ECONOMIC REPORT AND BALANCE SHEET 1388 (2009/10) CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN

ECONOMIC REPORT AND BALANCE SHEET 1388 (2009/10) CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN

ECONOMIC REPORT AND BALANCE SHEET 1388 (March 20, 2010) Approved at the Annual General Meeting of Central Bank of the Islamic Republic of Iran Held on August 10, 2010 Prepared by: Economic Research and Policy Department CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN

ECONOMIC REPORT AND BALANCE SHEET 1388 CONTENTS ABBREVIATIONS SYMBOLS LIST OF FIGURES LIST OF BOXES vii vii viii x PART ONE (ECONOMIC DEVELOPMENTS OF IRAN IN 1388) Chapter 1: NATIONAL PRODUCT, EXPENDITURE AND INCOME 1 Gross Domestic Product 1 Gross Domestic Expenditure 2 4 th Five-Year Development Plan 3 Chapter 2: AGRICULTURE 5 Farming and Horticultural Crops 5 Government Investment 8 Banking Facilities 9 4 th Five-Year Development Plan 14 Chapter 3: ENERGY 17 Primary Energy Consumption 17 Crude Oil Reserves 17 Crude Oil Production 17 Production and Export of Crude Oil 21 4 th Five-Year Development Plan 22 Chapter 4: MANUFACTURING AND MINING 25 Production 25 Government Investment 26 Banking Facilities 27 4 th Five-Year Development Plan 28 iii

CONTENTS Chapter 5: CONSTRUCTION AND HOUSING 31 Government Investment 32 Banking Facilities 32 Construction Indices 36 4 th Five-Year Development Plan 37 Chapter 6: TRANSPORTATION 39 Government Investment 39 4 th Five-Year Development Plan 42 Chapter 7: DOMESTIC TRADE 47 Domestic Market Management and Essential Goods Procurement 47 Banking Facilities 49 4 th Five-Year Development Plan 51 Chapter 8: LABOR MARKET DEVELOPMENTS AND HUMAN RESOURCE 55 Population and Human Resource 55 Allocation of Facilities for Employment Creation 58 Education 60 4 th Five-Year Development Plan 62 Chapter 9: SOCIAL AFFAIRS AND HOUSEHOLD WELFARE 65 Socioeconomic Characteristics of Households in Urban Areas 65 Social Security 72 Health and Medical Care 73 Human Development and Poverty Indices 73 4 th Five-Year Development Plan 75 Chapter 10: FISCAL POLICY AND PERFORMANCE 77 4 th Five-Year Development Plan 81 Chapter 11: BALANCE OF PAYMENTS 87 Balance of Payments Developments 88 Current Account 88 Goods Account (trade balance) 89 Exports 90 Imports 91 Services Account 91 Income Account 92 Current Transfers Account 92 Capital and Financial Account 92 Foreign Direct Investment 93 4 th Five-Year Development Plan 95 iv

ECONOMIC REPORT AND BALANCE SHEET 1388 Chapter 12: FOREIGN EXCHANGE AND TRADE POLICY 99 Trade 99 Imports 100 Exports 102 Terms of Trade 104 4 th Five-Year Development Plan 105 Foreign Exchange Market Developments 107 Chapter 13: RELATIONS WITH INTERNATIONAL MONETARY AND FINANCIAL ORGANIZATIONS 109 Chapter 14: MONETARY AND BANKING POLICY AND PERFORMANCE 115 Banking System Performance 117 Banking System and Public Sector 118 Banks and Non-public Sector 119 Liquidity 121 Sources and Uses of Funds of Public Commercial Banks 123 Sources and Uses of Funds of Specialized Banks 123 Banking Sector Developments 124 4 th Five-Year Development Plan 127 Chapter 15: PAYMENT SYSTEM 135 Notes and Coins 135 Interbank Clearing House 136 SAHAB 139 SATNA 140 4 th Five-Year Development Plan 142 Chapter 16: INSURANCE 145 Performance of Insurance Market 145 Assets and Liabilities of Insurance Companies 147 4 th Five-Year Development Plan 147 Chapter 17: CAPITAL MARKET 151 Share Trading 151 Share Offering by Public Sector and Banks 154 Mercantile Exchange 156 Participation Papers 158 4 th Five-Year Development Plan 158 Chapter 18: PRICE TRENDS 163 Consumer Price Index 163 Producer Price Index 165 Exportable Goods Price Index 167 Velocity of Circulation of Money 168 4 th Five-Year Development Plan 169 v

