Press Release: Statement by IMF 2004 Article IV Consultation Mission to the Islamic Republic of Iran

June 23, 2004

The following statement was issued on June 19, 2004 in Tehran:

"An International Monetary Fund mission led by Mr. Abdelali Jbili, Assistant Director in the Middle East and Central Asia Department, has completed a review of economic developments in Iran and held policy discussions with the authorities under the IMF's annual consultations with Iran.

"The mission noted that in 2003-04 real GDP growth was high and broad based, unemployment declined, gross international reserves increased to the equivalent of more than six months of imports of goods and services, but the external current surplus narrowed compared to the previous year. Inflation remained at about 15 percent. The prospects for 2004-05 also look favorable, aided by higher oil revenue and the continued strong momentum of private sector investment. Growth is expected to remain at about 6 ½ percent, with most sectors showing relatively strong performance.

"The mission noted that more restrained fiscal and monetary policies would help reduce liquidity growth and inflation. It also highlighted the need to build precautionary savings in the Oil Stabilization Fund (OSF) at a time when oil prices are high. The authorities shared the mission's views on the need to reduce domestic liquidity growth to keep inflation under control and help sustain high growth rates and employment creation over the medium term. The mission supports the authorities' efforts to strengthen the financial sector and further improve its supervision.

"The mission welcomed the authorities' plans to accelerate and deepen structural reforms under the forthcoming five-year development plan (2005-09), which would pave the way for sustainable high rates of growth and employment. The mission commends the authorities for taking the necessary steps to eliminate all remaining exchange restrictions on current account transactions.

"The mission expressed the IMF's willingness to continue to provide technical assistance in support of the authorities' economic reforms."


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