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Iran foreign debt put at dlrs 23.4 billion

Tehran, March 2, IRNA -- Deputy Governor of Central Bank of Iran (CBI) for Economic Affairs Akbar Kimjani said here Sunday that Iran's foreign debt, excluding interests due, stands at dlrs 23.438 billion by the end of the Iranian month of Dey (December 22-January 20).

He told IRNA the actual and potential of foreign debts stands at dlrs 8.7 billion and dlrs 14.7 billion, respectively, in the same period.

He further brushed aside concerns on the part of some MPs and economic experts that the country's increasing debts is worrisome.

Given that solid steps have been taken in the recent years with the aim of establishing a stable foreign exchange regime, "CBI is not concerned with the issue," he retorted.

Kimjani said the ample CBI hard currency reserves and balance of Forex Reserve Fund is unprecedented in the Iranian economic history.

He said the nation's financial obligation have fallen short of the amount outlined in the Third Five-Year Development Plan (March 2000-March 2005).

Article 85 of the development plan calls for payment of both short and long-term debts payments to be scheduled such that it does not exceed 30 percent of the government hard currency earnings in the year prior to the expiration of the plan.

"This does not include any obligation arisen by the buy-back contracts," the CBI official said.

He said the government should also time the payments of foreign debts and obligation, "such that during the course of the plan their net present value does not exceed dlrs 25 billion in the last year of the plan."

He said the CBI has been striving to structure the debt to predominantly intermediate and long-term, "while concurrently reducing the overall debt overhang."

The source for payment of the short-term is oil revenues Kimjani said adding "any adverse fluctuations of oil prices could negatively affect the debt-payment capabilities of the government."

However, he said, CBI's hard currency reserves and Forex Reserve Fund could be drawn upon to cushion any fluctuations in the price of oil.

Kimjani said finances are channelled to development project and are in line with economic growth and employment generation policies.

Meanwhile, Governor of Central Bank of Iran (CBI) Mohsen Nourbakhsh defended in february the bank's policy of selling dlrs 14 billion of hard currency in Dubai currency markets.

The Persian daily Iran quoted him as saying that contrary to what has been said Iran's hard currency exchange balance is stable.

"I should say that since my tenure as the governor of Central Bank, all economic indices have been released regularly each quarter showing the latest monetary and hard currency situation of the country," Nourbakhsh said.

He also rejected the views that the parity rate of exchange of rls 8,000 per dollar is too high, adding, "If the rate were to drop, some would complain that the rate is too low."

Nourbakhsh said the government has asked for an increase in the hard currency ceiling for the next Iranian year to pay off its foreign debts and continue implementing its single parity forex rate mechanism.

Under the bill, the forex ceiling for next Iranian calendar year of 1382 (to start March 21, 2003), would increase to dlrs 15.3 billion from dlrs 11.5 billion and government would also be allowed to withdraw dlrs 2.5 billion from the Forex Reserve Fund to pay off debts and prevent any rise in government's debts to the Central Bank of Iran due to enforcement of the single parity rate system.

Nourbakhsh said that the government's monetary and forex policies next year would be based on sustained forex parity rate policy, using Forex Reserve Fund's resources to grant facilities to the private sector and increase investment.

Fearing a budget deficit next year, government has put forward the bill for amendment to Article 60 of the Third Five-Year Economic Development Plan's (2000-2005) law, which bars any withdrawal from the Fund unless there are ample good reasons, namely using the fund for compensation of deficit in budget caused by slump non-oil export revenues and falling oil revenues.

... Payvand News - 3/3/03 ... --

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