CONTENTS Chapter 19: COMPARISON OF THE IRANIAN ECONOMY WITH COUNTRIES IN THE REGION 171 Economic Growth 174 Investment Growth 176 Liquidity Growth 177 Inflation Rate 178 Unemployment Rate 178 4 th Five-Year Development Plan 180 PART TWO (ADMINISTRATIVE ORGANIZATION, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT) Executive Board 182 Board of Auditors 182 Money and Credit Council 183 Note-Reserve Control Board 184 Balance Sheet 186 Profit and Loss Account 188 Details of Balance Sheet 190 Details of Profit and Loss Account 194 PART THREE (STATISTICAL APPENDIX) List of Tables 198 vi

ABBREVIATIONS ATM CBI CPI FYDP GDP kwh mb/d MCC NIGC NIOC NIORDC OPEC OSF POS PPI Rls SCI SMEs TEDPIX TEPIX TEU TSE WPI Automated Teller Machine Central Bank of the Islamic Republic of Iran Consumer Price Index Five-Year Development Plan Gross Domestic Product Kilowatt-hour Million barrels per day Money and Credit Council National Iranian Gas Company National Iranian Oil Company National Iranian Oil Refining and Distribution Company Organization of Petroleum Exporting Countries Oil Stabilization Fund Point of Sale Producer Price Index Rials Statistical Center of Iran Small and Medium Enterprises Tehran Stock Exchange Dividend and Price Index Tehran Stock Exchange Price Index Twenty-foot Equivalent Unit Tehran Stock Exchange Wholesale Price Index Negligible fraction.. Figure not available SYMBOLS Figure is not a significant decimal fraction Figure is provisional Previous figure now revised More than 500 percent increase Calculation of percentage change is not possible The year 1388 corresponds to 2009/10 (starting March 21, 2009 and ending March 20, 2010). In all tables, components may not sum to total because of rounding. "Billion" means a thousand million; "trillion" means a thousand billion. vii

List of Figures Figure 1.1 GDP Growth 1 Figure 1.2 Economic Sectors' Contribution to GDP Growth 2 Figure 1.3 Expenditure Items' Contribution to GDE Growth 3 Figure 2.1 Precipitation Level, Accumulated 5 Figure 2.2 Estimated Production of Major Farming Crops 6 Figure 2.3 Guaranteed Purchase Price of Major Agricultural Products 8 Figure 2.4 Subsidy Paid on Major Agricultural Products 8 Figure 2.5 Outstanding Facilities Extended by Banks to Non-public Agriculture Sector 10 Figure 2.6 Facilities Extended by Bank Keshavarzi Iran 11 Figure 3.1 OPEC Members' Production Quotas in 2009 18 Figure 4.1 Investment and Employment in Manufacturing Operation Permits 25 Figure 4.2 Change in Outstanding Facilities Extended to Non-public Manufacturing and Mining Sector and Government Development Expenditures 27 Figure 5.1 Estimated Floor Space in Construction Permits Issued by Municipalities 34 Page Figure 5.2 Number and Total Floor Space of Residential Units Constructed by Private Sector in Urban Areas 36 Figure 5.3 Performance of Mehr Housing Program as of Implementation till end-1388 36 Figure 5.4 Growth in Housing Sector Indices 37 Figure 6.1 Number of Carried Passengers 40 Figure 6.2 Shares of Vehicles (Passenger and Freight) by Age of Vehicles by end-1388 40 Figure 6.3 Volume of Carried Goods 42 Figure 8.1 Share of Employment in Various Economic Sectors 57 Figure 8.2 Education Quality Indices in Iran 61 Figure 8.3 Labor Supply and Demand in 4 th FYDP, Targets and Performance 64 Figure 9.1 Share of Expenditure Groups of Urban Areas in 1388 67 Figure 9.2 Comparison of Average Household Expenditures with the Average Expenditures of Urban Areas in Various Deciles in 1388 69 Figure 9.3 Comparison of Households' Gross Expenditure and Income at Constant 1383 Prices 71 Figure 9.4 Comparison of Lorenz Curves 71 Figure 10.1 Composition of Government Budget 78 Figure 10.2 Government Fiscal Position 80 viii

