The central bank now expects the real gross domestic product to fall just 2.4% in 2020, compared to a decline of 3.7% predicted in September. The Fed also upped its 2021 real GDP forecast to 4.2% from 4.0% expected previously.

The Jerome Powell-led Fed estimates the unemployment rate to fall to 6.7% this year, further below the 7.6% previously predicted. The unemployment rate should fall to 5.0% in 2021, compared to the central bank’s previous estimate of 5.5%.

The Federal Open Market Committee said in its statement Wednesday that it would continue to buy at least $120 billion of bonds each month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”

The Fed kept its inflation estimates for 2020 unchanged at 1.2%. The FOMC now sees PCE inflation running to 1.8% next year, slightly above its previous estimate of 1.7%.

Core PCE inflation is expected to come in at 1.4% this year, down slightly from September’s projection of 1.4%. Next year, core PCE inflation is estimated to reach 1.8%, up from September’s forecast of 1.7%.

The Fed decided to keep interest rates unchanged in its December meeting after slashing them to near-zero in an emergency meeting in March due to the fast-spreading coronavirus.

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IRAN NEWS ECONOMIC DESK

TEHRAN – Deputy Head of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) says Iran’s frozen money in other countries stands at around $40b, reiterating that the amount of forex resulted by the exports which has not been repatriated to the country by the private sector is around $6b

Speaking to ILNA, Hossein Selahvarzi refuted allegations on the amount of the frozen money of Iran in the overseas banks and also allegations that exporters have not repatriated major part of their earned forex to the country.

He said the amount of Iran’s frozen forex in foreign banks is around $40b, adding that the private sector has repatriated their forex earned from exports to the country and they have just failed in bringing back some $6b.

He criticized the Central Bank and other officials who claim some $27b has not been repatriated to the country and called it a wrong figure. He added that the alleged figure belonged to 2018 and 2019.

Selahvarzi reiterated that in 2018 and 2019, the policies of the Central Bank were in a way that they could let exporters repatriate 70 percent of their forex.

He reiterated that the forex resulted from the exports by the private sector which has not been repatriated stands at $6b and exporters are trying to repatriate it after resolving problems.

He also criticized the Central Bank for saying that some of the exporters have been cardboard sleepers, saying that the bank is totally wrong.

He said since the Central Bank has no enough data bank and domination on the identities of the exporters, it gives wrong addresses.

Selahvarzi also criticized wrong policies of the Central Bank especially in the past two years, saying that change of policies has created headache for the exporters. He added that these policies have led to emergence of novice and small exporters and currently the number of exporters in the country exceeds 20,000.

He said allocating dollar based on the government rate of 4200 tomans was a wrong decision which led to emergence of new exporters and waste of the national forex.

He reiterated that such a waste of forex resources for import of non-essential goods like cosmetics has put the country in a condition that it is facing with shortage of dollar for import of medicines and basic goods.

Selahvarzi also reiterated the forex policy-maker is currently after ways to manage and increase the forex resources and since it cannot earn more money through sales of oil, it has focused on non-oil export revenues.

He emphasized he believes the forex resulted by exports should be repatriated into the country.

He also said that he has asked the Central Bank to reveal the names of those exporters who have not repatriated their forex which is said they have been cardboard sleepers.

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IRAN NEWS NATIONAL DESK

TEHRAN – Supreme Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei says the United States and the Europeans do not want their failures in fighting the novel coronavirus (COVID-19) pandemic to be seen.

He made the remarks in a video call to a meeting of the National Headquarters for Managing and Fighting the Coronavirus in Tehran on Sunday.

“The West and those supporting the West do not want this failure to be seen, but it is necessary to examine and articulate the dimensions of this inability,” the Leader said.

“The coronavirus spread in the United States and Europe later than other countries. It means that these countries had the opportunity to prepare themselves in the face of the virus, but they couldn’t as it was required,” Ayatollah Khamenei stated.

“The high number of infections and deaths in the United States and some European countries and various problems the people have in these countries, including unemployment, prove their inabilities,” he added.

The Leader also pointed out that the West’s social philosophy proved to be a total failure in tackling the coronavirus pandemic.

Ayatollah Khamenei noted that social philosophy in the Western world is primarily driven by materialism and money.

“That is why they ignored the elderly, the sick, the underprivileged and the socially underdeveloped during the corona crisis. Because [people belonging to] these social groups are incapable of earning money and contributing to materialism. The result was that many lost their lives in elderly care homes – a further proof of the defeat of the West’s social philosophy.”

