Strong oil boosts Iran's economy, cheers investors
LONDON, Sep 28 (Reuters) - Strong oil prices have lifted key crude producer
Iran onto solid economic ground and built confidence in potential international
investors, a senior Iranian official said on Thursday.
``Oil revenues are more than 60 percent higher during the first quarter
of 2000 versus the same period last year,'' Iranian Central Bank Governor
Mohsen Nourbakhsh said at Iran Invest in London. He was referring to the
first three months of the Iranian year which began on March 21.
Oil prices hovering at decade highs of around $30 a barrel have left
producers raking in profits while raising the alarm in consuming nations.
The huge influx of petro-dollars has allowed Iran -- OPEC's second biggest
producer -- to balance its books during the first quarter and push its
trade account surplus to $2.7 billion, he said. GDP growth this year is
projected at about four percent, Nourbakhsh added.
These encouraging economic prospects could well boost Tehran's standing
in international financial circles.
The Central Bank chief insisted Iran was still keen on a $500 million
Eurobond issue, targeted mostly at Europe.
Iran first expressed an interest in tapping international debt markets
several months ago, but bankers do not expect the issue to emerge until
``That is definitely a market we would like to be in,'' Nourbakhsh said.
``That way we would have access to the capital market.''
He declined to be drawn on the timing of the issue -- Iran's first foray
into international capital markets since the 1979 Islamic revolution. But
the Central Bank chief said talks were underway with dealers to handle
``We are working on the documents,'' Nourbakhsh said. ``Everything must
be harmonised with the Central Bank.''
STRONG OIL CUTS DEBT
Higher oil earnings have knocked down Iran's external debt to $10.4
billion this year from $14 billion during 1998-1999 when low oil prices
created economic turbulence, Nourbakhsh said.
``By any standards this level of debt is too low,'' he said, adding
that external debt now accounts for less than 10 percent of the country's
GDP. ``We need more access to external financing to achieve the growth
objectives set out in our third five year plan.''
Although Iran is reaping the benefits of robust oil prices, the country
still has obstacles to overcome along the road to economic reform.
``Our immediate challenge is unemployment,'' said Nourbakhsh. ``We must
get our young graduates into the labour market through expanded economic
Robust oil prices pushed Iran's economic growth to 3.2 percent last
year, Nourbakhsh said. But the country needs six percent economic growth
and a rise of more than seven percent in investment to create 3.6 million
jobs for its booming young population over the next five years.
Nourbakhsh repeated that stability in the oil market is crucial for
both consumers and producers. But he said there must be symmetry between
the two groups. Nourbakhsh said OPEC had done its part by recently agreeing
to increase production by 800,000 barrels per day (bpd).
He called on industrialised countries to reduce their tax on fuel.