New details of the reason for the decline in the monetary base growth during the first two months of this year

to report Iran is an economistThe growth of the monetary base during the first two months of 1401 (at the end of May 1401 compared to the end of the previous year) was equal to 6.5 percent, which is about 0.9 percent decrease compared to its figure in the same period of the previous year (7.4 percent). it shows.

The net foreign assets of the Central Bank as one of the basic monetary sources during the first two months of 1401 (at the end of May 1401 compared to the end of the previous year) decreased by 5.4%; While this variable shows an increase of 1.5% in the same period of the previous year. This issue is due to the supply of foreign exchange earnings to the applicants and its non-deposition in the Central Bank’s balance sheet during the first two months of this year, which was done with the aim of properly supplying the real demand for foreign exchange and establishing stability in the foreign exchange market.

In this regard, the central bank’s claims from banks are another source of monetary base, which shows a decrease of 6.1% during the first two months of 1401 (at the end of May 1401 compared to the end of the previous year). This decrease is more than the decrease of this variable in the same period last year (1.2 percent decrease). This issue is mainly due to the strengthening of the management and organization of bank overdrafts and credits granted to them by the central bank during the said period.

The net of other items of the central bank is another source of monetary base, which shows a decrease of 55.6 percent during the first two months of 1401 (at the end of May 1401 compared to the end of the previous year), which is compared to the decrease of this variable in the same period of the previous year. (12.1 percent decrease) indicates a more severe decrease. This issue is mainly due to the decrease in the volume of open market operations in the form of a repurchase agreement (injection of liquidity to banks) by the central bank during the said period and the sale of government bonds by the central bank (to the amount of 70 thousand billion rials in May 1401); So that the volume of the said operation decreased from 945 thousand billion Rials in the last auction of the previous year on 23/12/1400 to 838.5 thousand billion Rials in the last auction in May 1401 on 26/02/1401.

Therefore, the net claims of the central bank from the public sector (including the government and state-owned companies and institutions) are only a part of the monetary base resources, which with a growth of 105.9% during the first two months of 1401 had an increasing effect on the monetary base growth. However, the growth of this variable in the same period of the previous year was equal to 183.8%, which is more than the corresponding figure this year (105.9%).

In the meantime, what is of great importance is the reform and improvement of the relationship between the central bank and the government in the field of how the government uses its deposits with the central bank and the treasury for its various expenditures in recent months. In this connection, the government’s debt to the central bank at the end of 2019 was equal to 1152.2 thousand billion rials, which increased by 31.1% during the first two months of 1400 (equivalent to an increase of 358.8 thousand billion rials) to 1511 thousand billion Rial has reached 1400 at the end of May.

While the government’s debt to the Central Bank increased by only 16.3 thousand billion Rials during the first two months of this year, from the figure of 1322.4 thousand billion Rials at the end of 1400 to 1338.7 thousand billion Rials at the end of May 1401, which indicates The lack of reliance of the government on the use of the revolving treasury in this period compared to the same period last year. On the other hand, the government relied more on the use (withdrawal) of its deposits with the central bank in the current period compared to the same period last year.

So that the government’s deposits with the central bank decreased by 31.7 (equivalent to 814.2 thousand billion rials) from 2565.8 thousand billion rials at the end of 1400 to 1751.6 thousand billion rials at the end of May 1401. While this variable has only decreased by 2.4% (39.4 thousand billion Rials decrease) during the first two months of the previous year, from 1647.7 thousand billion Rials at the end of 2019 to 1608.3 thousand billion Rials at the end of May 1400. . These points indicate the appropriate results of the new mechanism established between the central bank and the government in order to improve the management of government resources at the central bank and to regulate the flow of government funds with the aim of disciplining the government’s financial behavior in order to more effectively use its deposits with the central bank and commitment To reduce the negative effects caused by the government’s use of the central bank’s resources in the form of treasury bills and the growth of the monetary base from this place.

This is despite the fact that before this, the government’s approach was more focused on the use of the treasury’s revolving salary and on the other hand, not using its deposits with the central bank.