“Comparing the homogeneous monetary figures during the tenure of President Hassan Rouhani [2013-17] with those of previous administrations would deflect any accusation of [monetary] indiscipline,” Abolfazl Akrami, the head of CBI’s Economic Office, was quoted as saying by ISNA.
The official emphasized that the comparisons of monetary figures must be based on homogeneous variables, meaning the growth of macro-monetary variables [liquidity and monetary base] and the number of banks and credit institutions in the same period must be accounted for.
In response to accusations of excessive money-printing, Akrami said volume-based comparisons and growth in economic variables are not good indices to measure the monetary situation, Financial Tribune reported.
“The average homogeneous growth in monetary base during the first and second terms of former president Mahmoud Ahmadinejad (2005-9 and 2009-13) respectively stood at 32.1% and 17.3% while the figure was 16.4% during the[the first term of the] the presidency of Hassan Rouhani (2013-17),” he said.
According to CBI’s statistics, the volume of monetary base during the year to March 19, 2016, reached 1.79 quadrillion rials ($46.9 billion) with the six new banks and four new credit institutions that were established or licensed during the year to March 20, 2013, accounted for 136 trillion rials ($3.56 billion) of the amount.
“If we exclude the added monetary base of new banks and credit institutions from the total figure, the volume of monetary base by the end of the year to March 20, 2016, would have reached 1.66 quadrillion rials ($43.5 billion),” Akrami added.
The head of CBI’s Economic Office noted that the comparison of figures will not only refute accusations of CBI’s indiscipline, but will also clarify that CBI has managed to bring order to the money market and curbed the high average growth in the monetary base that stood at 24.5% during the previous administration while the figure dipped to 16.4% during President Rouhani’s tenure.
The volume of liquidity during the eight-year tenure of former president registered an annual growth of 26.1%. The increase in monetary base accounted for 24.5% of liquidity growth while the growth of multiplier only reached 1.4%.
Liquidity increased by 25.3% year-on-year during the first tenure of Rouhani’s presidency but in this case, multiplier and monetary base accounted for about 8% and 17% of liquidity growth, respectively.
Akrami emphasized that according to banking and economic experts, the composition of liquidity is much better than what it used to be.
“We have tried to focus on using the money that is already circulating in the market and reduce the injection of CBI’s money into the market,” he said.