DEVELOPMENTAL PLANS

 

THIRD FIVE YEAR DEVELOPMENT PLAN 1379-83 (2000-2004)

The Third Five Year Development Plan is formulated with a view to various aspects of the existing realities of the country, the challenges that the economy faces and the emphasis on having a comprehensive and balanced plan. The 3rd FYDP is a package of articles, policies, and guidelines covering 26 Sectoral and intrasectoral areas and provide a comprehensive framework for resolving structural impediments and economic difficulties during the plan period. 

The core elements of the general policy framework of the plan are as follows: 

1 The "High Council of Administrative" will be established in order to enhance administrative and human resource management and structure. 

2 The financial position of all state enterprises will be assessed with the aim of either liquidating, privatizing, or restructuring them.

3 An effective social safety net will be put in place to replace the current generalized consumption subsidies, with the aim of supporting specific targeted groups. 

4 "State tax Organization" will be established as an independent public institution under the supervision of the Ministry of Economic Affairs and Finance with the objective of raising the efficiency of the tax system and eliminating the existing organizational bottlenecks. 

5 "Oil Stabilization Fund" will be created for reducing budget reliance on oil revenue and ensuring the sustainability and preservation of national wealth. 

6 The net increase in bank's scheduled facilities will be reduced by 10 percent on annual basis, taking 1378 approved figures as benchmark. Hence in the final year of the plan the net increase of scheduled facility will not exceed 50 percent of the approved figure of 1378. Government's support for productive activities in the form of preferential lending rates and loan repayment guarantees will become transparent and taken care  of within the government's annual budget.

7 The amount and the term structure of official external debt will be regulated so that total external debt will not exceed 25 billion US$ and debt service ratio will not exceed 30 percent of government foreign exchange receipts at the final year of plan period. 

8 Government will issue 5,000 billion Rls. of specific participation papers for recapitalization of banks. The proceeds from the sale of these papers will be used for strengthening financial position and government capital investment of undercapitalized banks. 

9 The Central Bank will prepare the condition for the operation of private banks and private non bank financial institutions. 
 

QUANTITATIVE TARGETS IN THIRD FIVE YEAR PLAN

1379-83 (2000-2004)

(Percent)

	Annual Average		Annual Average
GDP	6.0	Inflation	15.9
Non-oil GDP	6.8	Total Government  revenues	19.5
Total investment	7.1	Oil revenues	20.8
Private	8.5	Tax revenues	23.3
Public	5.0	Other revenues	13.3
Private consumption expenditures	3.5	Total government expenditures	19.6
Public consumption expenditures	2.5	Current	18.8
Liquidity	16.4	Development	21.4

	Annual Average		Annual Average
GDP	6.0	Inflation	15.9
Non-oil GDP	6.8	Total Government  revenues	19.5
Total investment	7.1	Oil revenues	20.8
Private	8.5	Tax revenues	23.3
Public	5.0	Other revenues	13.3
Private consumption expenditures	3.5	Total government expenditures	19.6
Public consumption expenditures	2.5	Current	18.8
Liquidity	16.4	Development	21.4

SECOND FIVE-YEAR DEVELOPMENT PLAN (1995-1999)

The implementation of the Second Five-Year Development Plan commenced on March 21, 1995. The Plan will maintain borrowing at zero level, increase tax income, curb the liquidity growth and reduce inflation by the end of 1999 to 12%. 

- Public sector investment will be made mostly through publication of bonds so that banking resources are directed towards the private sector.

- Better organization of the  market, commodity, capital and stock is included in the plan.

- Financial discipline and economy in use of development projects, credits, increased efficiency and better utilization of resources are detailed in the plan. 

FIRST FIVE YEAR DEVELOPMENT PLAN (1989-1993)

The major pivot of the government's economic policies during the First Five-Year Development plan was to strengthen the country's economic structure through investment in infrastructural and production sectors. In the first year of the plan's implementation (1989), the major economic goals were: changing the production, distribution and pricing systems, gradually introducing a single exchange rate, liberalizing foreign trade with the aim of increasing production, privatizing state-owned companies, providing export facilities and supporting the low-income strata of society. 

Major objectives of the government sector during the First plan were: eliminating the budget deficit, limiting government establishments, transferring parts of government property to the private sector with the aim of reducing expenditures, increasing government income through increasing the price of state-owned services and improving the taxation system for better income distribution. 

After the 1979 Islamic Revolution, banks were nationalized and any kind of foreign banking operation was declared null and void. Problems resulting from war and economic recession led to a reduction of banking activities. With the announcement of an economic and monetary liberalization program at the end of the war, banking competition was intensified, the Central Bank's control over domestic banks was limited and banks were authorized to offer credits after fulfillment of legal obligations. Moreover, with the introduction of new financial instruments such as participation papers, market economic instruments were expanded and non-government financial institutions were planned. 

The government's major post-war economic headache was the continuing price rises. Therefore, in line with the First Plan's objectives, a package of new monetary and credit measures were implemented simultaneously with the introduction of a single exchange rate in order to curb liquidity and inflation. These measures included encouraging banking deposits through activating the banking system and increasing banking interest rates, 
directing banking resources to production sectors, increasing the efficiency of money markets, etc.