The Leader also highlighted the failure of ethics and how it was manifested in Western communities in recent times. He recalled how panicked shoppers raided store shelves in those countries, noting, “Despite all their claims, the West failed in this respect as well.”

Meanwhile earlier President Hassan Rouhani said that today, the Islamic Republic of Iran is very proud of controlling and combatting the disease compared to other countries.

Addressing the meeting of National Headquarters for Managing and Fighting the Coronavirus,  President Rouhani, Ministers of Health and Interior, and Chief of the General Staff of the Armed Force presented reports to the Leader in the session.

The President gave a report on the current state of the outbreak of coronavirus in the country and the measures taken to control and stop the spread of the virus and services provided to patients in this regard, appreciating the hard work of doctors and medical staff and other sectors working in this regard saying, “Today, the Islamic Republic of Iran is very proud in controlling and combatting the disease compared to other countries.”

Referring to the extensive measures taken since the formation of the National Task Force for Fighting Coronavirus in the form of eight committees and 80 meetings over the past 80 days, Rouhani said, “In the process of combatting this disease, one of the beauties, which was seen in a few countries, was the presence and efforts of everyone, including the IRIB, the armed forces, the ministries, the public and non-governmental organizations, as well as all people, the NGOs and donors.”

The President said that since April 13 after the peak of the disease, the death toll in the country has reduced to 2-digit figures from 3 digits before, saying, “In fighting coronavirus, we did not let a situation of life or bread happen in our country, despite the case in many countries, including the United States.”

“We took into account both the health of the people and bread and the economy in a very wise way,” said Rouhani.

He continued to talk about lifting of some restrictions from April 11 in some provinces, adding, “From April 18, shops in Tehran whose activities were very low-risk or medium-risk reopened, and next week, we might reopen some others very carefully based on the daily figures of the Ministry of Health.”

“Despite the pressure of sanctions, a lot of work has been done, and all the figures, including those of the infected, the recovered and the dead, are acceptable, and now we can be exporters in a lot of equipment and medical supplies,” the president said.

Rouhani referred to the division of the country into three regions of red, yellow, white or low-risk, and stated that today 158 cities around the country are among the white or low-risk areas, adding, “In these zones, activities, including in mosques, are taking place with observing health protocols, and today we decided to reopen schools next week only for students who want to go and ask their problems from their dear teachers, and of course it is not mandatory, and we have made special decisions for universities.”

Enumerating the economic problems caused by coronavirus and the government’s efforts to alleviate these problems, the president said, “It was very important to cover the costs of unemployment and health care, and because we did not have the resources to do so, with Your Excellency’s consent, one billion euros was allocated for this purpose, 30 percent of which was paid and the rest will be paid, and this was a very important task of ours.”

Rouhani referred to Justice Shares and said, “A great deal of work was done by Your Excellency and that was the agreement with the release of Justice Shares, among others, which I believe is the best help given to the deprived in these critical conditions.”

Rouhani also appreciated the measures taken by the Central Bank and said, “All economic measures taken, including 75-trillion-toman loans, have been the main task of the Central Bank.”

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IRAN NEWS ECONOMIC DESK

TEHRAN – Majlis yesterday passed a bill allowing the government to slash four zeros from the rial, after a sharp fall in the value of the currency.

Under the approved bill, Iran’s national currency will be changed from the rial to the Toman, which is equal to 10,000 rials.

The bill needs to be approved by the Guardian Council before it takes effect.

Iran’s state TV said the Central Bank of Iran will have two years to “pave the ground to change the currency to Toman”.

Addressing to the open session of Majlis in defense of the bill, the governor of Central Bank Abdolnaser Hemmati said that because of the inflation in the past five decades, rial and dinar have lost their stamina and actually toman has replaced them in the society and people use toman in their daily trades and they even equals 50 tomans to 50,000 tomans.

On the cost of destroying old banknotes and printing new ones, he said there are some eight billions of banknotes circulating in the country and five billions of them are banknotes with value less than 2,000 tomans and by this approval and cutting four zeros, the bank can circulate one- and two-toman coins.

Hemmati reiterated that currently the bank destroys one billions of banknotes annually which its annual cost is around 400b tomans.

He reiterated that protecting the reputation of the national currency is very important, adding that currently the gap for changing rial with currencies like dollar and euro is very high. He admitted that the ration between national currency with dollar is 0.000006 which is a very weak one in the world.

