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Iran government avoids borrowing for a second spending month: Minister

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Iranian government says it has avoided borrowing to finance its budget needs for another month.

An Iranian administrative government that came to office in early August has managed to finance its budget needs for a second consecutive month without resorting to borrowing, says the country’s finance minister.

Ehsan Khandouzi said on Monday that the government had resisted calls for issuing new debt to finance its spending in the calendar month to October 22 despite increasing pressures on the public budget.

“Thank God the government expenditures in the month of Mehr were funded without any issuance of new debt bonds,” said Khandouzi in a Farsi tweet he posted on his personal page.

Authorities in the government of President Ebrahim Raeisi have insisted that borrowing from Iran’s central bank or issuing bonds have caused the inflation in the country to rise steadily over the past few years.

However, issuing sukuk, or bonds that are compliant with Islamic financial rules, have been a key part of Iran’s efforts to fund its massive development projects since 2018 when the country’s crude sale came under US sanctions.

The current government says those borrowings have caused an expansion in Iran’s money supply and have pushed up the consumer prices.

Government figures published on Saturday showed that the annual inflation rate had dropped slightly in the month to late October to 45.4%.

Khandouzi’s Monday announcement on government bonds issuance come as the Central Bank of Iran (CBI) continues to issue and sell sukuk as part of its open market operation policy which is meant to control the interbank interest rate.

Reports suggested that private and state banks had bought 370 trillion rials ($1.34 billion) worth of CBI sukuk in trades that took place earlier in the day.

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