Central Bank Allays Inflationary Concerns

A notable decline in liquidity growth is a reassuring sign that Iran will be able to anchor its inflation in the single digits, the governor of the Central Bank of Iran said.

Valiollah Seif took to the popular social media app Telegram to publish a review of Iran's economic achievements during the previous fiscal year and respond to a number of media reports that viewed the latest World Economic Outlook report on Iran by the International Monetary Fund in a negative light.

Recounting a number of achievements registered last year, namely stability in the foreign currency market, a single-digit rate of inflation after nearly three decades and a double-digit growth figure, Seif said the latest data on the growth of liquidity and the loan portfolio of banks are complementing those feats.

"According to the latest data, liquidity registered a growth of 23.2% during the previous fiscal year (ended March 20. 2017) which, considering its meaningful decrease compared with the previous years (that posted a 30% increase) and its lower growth pace compared with the average figure in bygone years, offers better reassurance about controlling the inflation rate and maintaining this achievement," he said.

According to the CBI governor, the new data paint a brighter future for the Iranian economy in the eyes of international institutions and makes the country more attractive to foreign investors.

In its recent report, IMF had predicted Iran's inflation rate to hit double digits in 2017 and 2018, to which the CBI on Saturday pointed out that the report was based on data collected up to December 14, 2016, and newer data would change IMF projections.

CBI further said "a good level of economic growth would result in tandem with the single-digit inflation" during the current fiscal year that began on March 21.

Seif noted that coupled with the decline in liquidity growth, the volume of bank loans during the previous fiscal year rose to 5,484 trillion rials ($146.2 billion) from the 4,173 trillion rials ($112 billion) of the previous year, which registered an increase of 31.4%.

"It is evident that even with the existence of credit crunch and structural problems in the banking system, this amount of credit allocation shows the high commitment of banks to finance various economic endeavors," he wrote.

Seif said these positive developments convey the hopeful message that "the economy has made a successful recovery" and because these achievements are "non-inflationary", the economy will experience a burst of dynamism and vigor.