Hemmati added that cutting the zeros will revive usage of coins in the country, adding that currently the per capita of banknote in the country is 102 and the figure for the coins is just 26 while the per capita of coins in other countries is three times more than Iran.

He once again reiterated that cutting zeros has no impact on inflation and they are other factors which are crucial in inflation.

Hemmati reiterated that replacing the current banknotes with the new ones will be gradual while both rial and toman will be valid during the transition period.  After that phase, all financial commitments based on the rial will be fulfilled in toman, he stressed.

The idea of fewer zeros has been floated for almost 16 years. The initiative to change the currency was first proposed by the government in August.

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TEHRAN – Islamic Parliament (Majlis) Research Center (IPRC) has predicted the country will face stagflation this year and government’s budget is facing with challenges of rise in expenses and decline in revenues.

IRAN NEWS ECONOMIC DESK IPRC in its recent report has reviewed the economic condition for this year and has forecasted a tough year for the government and the nation.

The report claims the government in the current Iranian calendar year will face with different types of budget deficit problems. The IPRC, even before the outbreak of the Coronavirus and in its previous reports, had warned the government about its budget bill.

It claimed Iran’s economy has faced with the problem of revenues while the government expenses cannot be reduced in accordance with the fall in revenues and this problem has led to the sustainable budget deficit which has been one of the national economic woes in recent years.

The report claimed that the outbreak of the Coronavirus will have its own expenses and will intensify the problem of budget deficit in the current year.

The IPRC in its report pointed that the outbreak of the virus will increase the costs in the health sector and the government’s financial support during the social distancing period.

It also pointed to the decline in revenues as the major factor in the budget deficit, adding that the government’s oil sales and tax earnings will drop drastically. The report claimed that the national economy in the current year will face recession and the fall in demand due to the virus will slow down production and consequently government’s earnings from tax will drop.

The parliament report also warned that the government may resort to the Central Bank to cover its budget deficit and it will lead to the rise in the liquidity in the society and inflation.

It also reiterated that because of decline in demand in the country, the velocity of money in the economy will slow and one can say the current year can be one of those years when the velocity of money will be at its lowest level and the inflation rate will not match the growth in liquidity.

In early April, the IPRC in another report had warned that the government’s delay in extending financial support to low-income people hit by the coronavirus outbreak might entail “painful consequences.”

In an elaborate allusion to the possibility of dissent and protests in Iran, the report charged that what President Hassan Rouhani’s administration has done so far to support “the poor and vulnerable people” has been “belated, passive and non-proactive.”

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IRAN NEWS ECONOMIC DESK

TEHRAN – Minister of Industry, Mine and Trade says the Central Bank’s report on the country’s seven percent growth in industrial production in the autumn and setting record for non-oil exports and boosting trade volume of the country to $85b indicates the country’s unique capacities for materializing the surge in production.

Reza Rahmani on Thursday said that the volume of exports and imports of the country last year surpassed 169m tons and the amount of exports last year experienced 14 percent growth comparing to the preceding year.

He reiterated that the figure reveals importance of developing infrastructures for exports and easing process for foreign trade more than ever.

Rahmani added that with studying all details and process of exports in the past Iranian calendar year, the ministry for surge in production will prioritize attention on exporting the knowledge-based exports and goods with value-added.

He noted that since the beginning of the New Year and upon the order of the President, activities in the production units especially in producing hygienic goods have not halted and it is expected that after containment of the Coronavirus, the country can turn the condition into an opportunity to materialize the slogan of the surge in production and to create new export markets.

Rahmani reiterated that the country enjoys having capacities and potentials to boost production and economic boom and all should work together to take advantage of capacities.

He also pointed to the Central Bank’s report on the seven percent growth in the industrial production in the autumn and setting new record in non-oil exports and increasing the national trade volume to $85b show that the country has unique potentials in production sector.

Rahmani added that most of the imported goods last year were essential goods, industrial machines, intermediary goods and industrial equipment and most of people’s needs were provided with domestic products.

He said if domestic products meet people’s needs and demands, then smuggling of goods will fall and to this end, all capacities for domestic production should be activated and Iranian brands should be revived.

Rahmani emphasized that cooperation of private sector and all activists in the industry will accelerate boost in production and can turn the threats into opportunities.

He said the ministry has started reviewing and studying the weaknesses on way of boosting production, and it wants to draw up plans for surge in production by using all experts’ views.

He emphasized that the ministry will draw up practical plans far from any slogan for implementing them in the country.

