Presidential Department for Strategic Planning and Supervision has forecast that domestic economic growth would increase to between 6.5 and 6.8 percent in the year to March 2009.
This figure is however tied to factors such as increase in hard currency revenues, rise in labor productivity and expediting privatization drive, IRIB reported.
Also costs of consumer goods would grow to 6.8 percent during the period.
Given the efforts of the government to expedite the privatization process and the reforms in some economic regulations, the investment rate would reach seven percent in the year to March 2009.
In view of the budget for the fiscal year March 2008-2009 and the government’s decision to control inflation, the growth in liquidity would be assessed at 30 percent while inflation rate would stand at 15.3 percent.
Growth in unemployment rate will fall by 0.7 percent due to the increase in the number of jobs created as a result of production growth and implementation of policies to activate the labor market.
Industrial sector posted a significant growth of double digit figure during the first half of the year to March 19. Iran’s economy grew 6.7 percent in the first half of the current Iranian year (to end March 19), showing a rise of 0.7 percent compared to the figure for the same period last year, according to the Central Bank of Iran (CBI).
The top bank in its report, Iran’s Economic Development, said that gross domestic product (GDP) increased from $235.6 billion during March 21-Sept. 21, 2006 to $251.4 billion during March 21-Sept. 21, 2007.
The bank used base prices for 1997 as its benchmark, MNA reported.
Agricultural, industrial, construction, transport and telecommunications sectors were the main factors contributing to the growth.
According to Agricultural Jihad Ministry, production of crops such as wheat, barley and rice rose by 9.1, 8.8 and 7.2 percent respectively, while horticultural and livestock products increased by 6.1 and 6.2 percent.
Industrial sector posted a significant double digit growth during the first half of the year to March 19. Industries grew by 11.7 percent during the six months.
Production of major industrial goods including raw steel, steel products, cement, vehicles and petrochemical items recorded minus 1.7, 13, 12.6, 6.6 and 41.6 percent growth respectively.
Following a boom in private investment in housing, the sector grew by 68 percent during the six months compared with the figure for the same period last year.

Iran is to target foreign investment in its energy sector by creating an umbrella group of nearly 50 state-run firms and listing its shares on four international stock exchanges.
Under the privatization plan, 47 oil and gas companies worth an estimated $90 billion are to be privatized on the Tehran Stock Exchange by 2014.
Hojatollah Ghanimifard, director of international affairs at National Iranian Oil Company (NIOC), says the holding company will list on markets in two of Iran’s neighbors and two large Asian countries, although he declined to give details.
“We decided the Iranian Stock Exchange may need to have some support financially from other stock exchanges, especially for the oil sector, because the money involved is too much [for Iran],“ he told the London-based Middle East Economic Digest (MEED).
Ghanimifard said deals have already been signed with the four exchanges, and further details will be announced by the end of March.
The official added he has ’high hopes’ that the value of the combined companies will exceed $90 billion.
“Today, the valuation award is something close to a $90 billion book value,“ said the NIOC official. “But at the time they go to the stock market, based on the bidding you will see from those that want to buy it, the total amount will be more than that.“
The original, seven-year timeframe for the companies to be privatized may be speeded up to cater for strong international investor demand.
“We think that for the oil side, it is going to be better to do it faster, because for many of the foreign investors it is going to be interesting to get to the oil investment in Iran either through the downstream or the midstream for the first time,“ Ghanimifard observed.
The development could make it easier for investors to sidestep US sanctions, which have made it difficult to deal directly with Iran.
Iran, the world’s fourth-largest crude exporter, tried to revive its stalled privatization plan in 2006 by ordering the floating of 80 percent of several firms. But it said the upstream oil sector and key banks would remain in state hands.
The 2006 list included NIOC subsidiaries, such as Petropars, set up in 1998 to help develop part of Iran’s huge South Pars gas field and which has since signed energy deals in Venezuela.
Other NIOC subsidiaries included Petroiran Development Company and North Drilling Company. Firms affiliated to Iran’s petrochemical industry were also on the list.