Figure 10.3 Ratio of Selected Budget Items to GDP 81 Figure 10.4 Ratio of Selected Budget Items to GDP 81 Figure 11.1 Ratio of World Trade to World GDP (sum of exports and imports of goods and services) 88 Figure 11.2 Current Account Balance Components 88 Figure 11.3 Ratio of Current Account Balance to GDP 89 Figure 11.4 Current Account Balance and Non-oil Current Account Balance 89 Figure 11.5 Ratio of External Trade Balance to GDP 89 Figure 11.6 Export-Import Ratio 90 Figure 11.7 Current Transfers Account 92 Figure 11.8 Ratio of Capital Inflows to Approved Investments 94 Figure 11.9 Ratio of New Letters of Credit Issued to Imports through Customs 95 Figure 11.10 Percentage of Realization of the 4 th FYDP Projections on Trade Sector 96 Figure 12.1 Export-Import Ratio 99 Figure 12.2 Imports Growth 100 Figure 12.3 Composition of Imports by Use 100 Figure 12.4 Composition of Imports in Terms of Value 101 Figure 12.5 Composition of Imports in Terms of Weight 101 Figure 12.6 Exports Growth 102 Figure 12.7 Composition of Exports of Industrial Goods in Terms of Value 103 Figure 12.8 Composition of Exports of Agricultural and Traditional Goods in Terms of Value 103 Figure 12.9 Terms of Trade 104 Figure 12.10 Developments of US Dollar in the Official Market 107 Figure 12.11 Developments of Euro in the Official Market 107 Figure 14.1 Major Economic Variables 117 Figure 14.2 Outstanding Facilities Extended by Banking System to Public and Non-public Sectors 119 Figure 14.3 Liquidity Growth and its Determinants 121 Figure 14.4 Factors Affecting Liquidity Growth 121 Figure 15.1 Share of Electronic Payment Instruments in Total Number of Electronic Transactions in the Banking System in 1388 138 Figure 15.2 Share of Electronic Payment Instruments in Total Value of Electronic Transactions in the Banking System in 1388 139 ix

Figure 15.3 Share of Non-cash Payment Instruments in Total Number of Non-cash Transactions in 1388 141 Figure 15.4 Share of Non-cash Payment Instruments in Total Value of Non-cash Transactions in 1388 142 Figure 16.1 Performance of Insurance Market 145 Figure 16.2 Share of Insurance Companies in Direct Premium and Paid Loss in 1388 146 Figure 16.3 Share of Insurance Companies in Issued Insurance Policies and Number of Paid Losses in 1388 147 Figure 17.1 TSE Share Trading 152 Figure 17.2 Comparison of Price and Dividend Index Growth with Inflation 152 Figure 17.3 TSE Monthly Indices 154 Figure 17.4 Value of Offered Shares 154 Figure 18.1 Changes of CPI and PPI 163 Figure 18.2 Contribution of Major Groups to CPI Changes in 1388 164 Figure 18.3 Contribution of Special Groups to PPI Changes in 1388 166 Figure 19.1 GDP Growth in Iran and Major Countries in the Region 174 Figure 19.2 GDP in Iran and Turkey 174 Figure 19.3 GDP per Capita 175 Figure 19.4 Ratio of Value-added of Manufacturing Sector to GDP 175 Figure 19.5 Annual Growth of Gross Fixed Capital Formation 176 Figure 19.6 Ratio of Gross Fixed Capital Formation to GDP 176 Figure 19.7 Ratio of Government Spending to GDP 177 Figure 19.8 Liquidity Growth 177 Figure 19.9 Inflation Rate 178 Figure 19.10 Unemployment Rate 178 List of Boxes Box 1 Oil Revenues during the 4 th FYDP 82 Box 2 Major Approvals Pertaining to Capital Market during the 4 th FYDP 159 x