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28 September 2011

Iran urges World Economy to shift to Islamic Finance

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Seyed Shamseddin Hosseini
Tehran: The international economy should shift towards new models like Islamic finance to avoid periods of instability like the European debt crisis, Iranian Economy Minister Seyed Shamseddin Hosseini said at an International Monetary Fund meeting in Washington.

"The current architecture of the world's economy, due to inconsistency between the financial and the real sectors, creates unavoidable periodical instabilities," Hosseini said.

Hosseini also criticized sanctions against Iran as unfair and said the IMF only "pursues the political will of some certain shareholders."

Hosseini also said Iran is making changes to foster greater economic productivity including changing its constitution to give the private sector and non-governmental organizations a greater role.

"Iran is also making changes to customs rules, taxes, currency denominations and the banking system," Hosseini said.

In its latest report on Iran in August, the IMF put Iran's rate of economic growth at 3.2 and hailed the Iranian government for its proper implementation of the subsidy-cuts plan.

Following the report, a number of western media and press including the Wall Street Journal tried to say that the latest IMF report was based on official sources in the Islamic Republic while the April-report - which put Iran's economic growth rate at zero - was compiled based on information provided by independent sources. The daily also tried to attack the report by trying to draw negative conclusion from it.

In response to this article, IMF Deputy Director of the Middle East and Central Asia department Ratna Sahay, published a statement in the same daily yesterday, stressing that her organization used its own numbers in compiling the report.

The official said that the lower projections reported in the IMF's Regional Economic Outlook in April were the organization's estimates based on limited information it had of the Iranian economy at the time rather than any independent assessments by a third party.

She noted that two key factors contributed to the IMF's revising the growth numbers upward - statistics the IMF experts collected in a recent mission which indicated an exceptional agricultural performance in the past two years as well as the positive impact of the high oil prices on a highly diversified Iranian economy.

She further underlined in her statement that like in any member country, the IMF projections remain independent of the authorities' views as the growth forecasts for 2011-12 are lower than the authorities' and below past trends despite the higher potential brought about by the subsidy reform.

On August 4, the IMF published a report saying Iran's economic growth has accelerated and cuts in subsidies have been achieved without sharp increases in inflation, improving the outlook for further gains.

The report caused fury among countries and bodies which are in unfriendly terms with Iran in the international arena as it proves the sanctions and economic pressures on Iran have been null and void.

(Courtesy: Fars News Agency)

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