President Mahmoud Ahmadinejad submitted the budget bill for fiscal year 2008-09 to the Majlis with the aim of making financial system transparent, having a government accountable to the nation and managing income and expenditures better.
The Ahmadinejad administration also aimed to decentralize economic decision-making and make parliament’s supervision over the budget more precise. Some 2,068 billion rials out of the 2,792-trillion-rial budget has been set aside for state companies, organizations and banks.
The most obvious change in the budget bill, the third to be presented by Ahmadinejad since assuming office in August 2005, is the cut in current expenditures and the increase in development spending. The government has also tried to reduce dependency on oil earnings for the second consecutive year. It is envisaged that less than $40 from the sale of each barrel of oil would be deposited in the state treasury, and the remainder will be put in a special fund considered for empowerment of private sector.
A 23-percent increase in tax incomes has been considered and the government can spend these earnings on its current expenditures.
The economy has experienced a sharp increase in liquidity in the past two years. This has for its part feed inflation. The rate reached over 17 percent in recent months, according to the Central Bank of Iran. It seems the administration should adopt tougher policies on its current expenditures, meaning to prioritize a contractionary policy. But it seems almost impossible to adopt such policy in development and infrastructural activities due to the target growth rate of above six percent for the economy.
Experts criticize Iran’s budgeting system for its excessive increase in the number of organizations and companies receiving budget. This causes a huge loss in government revenues, complicates the current bureaucratic maze and leads to lower productivity.
In a new move, the Ahmadinejad administration has cut the number of these bodies from 600 to less than 50 to strengthen executive clout and prevent wastage of financial resources.
Meanwhile, the economic power of governor generals has increased in the next budget to help increase creation of jobs, flourishing production an attracting investment.
The fact is that the national economy is experiencing a transition from a state to private ownership to become more transparent and competitive. This makes the government have compensation policies and welfare supports for the nation.
The main challenge facing the government is a young population of about three million job seekers. The other is growing housing demand. The government should also allocate a huge sum of its revenues on subsidies to narrow wealth gap.
A reduction in mounting energy consumption including gasoline, diesel, electricity and water is a priority. Meanwhile, huge funds are considered for increasing wages of government employees, retirees and teachers to improve social welfare. Numerous plans are underway to create jobs for the youth, build new houses, improve welfare condition and livelihood of the people, make subsidies targeted and reduce energy consumption. Although these plans have led to some complaints among the public, their implementation is a must for the country’s economic, cultural and social sustainable development.
Iran’s budgeting system is changing and so some problems are unavoidable. The incumbent government believes it is worth putting its political popularity at risk to have an economically-logical budgeting system.

Airfares on domestic flights increased between 15 and 17 percent from late August, 2007.

Airfares will not increase in the coming Iranian year to March 2009, Minister of Road and Transportation Mohammad Rahmati announced.
“Airfares have to be inexpensive to attract more passengers,“ the minister told reporters in Tehran late Friday.
Putting the number of air travelers at less than two percent, he noted that the passengers are mainly state employees.
Rahmati, however, added that civil airliners should meet their expenses from ticket sales, the Persian daily ’Asr-e Eqtesad’ reported on Saturday.
Airfares on domestic flights increased between 15 and 17 percent from late August, 2007.
Head of Civil Aviation Organization of Islamic Republic of Iran (CAOIRI) Hossein Khanlari explained that the decision was taken by the High Aviation Council after holding seven meetings to improve safety and quality and balance revenues and expenses of domestic airliners.
He contended that the earlier airfares were unrealistic and could not meet the costs.
He believed that the increase in airfares would help airlines to provide passengers with more safety and better services.
In a related development, an Iranian oil company said its experts have invented a device which can facilitate aviation fuel production in the country.
Tehran Oil Refinery Company Managing Director Shahabeddin Motaji said that the contraption, the country’s first homemade machine, is capable of filtering mercaptan from kerosene, IRNA reported.
“This innovative design can be used in producing aviation fuel from kerosene,“ Motaji told reporters in Tehran.
Aviation fuel is a specialized type of petroleum-based fuel used to power aircraft. It is generally of a higher quality than fuel used in less critical applications such as heating or road transport.
Amongst its many properties, it often contains additives to reduce the risk of icing or explosion resulting from extreme temperatures.

