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Iran fires central banker

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    Iran fires central banker Najmeh Bozorgmehr in Tehran September 21 2008 http://www.ft.com/cms/s/0/54c007b6-8825-11dd-b114-0000779fd18c.html? nclick_check=1
    Message 1 of 1 , Oct 3, 2008
      Iran fires central banker

      Najmeh Bozorgmehr in Tehran
      September 21 2008

      Iran's central bank governor has reportedly been dismissed after
      refusing to carry out the populist policies of Mahmoud Ahmadi-Nejad,
      the president. Tahmasb Mazaheri, says one ally, was forced by the
      president to stand down mainly because of his support for tighter
      monetary policies which have made it difficult for the government to
      implement its promises of giving cheap loans to the poor and
      supporting short-term employment projects. EDITOR'S CHOICE Ahmadi-
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      Pressure mounts on Iran president - Sep-08Roula Khalaf: Georgia
      crisis plays to Iran's advantage – for now - Sep-01Officials have
      plans for Iran's oil fund - Aug-25Mr Mazaheri declined to comment
      other than to say to the semi-official Fars news agency: "I've heard
      it too." The government is expected to announce the
      banker's "resignation" soon. According to the domestic media, Mahmoud
      Bahmani, the bank's deputy governor, has been appointed the new
      central bank governor – the third in the president's three years in
      office. Mr Bahmani is expected to be less resistant to the
      government's populism, although economists do not regard him as
      different in principle from his predecessors. The next nine months
      ahead of Iran's presidential elections will be crucial for Mr Ahmadi-
      Nejad, expected to run for a second term. Analysts believe the
      government, which has been unable to curb rising consumer prices,
      will focus on giving cash to the poor as a way of buying their votes.
      Government pressure had failed to persuade Mr Mazaheri to give up his
      main policy of curbing liquidity, which stood at 40 per cent when he
      joined the bank last year. Instead, he repeatedly said that he had
      put "six locks" on the treasury to decrease the rate, which has since
      been almost halved. But his opponents argue that this led to rising
      unemployment, which has reached at least 10 per cent. Mr Mazaheri
      argued that cheap loans fuelled inflation, which stands at 27.6 per
      cent, and were given to projects that were not economically
      justifiable. These short-term projects have absorbed 180,000bn rials
      ($18.5bn) from the banks during the past three years. Analysts
      believe the government has also been using its own funds and accounts
      to meet the promises made during the president's high-profile
      provincial trips. Mr Mazaheri, believed to be backed by supreme
      leader Ayatollah Ali Khamenei, struck another blow against the
      president in July when he refused to take the interest rate below 12
      per cent, ignoring the government's promise of a single-digit rate.
      Copyright The Financial Times Limited 2008
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