TEHRAN, Oct. 14 (MNA) – The Central Bank of Iran will focus on controlling liquidity and bringing down inflation as President Hassan Rouhani has agreed to separate monetary and fiscal policies, giving the central bank more independence, the Central Bank Governor, Valiollah Seif, has said.

Seif said President Hassan Rouhani inherited an economy in recession as international sanctions against the country weakened its currency and accelerated inflation to about 40 percent in September, according to Bloomberg.
 
“Under the previous administration, the allocation of credit to many sectors was not based on the analysis of experts,” Seif said on Friday in Washington, where he’s attending the annual meetings of the International Monetary Fund and the World Bank. “There was a housing project for the poor, and a lot of resources were allocated to that, about 40 percent of the liquidity volume.”
 
Liquidity in Iran has reached 500 trillion rials (about $201 billion based on the USD official exchange rate of 24,800 rials), Iranian Finance and Economic Affairs Minister Ali Tayyebnia said last week.
 
He also said that the inflation rate for the 12-month period ended the sixth calendar month of Shahrivar (September 22) hit 40 percent.
 
The Central Bank of Iran has reported that liquidity has grown over five folds since seven years ago.
 
The Iranian central bank said in July it had more than $100 billion in reserves. Seif declined to disclose the value of the bank’s holdings.
 
The rial lost more than half its dollar value in the 12 months before Rouhani’s election in June, though it has since rebounded about 20 percent. “The foreign-exchange market is relatively stable,” Seif said.
 
The central bank’s main priority is to reduce inflation and money supply, even as the economy is struggling with a recession, Seif said. “We are now facing a stagflation,” he said. “Expansionary monetary and fiscal policies will not help the growth.”
 
To ease the effect of tighter monetary policy on growth prospects, the central bank is looking “to allocating resources to productive activities” and working to improve the business environment, he said.
 
The central bank estimates that Iran’s economic growth will be flat in the Iranian year that ends in March, compared with a contraction of 5.4 percent in the previous 12 months, he said. The economy may grow 3 percent in the year starting March 2014, he said.

MNA

END
 

News Code 100080

Your Comment

You are replying to: .
  • 3 + 8 =