EghtesadOnline: Abdolnasser Hemmati says local banks have no plans for now to increase interest rates because of the state of the economy and bank sector challenges.
According to the Islamic Consultative Assembly News Agency (ICANA), the CBI boss made the announcement on Sunday during the Majlis Economic Commission meeting attended by the Ministry of Economy and Finance, Ministry of Industry, Mining and Trade, heads of the Iran Chamber of Commerce, Industries, Mine and Agriculture and Iran Chamber of Guilds.
Hemmati said the goal of the Central Bank of Iran is to stabilize the economy and boost domestic production, according to Financial Tribune.
"Increasing bank interest rates would put domestic producers under pressure. Under optimum conditions we need to modify the interest rates. For now we have no plan to do so.”
National resources should be allocated for importing raw materials and intermediate goods, Hemmati said.
He recalled that the regulator is struggling with the harsh US sanctions and selling banks' surplus assets could create useful resources. In his view, compared to last year the “currency market is in a better state.”
In the last three months of the past Iranian year (ended March 20), about 189 trillion rials ($) was injected into domestic manufactures to help lift output and productivity, the CBI boss said.
Last year almost 3,570 trillion rials was allocated for boosting the working capital of businesses, 55% of which went to the industrial sector, the senior bankers said, implying that in the current year lending would grow.
Referring to the fact that most manufacturing companies need infusion of working capital, the Minister of Industries, Mining and Trade Reza Rahmani said in order to preserve the previous year's production, around 3,600 trillion rials is required to boost national production.
Non-oil exports to neighboring countries last year generated $25 billion, which indicates almost 2% of neighboring countries’ total imports. The Ministry of Industry, Mining and Trade has plans to boost this to 5% and in the process add a million jobs.
Farhad Dejpasand, the economy minister, said as per the Sixth Five-Year Economic Development Plan $60 billion in foreign investment a year is allowed for the government to improve the economy. “But without foreign finance diplomacy this objective is rather unattainable.”
World Bank has downgraded Iran's economic growth estimates and forecasts in a new report.
The report put the Islamic Republic's real GDP growth for 2018 at -1.6%.
The World Bank has forecast that the rate will further contract to reach -3.8% in 2019 before an expansion of 0.9% in 2020 and 1% in 2021.