Iran resumed the flow of its natural gas to Turkey from around midnight Friday, and will pump two million cubic meters of gas per day, a senior energy official told Reuters on Saturday.
Iran had stopped pumping gas to Turkey due to harsh weather conditions, the Turkish Energy Minister Hilmi Guler said on Friday.
“Bad weather conditions have had their effect. The flow of Iranian natural gas dropped and halted yesterday,“ Guler told reporters at a reception at the Iranian embassy.
“Our friends are holding talks to try to solve the problem.“
A previous stoppage lasted three weeks before Iran finally resumed its gas exports to Turkey on January 27.
Iranian officials blamed that disruption on increased domestic demand sparked by the cold weather and a cut off of gas supplies from Turkmenistan.
Russia and Iran account respectively for about 70 percent and 20 percent of Turkey’s natural gas needs. Russia raised its supplies last month to meet Turkey’s shortfall.
Greece was hit in a domino effect last month during the shortfall. Turkey’s current gas demand is currently at 125 million cubic meters.
Meanwhile, Tajik President Emomali Rahmon is slated to visit Tehran in an attempt to find a feasible solution to Tajikistan’s ongoing energy crisis.
During his two-day visit, Rahmon will confer with President Mahmoud Ahmadinejad and other high-ranking officials.
Rahmon is slated to discuss the 220-MW Sangtudin 2 power plant which is being constructed by Iranian experts in southern Tajikistan.
He will also address the energy crisis in Tajikistan which has extensively damaged the country’s infrastructure and led to the closure of 90 percent of its factories.
Tajikistan meets its electricity demand through imports from Uzbekistan, Kyrgyzstan and Turkmenistan; however, the recent cold snap in central Asia has stalled imports.

At present, about 320,000 universities and over 5,000 schools are connected to the Internet.

According to the International Telecommunication Union (ITU), Iran ranks first in term of Internet use in the Middle East.
Announcing this on Saturday, caretaker of Iran Telecommunication Research Center noted that some 36 percent of world Internet users are located in Asia and 2.7 in the Middle East of which Islamic Republic’s share is one percent.
“Some 1,218 of Iranian cities have access to Internet and 1,460 telecommunication centers are operational there,“ Kamal Mohamed-Pour said, IRIB reported.
He stated that some 500,000 Internet ports have been installed nationwide of which 25 percent pertains to governmental sector and 75 percent to private enterprises.
Referring to installation of 20,000 ports for establishing electronic government in economical and banking sections, he noted that currently some 15,000 ports have been installed nationwide.
He announced that at present, about 320,000 universities and over 5,000 schools are connected to the Internet.
Earlier, Minister of Communications and Information Technology Mohammad Soleimani said that the cabinet has approved the plan for setting up a national Internet network.
Soleimani noted that the cabinet authorized Telecommunications Company of Iran (TCI) to spend 5,660 billion rials to establish the network within three years.
“Efforts to design the national Internet network have proven useful and components for the project are in place,“ he said.
Secretary of the High Council of Information Technology, Abdolmajid Riyazi, said that if the budget for the national network is allocated on time and its implementation faces no problem, the project will be complete by March 2010.
He further said President Mahmoud Ahmadinejad believes the national Internet network should become operational by the end of the incumbent government’s tenure. “To meet the entire demands of cities and villages, the national Internet network will require a budget of 10,000 billion rials,“ he said.

A group of experts from the Japan International Cooperation Agency is on its way to Tehran to help reduce greenhouse gas emissions from power plants.
The team, due in Tehran on February 11, will be in the country for 28 days to cooperate with the Energy Ministry in the field.
Inefficient systems in national thermal power plants are blamed for the emission of harmful greenhouse gases such as carbon dioxide which causes global warming, a fax sent to Iran Daily from JICA’s Tehran office reported on Saturday.
The Japanese agency has so far conducted a number of researches in Iran including a study on evaluation of environmental impacts of Tabriz and Isfahan thermal power plants during 1995-1999; and a project to improve energy conservation and establishing the National Training Center for Energy Management in Tabriz, in the northwestern East Azarbaijan province.
The activities of JICA experts have been defined as introducing advanced Japanese energy conservation technologies and methodologies to the Energy Ministry as well as propose ideas for reducing, gathering and storing greenhouse gases at Tabriz and Isfahan thermal power plants.
The Japanese governmental organization has more than 100 overseas offices worldwide and has been active in Iran for the past several decades.