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IRAN NEWS ECONOMIC DESK

TEHRAN – Iran’s Central Bank under pressure from the critics finally released the report on inflation rate for last Iranian calendar year as according to the report the country posted the highest inflation rate in the past four decades with 41.2 percent.

The Central Bank under pressures from the critics and economists finally released report on the inflation rate in the country.

According to the report, Iran’s inflation rate stood at 41.2 percent last year which is the highest in the past four decades and it is another setback for President Hassan Rouhani’s government.

The central bank has been barred from releasing any data on inflation following the order of President Rouhani.

The government preferred Iran Statistical Center to issue any economic statistics in order to manage the figures according to what it wanted.

According to reports, the Central Bank under pressure from Judiciary was forced to release the report.

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IRAN NEWS ECONOMIC DESK

Mr. Naghashian in an interview with Sobh-e Eghtesad daily answered to the questions about recent developments in the forex market and disputes over cryptocurrency in the country.

When was asked about the launch of the regulated forex market by the Central Bank and the goal behind of it, Mr. Naghashian said that the new market can be a solution to control the forex market but some measures should be taken into consideration.

He said essentially those countries, whose economies are run based on oil revenues and through oil or any other product sales, earn forex by the sale and run their national treasuries by the resulted forex. He added that so sales of the resulted forex can have different rates in their countries.

Mr. Naghashian further said, “Forex needs in our country are divided into several groups. because about  90 percent of national economy is administered based on the government’s policies, measures and implementation. Consequently, forex rate is not a defined rate in the free market. And since there is no certain definition for the rate, the government can sell it with different rates by taking into consideration where it has to pay subsidies and where the rate can affect the price of the goods.

On the unification of forex rate, he said, “Actually in a country where it witnesses fluctuating inflation rate, the inflation rate is double-digit and its economic system does not enjoy an irreducible and stable inflation rate, there is no ability to have a fixed rate. In the past four decades, governments have decided to unify the forex rate but after a while the fixed and unified rate has turned into multiple rates. There are several factors behind it.  The first factor is the ruling system on that country’s economy. In Iran and after the victory of the Islamic Revolution, some economists who had graduated on the West like Messrs Roghani Zanjani and Mohsen Noorbakhsh in the early governments underlined the creation of free and open market. Of course for launching the Islamic economy in the country, there were some economists like Dr. Tootoonchian, who also worked with Finance Minister Mr. Namazi in the early days of the revolution and had several books on Islamic economy which are taught in foreign universities, were put aside and they were not employed in the national economy. The national economy was shaped by a group of economists which are known New Yorkers. They formed the economy based on what they had studied or perhaps based on what was dictated to him from overseas. Our officials did not realize how they were deceived. The second factor in administering the national economy is to divide the economy into two balanced parts as monetary economy and financial economy, and this balance was formed with a dubious inequality and perhaps it was an assumption that it had been formed. And consequently with an uneven competition in the monetary economy, the rate of money soared more and more and day by day,  and the inflation resulted from the rate of money would be a deadly blow to any economy. So this inflation paved the ground for more demands for money and led to speculation and today this reins the forex rate and creates multiple rates. Some part of the forex is earned through smuggling of goods based on the rates which are not registered in the banks and they are not registered because they are channeled into the country out of banking system. So it is natural that they define their own rates. Today an in an era that we faced a chaotic process in our forex system, those markets which fix the rate have gone out of the centralized domestic market and some part of it has been shifted to Dubai, some to Iraqi Kurdistan and some to Kabul in Afghanistan. So by taking into the consideration such a condition, you cannot define the forex rate, which is generated by the people, by force and restrictive laws. Actually the balance between resources of real demand and supply is the determining factor for free forex rate and governments have no roles in it. The third factor is the rate of investment in the country and governments had to encourage investors by taking proper measures but unfortunately a confusion happened that had direct impact on insecurity in the investment market. So it did not let production growth  challenge with the growth in liquidity and growing increase in generating money by the banks, and it led to unprecedented fluctuations in the forex rate and today  40 years after the victory of the Islamic Republic, the dollar rate from 70 rials has soared to almost 120,000 rials; it means that increased by 2000 times. I believe the new governor of the Central Bank Mr. Abdolnasser Hemmati has done a great job and he, by taking wise measures, could control the forex market by using the national forex reserves and by launching the NIMA system which is a channel for flooding the forex resulted from the exports to the market which was decisive in stability of the forex market. Of course such an injection needs sustainability for a stable forex market and I think for this reason the central bank has introduced the regulated forex market which can be a solution for stability of forex market. This will be successful if we take the power from Dubai, Erbil and Kabul markets for defining and determining the forex rate. I myself agree with multiple rate for forex but it should be managed and the gap between prices should not be high. If the gap between rates is high, it is natural that all should rush towards the lowest rate to take advantage of it and it will lead to corruption and illegal interests.”

