Iran’s growing national debt no matter of concern-expert

Business Materials 2 August 2017 18:55 (UTC +04:00)

Baku, Azerbaijan, Aug 2

By Farhad Daneshvar – Trend:

Iranian financial analyst has played down the concerns over the government’s growing debts to the country’s banking system, accusing the media outlets, affiliated with the President Hassan Rouhani’s critics, of exaggerating the reality.

“In fact the government of President Hassan Rouhani has adopted proper financial and fiscal policies. Interestingly, one of main reasons behind the ongoing recession in Iran is that the government operates strict monetary and financial policies,” Alireza Kadivar, a financial analyst and the Deputy Chief of Iran’s Novin Investment Bank, told Trend.

“The government has put in a great deal of effort to tackle the inflation rate and this has caused the economy to slip into recession,” added Kadivar.

Iran’s inflation rate had climbed above 30 percent, after Iranian President Hassan Rouhani came to power in mid-2013. Nonetheless, for the first time over the past 26 years, that figure declined into a single digits row, bottoming out at 8.6 percent in June of 2016. Despite that fact, according to the country’s Central Bank report for the 12-month period ending on July 22 inflation rate peaked at 10.3 percent.

“The fact that the amount of the government’s debts has increased over the past four years does not necessarily represent the government’s failure in adopting proper financial and monetary policies,” Kadivar stated.

According to the data available on the website of the Central Bank of Iran (CBI), the government's debts to the banking system, including the CBI, surpassed $58.3 billion (2.2 quadrillion rials) in the fiscal month ending April 20, indicating to the increase of 21.3 percent year-on-year.

“Considering the government’s triumph in reducing the inflation rate in the view of a huge decline in the governmental incomes, due to the sharp slump in global oil prices, as well as debts it inherited from its populist predecessor, Mahmoud Ahmadinejad, I assume that President Rouhani’s government had a relatively good performance in maintaining financial discipline,” the expert added.

“The administration has apparently made great efforts to reduce the speed of growth of its debts,” he added.

The President’s conservative opponents have recently described the increase in the government’s debts as an indication of the government’s failure in maintaining financial discipline.