Conservative daily gives Khatami a mixed economic report
A report published in Resalat, a daily newspaper associated with Iran’s conservative clergy, has given a mixed grade to the economic performance of the reformist government of President Khatami.
The newspaper stated at the outset that the government ‘s economic performance has to be judged according to its ability to fulfill its Islamic duties, which include just economic system that provides a host of welfare programs, such as accepted minimum level of housing, food, clothing, health, medical care and education. Additionally, the newspaper stated, the government must provide help to those Iranians intending to marry, so as to encourage and facilitate the formation of new families.
The government, Resalat stated, is also responsible for preventing the accumulation of wealth through unethical, illegal and illegitimate means, and it is duty-bound to stop any kind of misappropriation of state assets. Furthermore, the newspaper said, the Iranian constitution charges the government with bringing about self-sufficiency in agriculture, industry and military production.
Looking at the Khatami government's economic performance over the past three years, Resalatsaid there was success in certain areas and failure in others.
The reduction of Iran’s’ foreign debt from $16.8 billion in 1996 to $10.3 billion in 1999 is one area of success, the newspaper stated, so is the fact that the government has been able to bring overall money supply under control. Another feather in its cap was the reduction in the official rate of inflation, from 23.3 percent in 1996 to 20.4 percent in 1999—although later in the report, the importance of this figure was questioned.
Iran’s country's balance of trade has also shown a marked improvement, Resalat noted, and in 1999 it actually enjoyed a trade surplus of $ 6.2 billion. The government has also enjoyed success in attracting foreign capital investment in to the oil and minerals sectors, the newspaper said.
But, on the other side of the balance sheet, Resalat said the economy is stagnating, falling from average annual growth rate of 3.07 percent for the three years falling ending in 1996, to an average annual growth rate of 2.5 per cent for the three years ending in 1999. Negative growth rates were reported in the petroleum and agricultural sectors, and in the industrial sector the number of new industrial units fell from 9,566 new units in1996 to 8,096 units in 1999.
The improvement in Iran’s overall trade balance was largely a result of increased oil prices said Resalat. Indeed, the value of non-oil exports fell from $4.8 billion in 1994 to $3.1 billion in 1999.
Over the past three years, Resalat reported, the rial weakened on the foreign exchange markets. Whereas, in 1996, 4,455 rials bought $1 on average, in1999 the average climbed to 8,656.6 rials.
The construction sector is in particular dire straits, the newspaper stated. While the value of unfinished private sector buildings amounted to 6,307 billion rials in 1996, the figure had climbed to 11,625 billion rials in 1999. And many of these problems Resalat said, were self-inflicted. In 1997 the Central Bank had instructed commercial banks not to extend credits to the construction industry in the private sector, in order to stop the uncontrolled growth of Tehran and other large urban areas. A consequence of this move was that many housing development projects that already had begun were left unfinished.
Resalat questioned the government’s reportage of a fall in the rate of inflation. “Statistics, even if collected and computed accurately, show only one side of the reality and not the whole truth,” it stated. “The drop in the official rate of inflation is to be appreciated. But the question is whether the people too feel that there has been a decline in the rate of inflation? Or do they feel that their overall purchasing power has declined rapidly?”
The newspaper pointed out that the Iranian Central Bank is to abolish the official rate of 3,000 rials per dollar allocated to imports of goods and service. Consequently, imports of goods and services will have to be financed by foreign currencies calculated at 8,200 rials per U.S. dollar. “Now, under these circumstances, can anybody believe you if you talk of the drop in the official rate of inflation?” the newspaper said.
Resalat was critical about what it felt was the Khatami government’s foot dragging on the issue of what it planned to do with additional income earned from oil production. “At any time in the Iranian economy, when we have had a period of increased oil income, we have halted all moves towards the development of non-oil exports. Our attention to non-oil exports has been maximized only when we have been faced with shocks of sudden drop in oil revenues or in prices of crude oil,” the newspaper stated.
In this respect, it quoted the country’ supreme religious leader, Ayatollah Khamenei, as saying: "an increase in non-oil exports is yet another priority move towards attainment of the goal of liberating the system from dependence on oil income."
Resalat also took the government to task over what it suggested were adverse economic effect resulting from the changed political climate in the country, in which reformists have been more inclined to criticize the religious establishment.
Referring to remarks made by Khamenei during a recent meeting with the president and members of his cabinet, the newspaper said that the function of the current five-year plan is to eliminate the “unholy triangular alliance of poverty, corruption and discrimination.” According to the newspaper, Khamenei had said that "if the country is plunged in a break down in law and order of any kind, we can neither eliminate poverty, nor corruption and nor discrimination." – (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)