Iran's central bank chief resigns over differences with Ahmadinejad

Iran Materials 21 September 2008 01:44 (UTC +04:00)

Iran's Central Bank Chief Tahmasseb Mazaheri has resigned and is to soon be replaced by the bank's general secretary Mahmoud Bahmani, Fars news agency reported Saturday, reported dpa.

Mazaheri, who declined to comment on the report but did not deny it, is said to have had grave differences with President Mahmoud Ahmadinejad over economic policies, and observers had considered him as the most likely next official to leave Ahmadinejad's administration.

Mazaheri initiated last month a three-month currency reform process with the aim of knocking off three zeroes from the national currency (Rial). Upon his order, the central bank printed new 50 and 100 Rials, replacing the previous 500,000 (518 dollars) and 1 million Rial (1,036 dollars) bank cheques.

Although the central bank reassured on state television that the new bank cheques could be used as de facto bank notes, several institutions, including banks, have hesitated to accept them, reflecting the government's dispute with Iran's Central Bank in the currency reform process.

Due to an inflation rate of more than 26 per cent - in some cases even up to 50 per cent - the current bank notes, which range from 500 Rials (about 5 cents) to 50,000 Rials (5.18 dollars) - no longer correspond to the prices and people have had to take a lot of cash with them for even simple shopping. The coins are de facto worthless.

Mazaheri is the second CBI governor to resign within Ahmadinejad's three-year presidential tenure. The first governor, Ebrahim Sheibani, resigned in August last year over differences with the president in the country's economic management.

So far the ministers of economy and finance, interior, cooperatives, mines and metals, oil, education, the head of the planning and budget organization, and chief nuclear negotiator Ali Larijani have left Ahmadinejad's administration, all reportedly due to disagreements with the president's policies.

Inflation in Iran has led to widespread criticism of Ahmadinejad, not only by opposition parties but also within his own political camp.

Both sides have often accused him of ignoring experts' opinions, especially on economic issues, and instead adopting an ideological approach.

Ahmadinejad has so far failed to implement his promised economic reforms toward fairer distribution of national wealth, including the country's increased oil revenue.