Governor of the Central Bank of Iran announced that the Central Bank welcomes any plan or idea which would focus on encouraging production and exports.

Tahmasb Mazaheri, Governor of the Central Bank

Tahmasb Mazaheri told a conference themed "Production for Exports" that the government has taken supportive measures, adding, "The government has allocated 3 billion dollars to increasing assets of Bank Saderat and Bank of Industry and Mine during the current year (started March 21, 2007) and the money will allow the government to fund 10 times more projects."

Governor of the Central Bank of Iran said identifying various exports risks is needed for promotion of export and underscored the necessity to identify and cover those risks.

He stated that the Exports Guarantee Fund played an important role as the main body covering political risks and noted that the fund can appropriate 200 million dollars of its funds and increase the number of guarantees that it issues to exporters by, at least, five times.

"Studies carried out during the past two years show that methods used for development of exports and covering risks are usually proposed by developmental state-run banks while commercial banks should be also involved," he said.

The official noted that financial discipline on the part of producers and exporters is very important and pointed out that export profits are exempt from taxes.

"Financial discipline and producing transparent statements will help banks take better advantage of domestic and foreign financial resources," he said.

Governor of the Central Bank of Iran added that exports play a great role in economic prosperity of every country.

"The eight-percent economic growth rate that we have envisaged for the Fourth Economic Development Plan will not be realized unless through increasing exports. At the same time, exports will guarantee realization of an economic growth rate of 8 percent. Of course, this is a hard goal to achieve and an arduous task for the government," he said.

Mazaheri stated that Iran was going through special economic conditions one of which is situation of liquidity.

"One of the main tasks of the Central Bank of Iran and the government is to channel liquidity toward production and exports," he said.

Touching upon new sanctions against some Iranian banks, Mazaheri stated that sanctions have only been announced by the United States against two or three Iranian banks and they are mostly a propaganda ploy and lack any practical significance.

"What we do is to explain activities of our banks and convince credit institutes of the world that unilateral sanctions imposed by the United States are not correctly founded," he said.

Governor of the Central Bank of Iran further stated that changes leveled against the Iranian banks by the American officials are far from the reality, adding, "The world is very big and lack of cooperation from a certain state will not lead to cessation of economic activities in another state, especially Iran."

Mazaheri expressed hope that the existing difficulties would be eliminated through the help of all producers, exporters and economic activists of the private sector as well as banks.

Explaining about the impact of sanctions on exports and financial institutes of Iran, Mazaheri said that they may have delayed effects or simply increase costs. "We will try to thwart the effects of those sanctions in delaying our economic activities or increasing their cost," he said.

The official noted that commercial and developmental banks were providing high credits to people and had got used to withdraw from resources of the Central Bank and this was not a good practice.

"Resources that are injected into the society by the Central Bank of Iran will increase the money base and will be converted into liquidity after being multiplied by, at least, four," he said.

The official noted that the first step to improve the situation was banning banks from granting facilities, even for production, through the Central Bank’s resources. He added that he has "locked the doors to the Treasury and has put away one of the keys where nobody knows."

"This is very serious…. Our banks should not use the Central Banks resources, but should grant facilities through resources which would create competition in the money market," he opined.

Mazaheri stated that banks should mobilize more resources without looking to the Central Bank for help.

"Liquidity should be channeled to production and should not be turned into credits and facilities which would increase price of goods or be used for hoarding," he said.

Governor of the Central Bank of Iran emphasized that banks should allocate credits to service, production and trade sector.