IMF vows to support economic reforms in Iran
First Deputy Managing Director of the International Monetary
Fund (IMF) David Lipton has wrapped his three-day visit to Tehran
ensuring Iranian officials that the international monetary body
will give support to reform efforts in the Islamic Republic.
"The IMF will continue to support the Iranian authorities' policy
and reform efforts through our continued economic policy dialogue
and technical assistance," IMF website quoted Lipton as saying at
the conclusion of his visit May 17.
Lipton visited Iran during May 15-17, 2016. During his visit, he
met with Mohammad Nahavandian, Chief of Staff of President Hassan
Rouhani; Mohammad Bagher Nobkhat, Vice President and Head of the
Management and Planning Organization; Bijan Namdar Zangeneh,
Minister of Petroleum; and Valiollah Seif, Governor of the Central
Bank of Iran.
"My visit came at a crucial moment for the Iranian economy, as it
begins to re-integrate, following the recent implementation of the
Joint Comprehensive Action Plan (JCPOA). With an improved economic
outlook in prospect, there is a unique opportunity to begin
implementing reforms to entrench macroeconomic stability and
promote higher sustainable and inclusive growth," Lipton said.
Pointing to considerable progress in restoring macroeconomic
stability in Iran over the recent years, Lipton said that inflation
in the country has declined from 45 percent in 2013 to around 8
percent recently.
The foreign exchange market has stabilized, and some key reforms
have been implemented, he added.
Speaking about positive impacts of the implementation of the JCPOA
on Iran's economy, he predicted about 4-percent economic growth for
the country.
"The implementation of the JCPOA bodes well for the outlook. Higher
oil exports, along with lower costs of trade and financial
transactions, as Iranian banks reconnect to the international
financial system, would help support the economy, with real GDP
growth projected at 4 -4.5 percent over the medium term".
He also touched upon the need for launching economic reforms in the
country and said unlocking the Iranian economy's growth potential
and promoting jobs, particularly for youth and women, will require
addressing many structural challenges.
Saying that to entrench macroeconomic stability, the policy
frameworks for monetary and fiscal policies need to be
strengthened, Lipton added that central in these efforts will be
promoting the private sector, by fostering private ownership,
attracting foreign investment, reducing the cost of doing business,
and enhancing transparency and governance.
Lipton described restructuring banks and strengthening the
framework for anti-money laundering and combating the financing of
terrorism (AML/CFT) as two important priorities.
"Two important priorities for the short term relate to the banking
system. First, it will be critical to begin restructuring
banks-both at their operational level and their high level of
nonperforming loans - to help lower real interest rates and
stimulate credit to the economy. Second, given the difficulties for
Iranian banks in reintegrating to the international financial
system, the authorities should persevere with strengthening the
framework for anti-money laundering and combating the financing of
terrorism (AML/CFT), which should be critical to facilitate such
reintegration," he said.
"Addressing Iran's structural challenges will not be easy and some
of the gains may only become visible over the longer term. But Iran
has already made big strides in restoring prudent policies and in
taking important steps to address structural challenges. These
efforts should continue and we would encourage the authorities to
develop a comprehensive reform agenda soon," Lipton added.
During his Iran visit, Lipton exchanged views with representatives
of the private sector, academics, bankers, and the youth of
Iran.