The government’s attempt to curb the inflation and create a sustained increase in the general price level have been successful, but they won’t bring about satisfactory results for households until the end of the year, according to the deputy governor of the Central Bank of Iran.
“Eeconomic conditions will improve in the following months,” said Akbar Komijani in the second meeting that was held in the central bank to examine the financing of projects across the country.
Inflation rate for the seventh month of the Iranian calendar, ending on October 22, dropped 1.5 percent to reach 19.1 from 20.6 in the previous month (Shahrivar, August 22-September 22), the Statistical Center of Iran reported last month.
The year-on-year inflation for this period stood at 14.2, without registering any changes compared to the same period last year.
Changes to Project Financing
The required finances for the projects will be mainly provided through the annual budget, said Komijani, adding that the rest will be financed using bank’s internal resources.
Top officials from the provinces of Qom, Kermanshah, North Khorasan, and Kordestan as well as representatives from agent banks and the CBI attended the meeting.
Pointing to the limitations of the banking system in granting loans, the deputy CBI governor said that the priority will be given to the projects that need smaller funding, and at the same time produce more profit.
The financing will also be expedited for projects that create more job opportunities, Komijani said.
Calling for proper management of available resources, Komijani advised the representatives of the agent banks to consider the availability of banking resources while deciding upon financing the projects, saying that “considering the rate of inflation, we need to create a favorable environment for the businessmen to invest.”
“By implementing policies to stabilize the market, the central bank can help bring about better economic conditions in the long run,” Komijani said.
As a result of the recent successful measures taken by the government, “it’s been a while that the currency market has been experiencing stability,” facing only slight fluctuations, Komijani said.
“The market is now sending positive signals for investment,” said the CBI official. Investment rate in Iran grew from -23.8 to -6.9 in the last year, and it increased to 5.7 percent in the first half of the current Iranian year (March 21-September 22), he added.
This is an indication of the fact that economic policies are successfully being implemented in a bid to exit recession without resulting in a rise in the inflation rate, with the focus being on the capabilities of the national economy, Komijani stated.
After Komijani gave an overview of the current economic conditions, banking officials and provincial governors also presented their reports.
The general manager for credit and investment affairs of the Central Bank asked the provincial governors to exclude the projects that lack economic and technical justifications from the list of proposed projects to banks, saying that “the interest rate on loans provided by the banking system for construction projects will be 22 percent in exchange contracts and at least 21 percent in partnership contracts.”
Elsewhere, the provincial governors or their representatives complained about the problems facing the projects, including limited human resources, with representatives of the agent banks.
Underlining the importance of observing the conventional interest rates by the banks, the provincial officials called for the involvement of banking system in financing the provincial projects.
At the end of the meeting, working groups were assigned with the task of examining these problems in the presence of provincial authorities as well as banks’ representatives.
