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Liquidity growth control main factor behind inflation reduction in Iran– MP

Business Materials 28 April 2015 12:13 (UTC +04:00)
Early 2015 figures by the Central Bank of Iran showed liquidity rising by nearly 15 percent to about $250 billion within a period of nine months.
Liquidity growth control main factor behind inflation reduction in Iran– MP

Tehran, Iran, Apr. 27

By Mehdi Sepahvand - Trend:

Early 2015 figures by the Central Bank of Iran showed liquidity rising by nearly 15 percent to about $250 billion within a period of nine months.

The country's liquidity for the three preceding years had been 19, 30.8, and 19.4 percent from latest to earliest.

The statistics indicate that President Hassan Rouhani's administration policies in controlling the liquidity growth rate have been successful.

The main reason why inflation fell to about 15 percent in the Rouhani administration was the policies adopted to rein in liquidity growth, Iranian MP and First Deputy Chairman of the Economy Committee of the Parliament Iraj Nadimi told trend April 27.

The inflation rate in Iran hit 15.5 percent in the first fiscal month of Farvardin (ended on April 20), according to the Central Bank of Iran.

Iranian First Vice President Es'haq Jahangiri said March 20 that President Hassan Rouhani's administration managed to lower Iran's economic inflation from 40 percent when it came to office to 16 percent at the end of the previous Iranian fiscal year (March 20).

According to an early April report by the IMF, Iran's economy contracted by 6.6 and 1.9 percent in 2012 and 2013 respectively. Last year it hit 3 percent and for the current year it is expected to reach 0.6 percent. For the next year, Iran's economic growth is expected to reach 1.3 percent.

Rouhani has promised to decrease the inflation rate to 5 percent in the Iranian fiscal year of 1395 (to end on March 20, 2017).

However, if liquidity does not help the domestic product growth, it will leave negative impacts on the economy.

Nadimi stated that the government has realized the point and taken action to prevent the bad side by naming the current Iranian fiscal year (which started March 21) as the year for production, and so adopting policies to improve domestic production.

Asked how the future of the country's economic inflation would probably be, the MP said that unless domestic production is given a push, there would be serious problems.

Effort must be made to take the economy out of its present dealership structure and give it a more productive shape, he reiterated.

Edited by CN

Mehdi Sepahvand is Trend Agency's journalist in Iran, follow him on Twitter: @mehdisepahvand

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