Iran will honor every single foreign financial commitment here, welcome new investment and effectively devalue its overpriced currency, the governor of the Central Bank of Iran said today.
Speaking at a news conference, Mohammed Ali Mohlavi sought to end weeks of uncertainty about the revolutionary governmenths financial and economic policy by reassuring both local and foreign investors.
Despite his efforts, not all analysts were convinced that he and Prime Minister Mehdi Bazargan's financial and economic policy by reassuring both local and foreign investors.
Despite his efforts, not all analysts were convinced that he and Prime Minister Mehdi Bazargan's embattled government could make good on their pledges.
Especially disturbing for analysts were Ayatollah Ruhollah Khomeini's recently repeated condemnations of Western ways in general and especially of the use of interest. The religious leader wants Iranian baks to abolish interest in keeping with the Islamic prohibition of usury.
Seeking to mollify foreign investors, Mohlavi said foreign remittances would resume once administrative problems occasioned by a three-month strike at the Central Bank were sorted out.
He swore that the Central Bank will ensure with all its strength that foreign commitments were met fully and added, "No Third World country can do without" foreign investment.
Mohlavi listed Iranhs foreign reserves at $15 billion, at least $4 billion and perhaps $5 billion higher than the level most analysts had estimated. Foreign debts amounted to not much more than $5 billion, he added.
The Iranian rial, now linked with the dollar, will float freely he said, and the currencyhs value will be determined when the first resumed oil exports leave Persian Gulf ports, probably on Monday.
The rial is officially exchanged at 70 to $1, but the black market has pegged it down to 90 to $1 in recent weeks.
Mohlavi spoke of the urgent need to reduce inflation fueled by massive wage hikes handed out by successive governments since last fall in an abortive effort to stop the revolution. He appealed to retailers to reduce prices by 10 percent.
He acknowledged that three million Iranians were currently unemployed, a situation made more serious by the fact that he did ot mention that the last receipts for oil sales, which stopped Dec. 26, were received in February and amounted to well under $1 billion.
Mohlavi criticized unnamed foreign banks for attacking revolutionary Iran and said they were creating problems for the new government.
Iran could hit back, but did not intend to do so since it wanted to create good relations with all banks.
The 78 representrative offices of foreign banks could continue to operate in Iran, he said, but under closer supervision than in the freewheeling past when Shah Mohammad Reza Pahlavi sought to turn Tehran into a Middle East money market and abolished controls on financial transactions.
Local banks in trouble would be helped by the Central Bank in order to put the Iranian banking system back in working shape.
As for Khomeini's pet project of bank loans without interest, Mohlavi said he would study the experience in other Islamic countries, particularly Kuwait, Pakistan and Saudi Arabia.
Mohlavi predicted confidently that investors would repatriate their money to Iran -- if they had taken it out legally -- because returns on investments here would be too good to be missed.
In a separate development, a government statement said "antirevolutionary armed elements" apparently seeking more arms, today attacked a police station in downtown Tehran.