Iran announces measures aimed at economic reform

[Amir Taghavi]

ATHENS, Greece (UPI) -- Iran announced Monday a series of measures
aimed at reforming the economy and encouraging foreign investment, the
official Islamic Republic News Agency said.
Iranian Economy and Finance Minister Mohsen Noorbakhsh released
details of the new measures at a news conference in Tehran. They are to
be introduced as of March 21, the Iranian New Year, he said.
An IRNA dispatch monitored in Athens said the new measures included a
parity rate for the Iranian rial against the U.S. dollar.
Noorbakhsh said the Central Bank of Iran would begin selling foreign
exchange at the free market rate to the public as of March 21, which
also marks the beginning of the Iranian fiscal year.
Earlier reports said private sector investment in Iran have been
virtually halted over the past six months, as businessmen awaited the
official announcement of reform measures, designed to take Iran out of
its current economic stagnation.
The economy minister told reporters the government of President Akbar
Hashemi Rafsanjani would release to private buyers a total of $2.5
billion it expected to earn from oil revenues in the 1993-94 fiscal
year.
He expressed hope this would help bring the free market exchange rate
down to 1,000 rials to the U.S. dollar.
The dollar currently sells on the Iranian free market at about 1,500
rials. The ``official'' rate has been pegged at 70 rials to the dollar
since the 1979 revolution that toppled the late shah, even though the
value of the rial has steadily tumbled in the interim.
Iran's ruling clerics used the ``official'' exchange rate to disguise
heavy subsidies on certain essential goods and state-owned industries.
Regional analysts said the subsidies contributed to the country's
current economic straits.
Noorbakhsh said Iran was in debt to the tune of $30 billion as of
March 21, 1992, but has since repaid $5 billion.
He said the government believed the economic reforms being introduced
March 21 would encourage foreign investments in development projects.
The alternative would have been to wait until Iran had enough
revenues from its own resources to finance its economic development
projects, ``and in the meantime continue to import products that might
otherwise be produced by these projects,'' he said.
Encouraging foreign investment ``sounds more logical and promising,''
and would save time in getting on with the country's development, he
said.
Joint-venture partners were expected mainly from Germany, Japan,
Italy and France, and Iran would borrow money from abroad for its
development projects at interest rates prevailing on the world market,
Noorbakhsh said.
But foreign ownership in Iranian industries would be limited to a
ceiling of 49 percent, he said.
Iranian private investors would also be offered shares in state
industries, he said. They would include ``real or corporate bodies that
can purchase shares without restrictions,'' the minister said.
Rafsanjani's hard-line opponents, who controlled the economy and
built it up along communist lines between 1980 and 1989, have criticized
the economic reforms since they were first talked about less than one
year ago.
Between April and June last year, a series of riots broke out in
several cities, when demonstrators opposed some earlier attempted
reforms.
The riots reportedly shook Rafsanjani's government, which announced
earlier this year that indirect subsidies for imported food, medicines
and petroleum products would continue after the single parity rate for
the dollar has been introduced.
Last month, the Majlis or Parliament approved the import of these
items with foreign exchange made available to state companies at the old
``official'' rate of 70 rials to the dollar.

"Copyright 1993 by <UPI/Newsbytes>