current surplus and the lack of a budget. Saleh said in a statement to Earth News,
"Finance as an economic phenomenon represents a decision that precedes the production of development itself, according to the contexts of the income cycle in the national economy, and
the importance of the impact of individual loans in financing economic activity depends on the destination of the debt or the loan itself." He added,
“In advanced industrial economies, spending debt or loan on consumer activity is an income-generating force through the spending multiplier or effective demand, through the generation of demand and derivative demand chains that lead to the activation of production within the economic community itself and the movement of idle productive energies, which contributes to In raising the rates of economic growth and raising the levels of employment, as well as the increasing demand for investments as well, they are called (investment accelerators). And Saleh continued,
“In our developing countries, the multiplier of spending or demand resulting from the disbursement of loan or financing amounts, if they are spent on consumer goods, especially those imported from them or produced outside the national economy, will increase demand in the foreign economy and cause double growth in foreign economies exporting consumer goods. to our country.” And the Prime Minister’s advisor added,
“However, if the loans are spent to finance productive activities within the national economy, it will certainly generate a demand for production factors and encourage national investment, especially if individual spending is directed towards the right productive investments, and it will greatly increase the chances of growth and overall economic prosperity.”.