CBI plans to channel liquidity into production: governor

July 17, 2019 - 20:51

TEHRAN- Central Bank of Iran (CBI)’s Governor Abdolnasser Hemmati said this bank has some plans for channeling the liquidity into production in a target-oriented way, ISNA reported on Wednesday.

Making the remarks during visiting a production unit in Isfahan Province, the official said, “I think that some production units are in need of liquidity and the banking system is responsible for providing liquidity for these units in the way of boosting domestic production and reducing reliance on foreign products.”

He further expressed hope that through efforts made by the industries and also a serious cooperation between the banking system and the industry ministry, the target of promoting domestic production, which has been ordered by the supreme leader, will be materialized.

The CBI governor also said that the government has made some serious decisions for promoting production inside the country.

The current Iranian calendar year of 1398 (began on March 21) is named as the year of "Pickup in Production" by Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei.

And, like the other economic bodies of the country, Central Bank of Iran has defined supporting production as its major plan in this year, as CBI governor has several times stressed that supporting production units to flourish production is the priority of the country’s banking system in the current year.

In early May, the official outlined CBI plans for neutralizing or relieving the impact of U.S. sanctions on the country’s economy and mentioned providing liquidity and working capital to maintain and boost domestic production as one of those plans.

To find the best ways for supporting production, CBI is regularly holding meetings with the representatives of private sector and also with the economists.

During the recent meeting of Hemmati with the economists, removing barriers in the way of production was one of the major issues discussed, while reforming the structure of the country’s banking system, controlling liquidity, curbing inflation, improving the people's livelihood and preventing income imbalances through monetary and fiscal policies, and the impact of U.S. sanctions and enforcement of bank operations were the other issues raised in the meeting.

Special funds to supply working capital

During his visit to a production unit in Isfahan, Hemmati also unlined that CBI has allocated some special funds to pay for supplying working capitals of the production units.

Earlier this month, in an Instagram post, the official had announced the bank’s new plan for supporting production.

Hemmati has mentioned this plan as “Productive Financing Plan” which is to provide finance for the production activities.

In his post, the official wrote that based on this plan, the production chain’s demand for the working capital will be met with the less inflation effect and the less expansion of credit.

The CBI governor went on to say that high production costs over the past year has sharply increased the need for working capital which has made providing finance more difficult; therefore; taking such condition into account, CBI is to define some plans for removing this problem.

CBI’s plans take two major approaches, first is that they will lead to secure finance for production activities and provide the working capital needed for such activities; and the second one is that they will not be resulted in any deviation in the banking resources and also in higher inflation.

In this regard, the central bank’s committees of liquidity and credit have investigated several plans, that one of them is “Productive Finance Plan”, which will be implemented after being discussed with monetary and banking experts.

MA/MA

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