Instead of borrowing, the government uses its own resources
According to Iran Economist, the public relations of the Central Bank of the Islamic Republic of Iran, in response to the media reports critical of the government about the growth of the monetary base in May this year, announced: With the beginning of the 13th government, the issue of controlling the growth of liquidity and inflation is one of the most important economic priorities of the government. And the central bank was noticed.
In this regard, the analysis of the twelve-month growth rate of liquidity shows that the growth rate of liquidity has decreased from 42.8% at the end of October 1400 during a downward trend to 37.3% at the end of May 1401. Of course, it is necessary to emphasize that 2.6 percentage points of liquidity growth in May 1401 is related to the increase in statistical coverage (the addition of Mehr Ektisad Bank information in monetary statistics, due to the merger of banks belonging to the armed forces in Sepeh Bank) and if not taken into account The increase in the aforementioned statistical coverage, the twelve-month growth of liquidity at the end of May 1401 will decrease to 34.7%.
Therefore, the twelve-month growth of liquidity leading to the end of May 1401 (on a homogeneous basis) compared to the growth of the same period last year (38.8%), shows a decrease of 4.1 percentage points. Also, the growth of liquidity in one month of May 1401 was equivalent to 2.5%, which shows a decrease of 0.7 percentage points compared to the same period of the previous year (3.2%).
Regarding the evolution of the monetary base, it is also necessary to explain that since the second half of 1400, the growth of the monetary base affected by the disciplinarian approach of the government and the active monetary and supervisory policies of the Central Bank has decreased significantly. A review of monetary statistics shows that the twelve-month growth of the monetary base has decreased from 42.6% at the end of July 1400 to 30.5% at the end of May 1401.
It should be noted that the twelve-month growth of the monetary base in May 1401 compared to the growth of the same period of the previous year (31.5%) shows a decrease of 1.0 percentage point. Also, the monetary base grew by 6.5 percent at the end of May 1401 compared to the end of 1400, which shows a decrease of 0.9 percentage points compared to the growth of the same period of 1400 (7.4 percent).
It should be noted that the main factor in the growth of the monetary base at the end of May 1401 compared to the end of the previous year was the net claims of the central bank from the public sector affected by the decrease in government deposits with the central bank, and the reason for the decrease in government deposits with the central bank at the end of May 1401 was the implementation of the popularization plan. The fair distribution of subsidies and the deposit of cash subsidies (related to the two months of May and June) totaling 468 thousand billion rials to the accounts of people subject to subsidies with the aim of supporting households on May 19 of this year.
It is necessary to explain, the central bank has created in line with attracting liquidity and reducing monetary effects due to the implementation of the popularization plan, fair distribution of subsidies, reducing the volume of repo (open market operations) and selling government debt bonds in 1401.
Regarding the financial performance of the government in 1401, it should be acknowledged that unlike the practice of the first two months of 1400, when the government was mainly financed by relying on the treasury current account resources and based on creating debt to the central bank, the government’s payments in two months At the beginning of 1401, it was based on its deposit resources. Therefore, one of the positive developments regarding the financial relationship between the government and the central bank, which is mainly related to the disciplined approach of the 13th government, has been the government’s greater reliance on its own resources.
Regarding the quarterly censorship of the publication of monetary statistics, it is also necessary to explain, until the statistics related to the central bank’s balance sheet are finalized at the end of each year, it is not possible to provide statistics and information related to the months of the following year, therefore, according to the procedure of previous years, providing statistics and information Related to the months of April and May 1401, after the finalization of the information related to the end of 1400 and with a short time interval, it has been placed in the central bank’s information base.