25. Februar 2016
Banking & Government’s Debt
Banking System Needs Reform
Although it seems normal that when inflation decreases, so does interest rate, but so far reality in Iran has been quite different. “With a great effort, today interbank rate has been reduced to 18.5% from 29.5% in June”, announces Dr. Tayyebnia, Minister of Economic Affairs and Finance of Iran.
For the next Iranian year, inflation is predicted to reach 11.3% from 15.1%. On the other hand, long-term deposits at 20% interest make it hard to see a quick solution. At least all new accounts from this week will enjoy a lower interest rate and Central Bank is determined to impose tight control
Government’s debt: half of GDP
Finally Iran Government’s debt amount became clear: ~$180 billion, i.e. 43% of GDP in 2014.
Its debt to banks is $24 billion, to Social Security and Pension Fund $19 billion, to its contractors and other private entities $18 billion and about $66 billion to other pension funds. $53billion debt of National Oil Company needs also to be added.
President Rohani says the Government will liquidate its debt within the next two years, i.e. by March 2018, mainly through selling bonds. Three major instruments are: Sukuk Bonds, Liquidity Bonds and Islamic Treasury Bonds.
Prices at Governmental Exchange Rate, Sources: Ministry of Economic Affairs and CBI reports
Its debt to banks is $24 billion, to Social Security and Pension Fund $19 billion, to its contractors and other private entities $18 billion and about $66 billion to other pension funds. $53billion debt of National Oil Company needs also to be added.
President Rohani says the Government will liquidate its debt within the next two years, i.e. by March 2018, mainly through selling bonds. Three major instruments are: Sukuk Bonds, Liquidity Bonds and Islamic Treasury Bonds.
Prices at Governmental Exchange Rate, Sources: Ministry of Economic Affairs and CBI reports
© Iran Economy in Brief by Dr. Mahya Karbalaii, 25.02.2016
