They need a lot of foreign direct investment, but who will invest?
Empty Forex Fund for Iran's Ahmadinejad
Thursday, July 21, 2005 IranMania.com
LONDON, July 21 (IranMania) - The Khatami administration is likely to hand over an 'empty' Foreign Exchange Reserve Fund to the incoming government, said a university professor, saying the pro-reform government failed to make use of hard currency deposits to improve the domestic production sector.
Sadeq Khalilian told Fars news agency that Iran could turn into a developed country with high living standards, if its God-given resources and potentials are utilized properly.
"In spite of all the natural resources and the $400 bln spent on three development plans, the country's economic indices still remain poor," he said, adding that widespread mismanagement has caused high unemployment rate and unfair distribution of wealth.
He said that more than $30 bln has been deposited in the Foreign Exchange Reserve Fund over the past four years, adding that the government has withdrawn some 75 % of the total reserves for its current expenses.
Khalilian, an instructor at the Instructor Training University, said the incoming government of president-elect Mahmoud Ahmadinejad is expected to face a $10-bln budget deficit in the year to March 2006.
As part of its economic reform plans, the Khatami administration created the Foreign Exchange Reserve Fund to garner surplus oil revenues and channel them into development projects undertaken by private companies.
Central Bank of Iran announced earlier that Iran's foreign exchange revenues will top $46 bln by March and that oil exports revenues will reach some $36 bln in the period. The remaining $10 bln will come from non-oil export earnings.
The CBI said the total amount of foreign exchange brought into the country by March 2006 might reach $50 bln given the fresh investments in the energy and industrial sectors.
The government last year withdrew the equivalent of 54 trln rials in hard currency from the Foreign Exchange Reserve Fund, showing a 28% rise against the figure for the previous year.
Higher foreign exchange revenues would lead to greater withdrawals and a subsequent rise in inflation.