Tehran, Oct 28, IRNA -- Governor of Central Bank of Iran (CBI) Mohsen Nourbakhsh said here Monday that preliminary data indicate a 6.6 percent economic growth rate in the current Iranian year (started March 21).

He added that the agricultural sector witnessed a growth of 6.1 percent, industries and mines 11.2 percent while the growth in the services sector stood at 5.1 percent in the period.

Speaking at the monthly meeting of the CBI, Nourbakhsh dwelt on the current economic developments in the world.

He further underscored the need for reform of domestic economic structures adding, "By providing financing alternatives, the government will ensure that the economy will have solid growth prospects."

He added that oil and financial market developments and competition in the exports arena are all factors which influence Iran's economy.

Nourbakhsh went on to discuss the prospects for fiscal and monetary policies and said, "The economic growth toped 4.8 percent last year."

Given the economy's stable condition, government commitments in implementing the right policies and enforcing fiscal discipline have all contributed to creation of a conducive atmosphere for implementing monetary policies, Nourbakhsh remarked.

He referred to the 20 percent growth rate of imported goods and services last year adding, "The balance of trade surplus stood at US dlrs 5.6 billion and the net capital account at US dlrs 1.1 billion."

He added that reduction in deposit for opening letters of credit (L/Cs) and lowering rate for banking deposits are among the steps taken by the CBI to boost real economic growth.

The lowering the deposit rates from 21 percent to 16 percent coupled with additional effect of the liquidity coefficient accelerator have lead to ample capacity for banks for money generation and hence providing adequate liquidity sources for the real economy, the CBI head underlined.

He said that controlling the growth of liquidity has been successful year, he highlighted the positive ramification of issuing participation bonds to rein in the adverse effect of liquidity growth.

"Over 10,000 billion worth of these bonds were issued by the CBI last year," he pointed out.

Among aims of bonds offering were to drum-up the resources needed for private and public sectors, Nourbakhsh said, adding that the profit rate of the bonds which is geared towards providing adequate funds for the private sector is based on the capital market mechanism and in case of the public sector, the rate is based on government policies.

The CBI governor expressed hope the continuation of reform policies, including implementing a uniform foreign exchange rate and eliminating the non-tariff barriers will lead to a prosperous economy.

On sectoral growth, he said the industrial output saw an 11 percent growth in the first quarter of the year, followed by mining with 11.8 percent, and steel and cement production by 9.3 percent and 11.9 percent respectively in the same period.

He said that the growth in steel and cement output reflects a vibrant construction and industrial sector activity which contradicts claims by some experts on a recession gripping the economy.

He also chided developers for constructing housing with prices out of reach of people's purchasing power, adding those cluster builders who cannot unload their buildings should not expect assistance from the banking system.

Nourbakhsh said establishing the foreign exchange surplus fund was a positive step for channeling funds to the private and public sectors.

He added that the allocation of employment funds to the tune of rls 4,500 billion two years ago was raised by 2.5 times in the current year.

Earlier, Nourbakhsh said in September that the CBI's liabilities do not exceed dlrs 21 billion.

Nourbakhsh, in an interview with IRNA, ruled out the claim that the bank's debts exceeded dlrs 80 billion.

The CBI chief was referring to the claim of former vice president Mohammad Hashemi in an interview with Tuesday edition of a morning daily that during President Mohammad Khatami's tenure dlrs 80 billion debt has been created for the government.

Hashemi had claimed that the commitments had been caused per the gas and oil protocols as well as certain other contracts such as buy- back, advance-sale, and usance.

Nourbakhsh said Hashemi had in fact been referring to the Oil Ministry's commitments. He said the liabilities had nothing to do with those of the CBI either during ex-president Akbar Hashemi Rafsanjani's tenure or the budget law.

He asserted that what related to the CBI commitments do not exceed dlrs 21 billion.

On a closely related factor of poverty an unemployment the economy has been as vibrant as was evident in statements by Director of Management and Planning Organization (MPO) for Social Affairs Majid Yarmand said here earlier in the year that 15 percent of Iran's population live below the poverty line.

He told IRNA that based on figures each urban household which earns less than rls 710,000 monthly and rural households earning less than rls 480,000 monthly is considered to live below the poverty line.

He said income distribution although has improved since the victory of Islamic Revolution in 1979 'has not changed markedly during the period'.

He said that the figures released by the Iran Statistical Center (ISC) indicates that in the Iranian year of 1378 (March 1999-2000), the bottom 10 percent of the population earned two percent of the national income 'while, the top 10 percent earned about 30 percent of the income'.

This means that the income gap between the top and the bottom 10 percent is 15-fold, which is similar to the rural areas, he said.

The pivotal policies in poverty alleviation should be creation of equal opportunities and empowering the poor through training and employment creation programs, Yarmand said. The number of jobless people in Iran have been estimated at 3.2 million.

... Payvand News - 10/29/02 ... --