Iran’s central bank chief replaced amid differences over economic management (Lead)

September 24th, 2008 - 1:27 pm ICT by IANS  

Tehran, Sep 24 (IANS) In what looks like widening differences with officials over his economic policies, Iranian President Mahmoud Ahmadinejad has sacked the country’s central bank chief Tahamasseb Mazahari, replacing him with his deputy Mahmoud Bahmani, the official IRNA news agency reported Wednesday. The replacement of Mazahari, who took office from his predecessor Ebrahim Shehbani last year, is the second change of guard at the central bank owing to differences between the president and his economic advisers over the management of the country’s troubled economy.

Shehbani was replaced in August 2007 when he disputed the government’s strategy to fight inflation and monetary policies and called for systemic reforms to set the house in order.

Tuesday’s decree signed by the president appointing Bahmani as the chief of the Central Bank of Iran (CBI) asked him to reorganise the monetary system by “recruiting faithful, committed, creative and efficient staff” and maintain and upgrade “the value of national currency while guaranteeing the country’s economic growth”.

Reform of the national currency rial and the strategy to tame the runaway inflation had been two major issues over which Mazaheri came to clash with the president.

Last month, the central bank issued new 50-rial and 100-rial bills replacing the 500,000-rial and 1 million-rial notes which no longer correspond to prices under inflation rates between 26 percent and 50 percent.

Inflation in Iran has led to widespread criticism of Ahmadinejad, not only by opposition parties but also within his own political camp.

The presidential decree called on the new governor to strive for an efficient banking and monetary system, compiling precise data and macro-economic indices, devising proper monetary policies, overseeing the performance of the national banking system and institutionalising Islamic interest-free loan system.

A number of ministers and high officials, including the country’s chief nuclear negotiator Ali Larijani, have resigned in recent months owing to disagreement with the president over policies.

The president’s declared economic reforms and proper distribution of the national wealth are still to be realised by the government.

The oil bonanza is exacerbating inflation and focusing new attention on the government’s mismanagement of the economy.

With the Iranian rial pegged to the plunging US dollar, inflation is forecast at 28 percent in 2008, up nearly 10 points from 2007. Some economists say it may even be as high as 60 percent.

Economists inside and outside Iran say Ahmadinejad’s economic policies are the reason why Iran has the worst inflation record in the region after war-stricken Iraq.

In June 2007, 57 Iranian economists accused the government of ignoring the basics of economics, and a prominent Iranian cleric went so far as to say that the president’s economic faults had dealt “a severe blow to the Iranian system”.

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