We have had a number of international conferences in recent years on the issue of foreign investment and we feel these conferences should be held on a more frequent basis. We’ll take the opportunity to elaborate on our recent progress in terms of finance and interact about the financial progress of the country. It is very important for investors to know about our finance issues and make sure that their investment is very secure and that the repatriation of their principals and revenues is honored by the CBI. But again I think the most important theme of these conferences will be the measures taken and reform programs that we have designed for the Third Economic Development Plan. I think the Third Plan has major financial contributions to our economy. So we will try to tell the financial centers and investors about our intentions and policies within the Plan. Our message would be that we have not only expressed our desire to open up and to move our economy toward a market-oriented type of economy, but also started economic reform measures in the beginning of the current Iranian year (March 2000). For instance, for foreign exchange policies we have eliminated one of the rates called the ‘export rate’ since March 2000. We are going to move to a unified exchange rate which is one of the most important economic measures in the Plan. This has also been ratified by the Parliament in the next year’s budget. The Parliament has requested the CBI to prepare the program of unification starting 1381 (March 2002 – March 2003). We are taking steps toward the objectives of the Plan in the financial sector, and the most important policy, of course, is foreign exchange.

In recent years we have overcome two major difficulties of the last decade in the area of finance, namely, the problem of arrears which began in 1993. By the end of 2000 we basically brought down our own debts to a minimum. In the current Iranian year, we are going to discharge all of our debts. Our external debt has come to a very low level. So we will manage to get over with this difficult issue of arrears. We have paid all the commitments that we made within the rescheduling program that started in 1993. Now, our external debt stands at US$8.9 billion as of January 2001 and we expect it to come down further. We have also taken steps to build up our foreign exchange reserve. Also, in the area of foreign exchange policies we have succeeded to come out of the fixity of the exchange rate system. In 1995, due to the expansionary situation of our economy, we adopted a dual and fixed exchange policy and tried to use this fixity as an anchor for our economy and to use the foreign exchange policy as an anti-inflationary policy. We have been able to bring down inflation from a very high level of 50% to the current 13%. But the adoption of such fixed foreign exchange policy in 1995 was basically in order to stabilize the economy because of the financial expansion taking place then. We used not only a monetary policy but also fixed exchange rates to bring down such a high inflation. Now, with the financial progress, overcoming the debt problem and also bringing down the inflation, our view in the Third Plan is that the fixity and the multiplicity of the foreign exchange system is no longer a proper policy, and therefore we started to exit this fixity and also the multiplicity of the foreign exchange system. Now, we have a dual exchange system in which one of the rates is basically determined by the market which we call the TSE (Tehran Stock Exchange) rate. It stands at 1750 rials for one US dollar and is only used for basic needs and basic commodities within the budget. So we don’t really see this as a relevant rate. The TSE rate should be eliminated as we progress toward a unified rate. We are also going to gather different markets in one place, the inter-bank market, meaning that the TSE activity in this connection is going to stop and our banking system is now gradually starting to sell foreign exchange. By year 1381 (2003), we will not need the TSE to conduct foreign exchange transaction. This unification will go along with centralization of foreign exchange activities through the banking system.

In the field of finance one major concern for foreign investors would be the question of repatriation of investments, dividends and principals. Although we have expressed our views on various occasions that according to the Law of Protection and Attraction of Foreign Investment, the CBI gives the guarantee of repatriation of dividends of investors involved in activities across the country. The CBI has always remained committed to this policy. We have shown in the last 20 years that we have honored our financial obligations. Although the regime changed in Iran, we lived up to our commitments and have maintained this policy. We have not only respected all the commitments made by the previous regime, but have also shown the international community that we were committed to the obligations even during very difficult times.
I think we should explain this to the international community and give assurances that this has been a common practice in Iran. It is a part of our culture to discharge our obligations. The international market is well cognizant of the fact that the CBI has demonstrated an excellent performance in this regard and this is why our ratings have improved and our relationship with export credit agencies has grown significantly.