Central Bank of Iran Defends Gov't Economic Legacy

Financial Tribune – The Central Bank of Iran's governor mounted a strong defense of the four-year performance of his bank as an extension of the economic policies of President Hassan Rouhani who seeks reelection on May 19.

"The [current] government began its work at a time when the foreign exchange market was extremely volatile and various sectors of the economy did not have any stability," Valiollah Seif also said during a press conference on Tuesday, IBENA reported.

He welcomed the press gathering, which was also attended by CBI deputy for supervisory affairs, Farshad Heydari, and deputy for economic affairs, Peyman Qorbani, as an opportunity to underscore the fact that the economy had become much more predictable to the benefit of investors.

Seif referred to the fiscal March 2012-13 when the administration took office, after the Iranian rial had lost around 70% of its value, prompting the central bank to focus on the currency market.

The market remained relatively stable until the final months of 2016, which saw the rial weaken to 41,500 per US dollar. It has since strengthened to 37,500 and officials have repeatedly assured that no sudden hikes are to be expected. Seif also referred to CBI’s attention toward financial discipline, the lack of which had plagued the eight-year presidency of Mahmoud Ahmadinejad, contracting the economy by 6.8% at the height of international sanctions in 2012.

 “GDP growth reached 11.6% during the first nine months of the previous fiscal year that ended on March 20,” he added.

The fact that a strong rise in oil exports, following the implementation of the nuclear accord and easing of sanctions, is responsible for a significant portion of the growth has garnered criticism over the country’s oil dependency.

 “This is natural in economic growth,” he said, pointing out that non-oil growth was also positive during the first three quarters of last year.

The role of banking system in energizing the stagnating Iranian businesses was also in the spotlight, with Seif pointing out that 25,000 small- and medium-sized enterprises received 175 trillion rials ($4.6 billion) worth of loans “which not only safeguarded jobs, but also generated employment in some cases”.

As he had announced earlier, the top banking official reiterated that the banking system allocated 5.48 quadrillion rials ($146.1 billion) during the previous fiscal year, which registers a 32% growth. Of this amount, 64% were designated as working capital.