Iran’s central bank to inject $15bn from oil fund into banks

Iran’s new central bank governor said he would inject $15 billion (Dh55.1bn) into the banking system to help them boost industrial production, a move economists have warned will stoke surging inflation.

Governor Mahmoud Bahmani said the funds would come from an oil reserve fund and by helping to boost production would ease price rises, echoing the government’s line.


Analysts said Tahmasb Mazaheri was replaced as governor last week because he was seeking to tighten credit to curb inflation running at 27 per cent, while the government was pushing for looser policy partly ahead of the June 2009 presidential vote.

“Many experts, including me, are staunch critics of withdrawing money from the Oil Stabilisation Fund [OSF], but it should be noted that withdrawing money from this account to strengthen production is fully in line with the aim of this account,” Bahmani told Hambastegi newspaper.

The OSF was set up as a fund to capture extra oil revenues when prices soar, as they have done in recent years, to provide a cushion when oil prices are low or to fund development projects.

Emirates Business 24/7