IMF sees 6.5 percent Iran growth, urges quicker reform

The International Monetary Fund (IMF), labelled a poor guide by Iran's Supreme Leader this week, said on Saturday it agreed with Tehran's economic reform goals but argued the pace of change needed to be quicker.
The fund predicted Opec's second biggest crude exporter would maintain buoyant economic growth in the year to March 2005, with robust showings from both oil and non-oil sectors.
"We expect growth to be about 6.5 percent, even though there might be a slight deceleration in agriculture and probably in construction," senior IMF official Abdelali Jbili said after an annual consultation with Iran's central bank.
The central bank said last month a slowdown in farming cooled economic growth to 6.7 percent in the year to March 2004, sliding from 7.4 percent in the previous year.
Supreme Leader Ayatollah Ali Khamenei said on Wednesday Iran, which is trying to streamline its lumbering state-dominated economy, should not follow IMF and World Bank models.
But Jbili, the IMF's assistant director in the Middle East and Central Asia Department, played down any idea of a rift, welcoming a package of reforms proposed in Iran's next five-year development plan which runs from 2005-2010. "We rarely had major disagreements on the objectives or the policies, sometimes we may have differences on the pace," he told a news conference.
"Privatisation" often means a company is acquired by another state organisation. Foreign investment, particularly in the energy sector, is hampered by notoriously complicated contracts that are always liable to be renegotiated.
Awaiting approval from a hard-line watchdog in the proposed five-year plan are moves to allow foreign banks to open branches in Iran and to allow foreign developers to win automatic development rights if they discover oil.
Jbili said Iran had to tackle liquidity growth and annual inflation running at about 15 percent by reining in high government spending. But he added Iran's steps to staunch price rises were working and forecast a possible fall in inflation in the year to March 2005.
"We expect inflation to either be at the same level as last year or lower," he said.
In a medium term forecast, he said Iran's trade surplus was under threat as oil prices headed down from their 21-year highs.
Jbili said the IMF would be willing to provide Iran with technical support in carrying out its economic reforms.