Central Bank of Iran: Liquidity Increased by 22 Percent Last Year

Recent official reports indicate that the liquidity in Iran reached over 782 trillion tomans by the end of last year. According to a report published by the Central Bank of Iran on May 18, the liquidity increased by 22.3 percent compared to the previous year. Liquidity in Iran has significantly increased over the past decade. This figure was about 67 trillion tomans at the beginning of Mahmoud Ahmadinejad's presidency in 2005, indicating that liquidity in Iran has more than tenfold increased since then. This issue has been cited by several economic experts as one of the main causes of the high inflation rate in Iran. The Central Bank report states that the overall liquidity growth of 22.3 percent last year was lower than the implicit target set for liquidity growth that year, which was around 23 to 25 percent. According to this report, 'the monetary base of the country increased to 131 trillion tomans by the end of last year, showing a 14 percent growth compared to the approximately 115 trillion tomans at the end of the previous year.' The report indicates that the overall approach of the Central Bank's policies in the year 1393 (2014) was based on 'enhancing monetary discipline, maintaining currency market stability, and providing appropriate financing for production.' The details of the statistics published by the Central Bank also indicate an increase in financing for working capital of production, industrial, and mining units. According to the Central Bank of Iran, in the area of credit policies, the main focus of the Central Bank was on 'increasing the lending capacity of the banking network and prioritizing financing for working capital of production units to utilize the idle capacities of the country's economy.' The report states: 'The volume of loans paid by the banking network reached 341 trillion tomans in the year 1393, showing a 44.5 percent growth compared to the previous year. Additionally, the share of working capital from the loans paid by the banking network in 1393 was 60.7 percent. This share was 46 percent and 54 percent in the years 1391 and 1392, respectively, indicating an improvement in the banks' performance in financing production.' According to this report, the share of working capital from the loans paid to the industry and mining sector during the year 1393 was 81 percent, which has increased compared to the shares in the years 1391 (less than 69 percent) and 1392 (less than 74 percent).