Economy, Business And Markets

Central Bank Official Backs Gov’t Economic Policies

Central Bank Official Backs Gov’t Economic Policies
Central Bank Official Backs Gov’t Economic Policies

Money supply growth slowed down to 20-22 percent from 31 percent during the current administration, Peyman Ghorbani, vice governor of the Central Bank of Iran, said on Friday. Further defending the administration’s policies, he said Iran’s economic recovery is in part due to the guidance of money towards the manufacturing sector by the central bank.

The government succeeded in lowering inflation from a record high of 40 percent in October 2013 to 15 percent at the end of last year. Now the administration is revising its financial and monetary policies and making structural reforms to help bring inflation down to a single digit.

Regulatory reforms should focus on foreign exchange policy, supervision over money market, the government’s debt to banks and reviving banks’ non-performing assets, Banker news website reported.

“Although Iran was suffering from a double whammy of inflation and recession, and any move to solve one would have adverse effects on the other, the government successfully curbed inflation while reaching an economic growth of three percent within two years of starting its work,” Ghorbani said on national television.

Fiscal and monetary discipline by the government as well as cutting reliance on oil revenues and increasing tax revenues were pivotal in curbing inflation. Ghorbani pointed to the implementation of the second phase of Subsidy Reform Plan and global oil-price crash as main economic shocks that Iran had to manage last year.

“The government has also devised comprehensive plans to reform the foreign exchange rate regime and implement new banking and monetary policies at the appropriate time,” said the vice governor, rejecting claims that the government aims to unify the exchange regime after the nuclear is finalized at the end of June. Iran is negotiating with the six world powers over a final deal that would lead to the lifting of economic sanctions in exchange for assurance on Iran’s nuclear energy program.