After an almost 45-day hiatus the government said it will resume bond sale this week.
According to a notice on the Central Bank of Iran website, bonds worth 100 trillion rials ($370 million) will be offered at the 19th auction on Tuesday.
On behalf of the Economy Ministry, the CBI is in charge of selling bonds in the interbank market plus retail and institutional buyers.
The CBI has invited banks, investment funds, insurance companies and other financial institutions to partake in the auction.
The norm is that investors must put in bids for a minimum of 500 bonds each at par value of 1,000 rials at the interbank auction platform managed by the CBI as well as the trade platform of Tehran Securities Exchange Technology Management Company.
Opening a primary interbank market for bond auctions is a CBI initiative that was launched in May 2020 to help the government raise funds for budgetary needs as it struggles with a deepening revenue crisis due to the US sanctions on oil exports – the lifeline of the economy.
The government generated 440 trillion rials ($1.6 billion) in bond sale from May to September. The last auction was held on Sep.21.
Data show stock market investors, particularly investment funds, have made a bigger contribution to the bond market that has often seen volatility at irregular intervals.
Out of the abovementioned amount, 295 trillion rials ($1b) in debt was bought by retail and institutional investors in the share market and the balance by banks and credit institutions.
Apart from selling debt, the government generated 810 trillion rials ($3b) from selling treasury bills in the present fiscal year that started in March.
EcoIran web TV reported that the government has sought permission from the High Council of Economic Coordination to issue new bonds. The council is an ad hoc economic decision- making body comprising heads of the three branches of power.
It said the council has given the go-head to the Raisi administration to sell additional bonds worth 500 trillion rials ($1.8b) by the end of the calendar year.
Economists say funding budget deficits via the bond market is a safer option than the government borrowing from the CBI, which in the past led to the monumental growth in money supply chronic inflation.
As per CBI estimates, by selling 400 trillion rials ($1.48b) in bonds, the inflation rate will be cut 11 percentage points.
Last year the government held 42 bond auctions that continued until the end of the fiscal year in March generating 1,257.4 trillion rials ($4.6b).
