Iran issues state bonds to cover budget deficit
TEHRAN, Aug 23 (Reuters) - Iran issued state bonds worth up to 500 billion
rials on Monday, part of an issue aimed at tackling a severe budget deficit
caused by last year's low oil prices.
Tehran radio said state banks began offering 500 billion rials worth
of "national participation certificates", which would provide
an annual return of 19 percent.
The domestic four-year issue is worth $166 million at the official exchange
rate, but just a third of that on the black market.
Newspapers said the issue was part of two trillion rials in certificates
that the government is allowed to sell to the public to supplement the
budget for the year to March 19.
Parliament approved the issue in October as part of an emergency rescue
package in the face of a budget deficit of about 18 trillion rials caused
by last year's slump in international oil prices.
Iran , trying to develop its capital market within Islamic constraints,
in 1994 approved the "national participation certificates", which
are similar to bonds - the first time since the 1979 Islamic revolution.
A number of state bodies, including municipal and provincial development
agencies, have since issued the certificates to finance projects.
The return on the certificates is provisional and an extra profit could
be distributed upon maturity. This is in line with the dominant view among
Iran 's Shi'ite Moslem scholars which bans the fixing of returns as tantamount
to usury.
Inflation is running at an annual rate of about 20 percent, according
to official figures. ($1=3,000 rials at the official exchange rate).
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