Mohammad Reza Farzin, the governor of the Central Bank of Iran, said the government has access to $6.7 billion from its resources with the International Monetary Fund.
In a meeting with IMF officials in Washington DC last week, Farzin noted that the funds, equivalent to 4.8 billion SDRs (Special Drawing Rights), can be utilized promptly and with minimal bureaucratic procedures to help meet economic needs, the CBI website quoted him as saying.
“The IMF, during global economic recessions in the past provided members liquidity measures in the framework of SDRs. This mechanism enables countries to access funds to alleviate recessionary circumstances.”
Speaking on the sidelines of his meetings, Farzin said Iran had 1.4 billion SDR in its account before 2021. “Later that year, as part of an IMF program to counter the economic downturn caused by Covid, an additional 3.4 billion SDR was added to Iran's account. Now we have 4.8 billion SDRs ($6.7 billion).”
Availability of the funds is expected to aid Tehran’s efforts to stabilize the economy and mitigate the impact of economic challenges, including the negative effects of US sanctions and the brutal pandemic. With early access to the IMF resources, the government can swiftly allocate funds to struggling sectors like healthcare, infrastructure development, and SMEs.
The funds should also play a role in enhancing Iran's economic resilience and sustainable growth. By channeling money into the economy, the government aims to stimulate investment, create jobs, and address the immediate needs of manufactures and businesses hurt by years of economic decline, economists shave said.
In another meeting with Jihad Azour, IMF director for the Middle East and Central Asia Department, the CBI boss nor highlighted the central bank's focus on implementing stabilization policies. He said that stability in the areas of money, currency and financial policies is a core pillar of CBI strategy.
Farzin noted that Iran is entitled to utilize its own resources within the SDR framework for investment needs. "Iran seeks to do its fair share in contributing to economic stability in the region, particularly in the Middle East, by supporting international banking, strengthening programs and economic relations with neighbors," Farzin said.
Access to Data
In a meeting with the IMF chief Kristalina Georgieva, Farzin noted the importance of increasing interaction with the international lender while at the same time “safeguarding national interest, particularly in the face of unlawful US sanctions.”
The meeting was the first of its kind between the CBI and the IMF under Farzin’s watch. Georgieva said the meeting marks the resumption of constructive contact between the two sides.
Farzin expressed satisfaction with strengthening of ties with the IMF after a period of interruption and stated that after internal coordination a report on Iran’s economic situation and its monetary and fiscal policies would be submitted to the IMF.
He added that economic data would be regularly published by the CBI and the Statistical Center of Iran to complement the information required for Article IV consultation. “However, due to the unilateral and unlawful US sanctions some economic information is classified as confidential and inaccessible.”
Farzin recalled Iran's request for financial assistance during the pandemic from the IMF, which was raised by the previous government in Tehran. “Although the request was denied by the IMF, despite being available to all other countries, Iran managed to cope with the Covid crisis via external interaction and domestic vaccine production, leading to the successful implementation of a nationwide vaccination campaign.”
Projections on Iran Economy
He expressed the hope that with the continuation of policy reforms, economic stability in Iran could be achieved, inflation would be curbed and 30% growth is projected to be realized in the current fiscal year that started in March.
The IMF has updated its projections about Iran’s economy in its new World Economic Outlook report. It forecast Iran’s real GDP growth to hover around 2% in 2023 and 2024, down from 2.5% last year.
The report also expects inflation to decrease from 49% in 2022 to 42.5% this year and further to 30% in 2024. The current account balance is forecast to drop from 4.7% of GDP in 2022 to 1.8% this year and rise slightly to 1.9% next year.
Unemployment is forecast to rise from 9.5% in 2022 to 9.8% in 2023 and 10.1% in 2024.
The international lender expects global growth to bottom out at 2.8% this year before rising modestly to 3% in 2024.
“Global inflation will decrease, although more slowly than initially anticipated, from 8.7% in 2022 to 7% this year and 4.9% in 2024,” the report said.
The IMF report came after the World Bank said it expected Iran’s economy’s growth to decelerate amid intensifying economic sanctions and decline in oil prices.
