Domestic Economy

First VP Backs Gov’t Economic Performance

First VP Backs Gov’t  Economic Performance First VP Backs Gov’t  Economic Performance

First Vice President Es’haq Jahangiri has backed the government’s overall performance in dealing with economic woes in the past year, saying that economic prosperity will be achieved even if oil prices plunge as low as $40 a barrel.

The top official said during a visit to Hamedan on Tuesday that the Rouhani administration is determined to take necessary steps to ensure that the country is run in the best way possible regardless of the oil price fluctuations and western sanctions.

He said he believes the recent decline in oil prices in the international markets is a “serious and big conspiracy” that is widely believed to be targeting either Iran or Russia,” noting that such a drastic fall in prices cannot be attributed to an economic cause.

Brent crude, a benchmark for oil, plunged to nearly $67 on Wednesday, after peaking in June at about $115 a barrel.

He further said that the government is ready to undertake any necessary measure to make sure that the country is pulled out of recession.

“The budget deficit resulting from the oil price fall is likely to be tackled should investment companies bring their assets into the market and properly play their role in the economy,” Jahangiri said.

He said that recession and inflation, the country’s two biggest economic challenges, have been brought under control with the policies adopted by the Rouhani government, he underlined.

Financial discipline is seen by the government as crucial in dealing with inflation and recession, he said, emphasizing that the government is committed not to misuse the CBI’s resources which basically belong to the public. “This has kept the country’s monetary base from increasing.”

On December 8, while submitting to the parliament his proposed budget bill for the next fiscal year (starting March 21), President Hassan Rouhani said, “Once again, I explicitly announce that the administration considers curbing inflation as its main goal, a goal that can be achieved by controlling and reducing monetary base and liquidity.”

Rouhani said his government will be trying to maintain the current declining trend of monetary base and liquidity in the country in the coming years in a bid to rein in the inflation.

“The monetary base in the seven months ending October 21 grew 18.1%, while the average monetary base growth in the past 23 years stood higher at 21.1%,” Rouhani said, implying that his administration’s financial discipline has worked since he took office in the summer of 2013.

Monetary base in a country is defined as the port of the commercial bank’s reserves that are maintained in accounts with their central bank plus the total currency circulating in the hands of the public.            

  Currency Manipulation Dismissed

Jahangiri dismissed as “unrealistic” the speculation that the government is manipulating the country’s foreign currency reserves in an attempt to generate extra revenues for itself.

“Stability in the currency market is the government’s greatest achievement,” he said.

The rial rate recently deprecated against the dollar – to as low as about 35,000 – in the free market. The currency responded in part to the oil price decline as well as the extension of nuclear talks between Iran and the six world powers (P5+1). Many Iranians expected the talks to lead to a permanent deal rather than an extension.

“During the previous administration’s term, $22 billion of the country’s foreign currency reserves vanished,” jahangiri said.  The money, he said, “was sold in Dubai and Istanbul under the pretext of regulating the currency market.”