Forex Fund shifting to Euro
8/25/02 Iran Financial NewsMore than half of the country's assets in the Forex Reserve Fund have been converted to euro, a member of the Parliament Development Commission, Mohammad Abasspour announced.
He noted that higher parity rate of euro against the US dollar will give the Asian countries, particularly oil exporters, a chance to usher in a new chapter in ties with European Union's member countries.
He said that the United States dominates other countries through its currency, noting that given the superiority of the dollar against other hard currencies, the US monopolizes global trade.
The lawmaker expressed hope that the competition between euro and dollar would eliminate the monopoly in global trade.
Controversy over budget deficit
Minister of Economic Affairs and Finance, Tahmasb Mazaheri and Head of Central Bank of Iran (CBI), Mohsen Nourbakhsh attended a session with members of the Parliament's Planning, Budget and Auditing Commission and exchanged views on how to offset the budget deficit.Since no agreement on an exact figure could be reached, it was decided that the Ministry of Economic Affairs and Finance and the Management and Planning Organization (MPO) will jointly estimate the budget deficit and report the findings to the Parliamentary Commission.
The report will also propose ways to offset the deficit.
Meanwhile, an MP from Mashhad, Gholam Hussein Takafoli stated that the budget deficit is estimated at Rls20 trillion ($2.5 billion) in the current fiscal year. He added that the Government is striving to prevent the negative consequences of this on the national economy.
Mr. Takafoli said that the Cabinet is expected to submit a plan to the Parliament on ways to overcome the deficiency.
An MP from Naeen, Isfahan province, Abolfazl Razavi said that the Government might be forced to reduce funds for development projects and its current expenditures. This will delay the process of national development.
Deputy Economic Affairs and Finance Minister, Mehdi Karbassian has revealed that state revenues since the beginning of the current Iranian year (started 21 March 2002) has been 26% below projections.
No reduction in bond interest rates
The Money and Credit Council (MCC) withdrew its previous proposal to reduce the interest rate of participation bonds by 2%.Based on the Central Bank of Iran's (CBI) report regarding the negative aspects of a 2% reduction in the interest rates of bonds, MCC members decided against such decrease.
Earlier, MCC had approved a 2% decrease in the interest rates of bonds; however this rate did not last longer than 2 months. Only the participation bonds issued by the Ministry of Energy bore that rate.
Based on this report, members of the MCC approved an increase in the interest rate of participation bonds of up to 17% and it is expected that before the issuance of any participation bonds by the Government, governmental companies or the CBI, the MCC will be reviewing the interest rates allocated to them.
The participation bonds issued by the CBI will also bear a 17% interest rate.
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