CBI unveils plans to compensate oil budget deficit in sanctions era

June 22, 2019

TEHRAN – The governor of the Central Bank of Iran (CBI) has said three plans have been developed aimed to compensate the probable budget deficit resulted from the U.S. sanctions on the country’s oil industry, Tasnim news agency reported.

Trying to use different ways to export more oil, issuing government bonds, and using the reserves of the National Development Fund (NDF) are the plans the government is to implement in order to counter the U.S. sanctions’ economic pressure, Abdolnaser Hemmati wrote in an Instagram post on Friday.

“Even though the central bank is going through a difficult period, I’m very hopeful about overcoming the problems with the mentioned plans in progress,” he noted.

“Communicating with people and economic activists, transparency in policy making and implementation, and responding to people are key components of a good governance in modern central banks,” he said, adding “In the complicated conditions facing the country's economy, I have been trying to implement these guidelines to pass through the current situation.”

The official went on saying that in the past three months, the government has allocated $5 billion for supplying basic goods and also $6 billion for importing basic materials for the country’s production units through the domestic Forex Management Integrated System (locally known as NIMA).

In early May, Hemmati had outlined CBI plans for neutralizing or relieving the impact of U.S. sanctions on the country’s economy.

In an Instagram post, the official pointed out some of the approaches that CBI was going to follow in order to counter the U.S. sanctions and to control inflation.

Maintaining and strengthening the relative stability of the foreign exchange market by strengthening and improvement of the performance of NIMA, setting foreign currency exchange policies to support non-oil and oil exports and providing liquidity and working capital to maintain and boost domestic production and finally establishing a financial mechanism with neighboring countries were some of the plans which CBI head said is going to execute.

Explaining CBI plans for managing inflation, the official noted that previous monetary policies regarding the controls over cash flow would be modified using the new structure of monetary policy and consequently uncertainty over controlling the cash demand was going to decrease.

EF/MA

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