Investors showed no inclination Tuesday to buy government bonds for the third straight week during the weekly auction held by the Central Bank of Iran.
No bank or credit institution took part in the auction while retail and institutional investors in the stock market also stayed away.
Capital market investors bought barely 100 billion rials ($363,000) out of the total of 56 trillion rials ($203 million) debt on, according to data seen on the CBI website.
The government has generated a meager 1.6 trillion rials ($5.8m) from bonds in the past three auctions, far behind the anticipated target. According to the Persian-language economic newspaper Donya-e-Eqtesad, the treasury was supposed sell 80 trillion rials ($290m) in bonds per week in the past six weeks.
Bond sale is part of the government policy to raise funds for its deficit spending as it struggles with bigger deficits due to the US economic sanctions.
The CBI on behalf of the government(s) has held 30 bond auctions since May 2021 and generated 660 trillion rials ($2.4 billion) to fund the budget deficits.
Investors’ refusal to buy bonds is spurring concern about the likelihood of the government to again resort to the CBI for money. Senior economic officials claim that they have so far avoided borrowing from the CBI.
Bond sale has reportedly helped cover the budget deficit to a considerable degree and helped avoid borrowing from the CBI that in the past fueled inflation by increasing the monetary base.
The Economy Ministry earlier said that the bond income is used entirely to reimburse the principal and interest of matured bonds issued in the past.
In a press release posted on its new website, the ministry said that the government has paid 528.16 trillion rials ($1.9b) and 275.95 trillion rials ($1b) respectively to settle principal and interest on debt sold in the past. That was higher than the total bonds sold in the present fiscal year that ends in March.
