Mission Concluding Statement 

An International Monetary Fund mission led by Mr. Abdelali Jbili, Assistant Director in the Middle Eastern 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 over the past three years, Iran has achieved one of the highest rates of growth in the Middle East-North Africa region against the background of increased openness to international trade and investment, economic reforms, and sustained oil prices. The overall economic situation in 2002/03 was favorable, with high and broad based real GDP growth, a decline in the unemployment rate for the first time in recent years, low external debt, and rising international reserves. The mission welcomed the progress achieved in economic reform in several areas, including trade liberalization, the establishment of private banks, the approval of the foreign direct investment law, the amendment of the tax law, and the preparation of reforms underway in several other areas.

The prospects for 2003/04 also look favorable and the momentum of investment and growth of the past few years is expected to continue. The mission noted, however, that domestic demand pressures stemming from an expansionary policy stance have intensified, generating rapid growth of liquidity and putting upward pressure on inflation. The authorities shared the mission's views on the need for corrective fiscal and monetary policy actions to keep inflation under control and help sustain growth under more stable financial conditions. The mission also encouraged the authorities to accelerate and deepen reforms aimed at developing private sector activity and enhancing efficiency.

The mission welcomed the important progress made in the area of economic transparency, including the publication of all IMF reports on the 2002 consultation, the improvement in the budget coverage, and the identification in the budget document of the implicit cost of energy subsidies. The mission expressed the IMF's willingness to continue to provide technical assistance in support of the authorities' economic reforms.