Mr Naghashian added that the main player of the forex market is the logical reserves which is used as a lever to regulate the market. He added the second player is the private sector and that part of the state-run business which generates non-oil forex like petrochemical, electricity and steel producers. And the third player is the revenues from the oil sales which have decreased, and the other player and important player is consumption, he added.

He noted that consumption demands are divided into essential goods for daily life, developmental needs like machinery and raw materials for producing essential goods and services like education and medical treatment abroad, adding that travelling abroad can be also included in the consumption category. Mr. Naghashian stated that essentially such an approach can be organized and the Central Bank has gone forward to form a corporate to control the forex market and it is not bad but why in form of a corporate? He said if a corporate does a job by having a look at its own interest, it will have opposite result.

He also backed the regulated forex market and said it will lead to transparency which will make overseeing the market easy. He noted the regulated forex market actually exists in the country but it functions without having any name and it is run without control and irregularly. So such disorders and chaos usually led to unpleasant impacts, reiterating that this volume of generating the forex and forex rate can be an Achilles Heel in our economy. The more this controlling system is vast the more stability will be, he noted, adding, so the Central Bank has adopted a name for this controlling system in order to implement operational forex system in a the form of a united body and the reason behind its postponement is that its players like exporters do not like to obey the overseeing and control and they do not like their forex banking accounts to be checked and monitored by the Central Bank and the finance ministry. Mr. Naghashian admitted that when the country cannot appoint human resources in line with the goals of the revolution for running the country and there are some traitors among the ruling currents and even opposing with the revolution, it is very natural that some people create obstacles in way of national economy, and some of those people essentially have different approaches and some become mercenaries of the foreigners and get the order from overseas.

He added, “In overseas, when somebody wants to take $10,000 into the country, he has to answer several questions about the source of money. But Iran’s economic system is in a way that there is no accurate control in terms of statistics. Essentially we oppose to transparency. I believe that if the economy either state-run or private is run transparently and in the glass rooms, such a mechanism or system can act as a lever for transparency in real sources of consumption and it will have great impact on the stability. Now we need transparency in our tax system, in identifying the economic behavior and in micro and macro sectors, and also launch of mechanisms like the regulated forex market. All of these needs can help us to exercise a centralized economic custodian or at least centralized policies in the country.”

Mr. Naghashian also supported the idea of supporting cryptocurrency in the country especially government’s support in this regard despite huge electricity consumption. He said he definitely supports this idea because it is essentially to the national interests especially it bears positive impacts during the sanctions although country like China pays no heed to sanctions and it is the biggest cryptocurrency producers in the world.

He added that cryptocurrency is now a money can be converted into other current forex and it is a turning point. It means when you earn cryptocurrency, some people in the world can afford to buy it and it is a exchange which has been believed by the world. He went on to say that since this cryptocurrency is not generated in the world banking operation and its trade is essentially unable to be traced or curbed in the politico-economic systems of the world.

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IRAN NEWS ECONOMIC DESK

During his one-day visit to Kurdestan Province, Abdolnasser Hemmati met a task force group on resistance economy and reviewed the latest developments in the province.

He pointed to the job creation as the most important issue in the province, adding that activating all economic capacities of Kurdestan for creating jobs is the primary goal and all are working on the issue to be materialized.

Hemmati admitted that an especial condition is currently looming over the country and all should accept that the country is engaged in an economic war but he assured that the condition of foreign exchange reserves in the Central Bank is good, adding that in recent months and after some plannings, the  forex resources are wisely and efficiently used.

He added that besides the importance for the national currency to regain more of its value, the CBI remains focused also on the stability of the rial.

“For the CBI it is important that along with strengthening the rial, stability of the market and preventing volatility is also crucial. However, this does not mean that we prevent declines in exchange rates or let them jump,” Hemmati reiterated.

He reiterated that allocation of loans or credit lines for Kurdestan has no problem for incomplete projects and resources of National Development Fund can help the Central Bank.

Hemmati also reiterated that the province can have better future after completion of the projects.

He went on to say that the bank is determined to control the forex market, adding that stability is currently seen in the forex market.

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