What is the solution to provide the required liquidity?

According to reports EconomyOnline According to Shargh, Rahim Zare, spokesman for the 1400 Budget Consolidation Commission, announced at the beginning of this week’s meeting of his commission with the Minister of Economy and the head of the Program and Budget Organization that the principal and interest of 130,000 billion Tomans of financial and Islamic bonds would be settled next year.

This figure is while next year’s budget, without considering the amount of oil sales and the transfer of government movable and immovable property, has a deficit of about 320 thousand billion tomans, because the current and future government has a severe budget deficit with a corona outbreak and unemployment forecast of between 2 6 million people (according to the Parliamentary Research Center) need to make a living by them, contributing to this deficit. Although the spokesman of the Program and Budget Organization said that the government, especially the economic team, is trying to settle this amount of Islamic financial securities without changes in important indicators such as liquidity and monetary base, but due to the country’s economic situation and problems in financing the budget for next year Also, the “timeliness” of the process of lifting or reducing sanctions, which could slow down the increase in oil resources in the budget, the full settlement of this amount of bonds if borrowed from the central bank, assuming an increasing coefficient of 7.8 (reported in the first 6 months of this year). Could) add 1011 thousand billion tomans to the country’s liquidity.

The liquidity figure is expected to reach about 33,000 billion tomans by the end of this year. So if the resources to settle these bonds are not realized, maybe the figure Liquidity At the end of the year 1400 to reach the border of 4000 thousand billion tomans. In this case, achieving higher inflation will not be out of the question. However, the increase of 1011 thousand billion tomans is the most pessimistic scenario. But with the budget deficit increasing by 68 percent in one year, securing even 20 percent of the resources needed to settle bonds at maturity by borrowing from the central bank could be a catalyst for liquidity and inflation.

The liquidity that was to be accumulated

Issuance of financial and Islamic bonds is one of the strategies of governments to accumulate liquidity in the society and prevent it from being sent to other markets, as well as financing in severe deficit conditions. In fact, the issuance of bonds can not only provide resources for the government, but also prevent fluctuations in the economy, especially in the capital markets. According to Mojgan Khanlou, director of monitoring government commitments and equipping resources Program and budget organization A few days after presenting the budget bill to the parliament, he had said that about 343 thousand billion Tomans of Islamic financial securities had been issued by the government from 1992 to mid-December.

According to him, the separation of these bonds in the form of “14 thousand and 700 billion tomans of participation bonds, nearly 173 thousand billion tomans of Islamic treasury documents, 7100 billion tomans of rent sukuk, 111 thousand and 400 billion tomans of Murabaha sukuk, 8500 billion tomans of futures and 29 thousand billion tomans “Toman is a bond.”

Examining the official statistics of the Central Bank on monetary indicators, the reports of the Statistics Center on inflation, as well as the realities of the society, it can be seen that the issuance of Islamic financial securities in the country is a little far from its main path and philosophy. However, one should not overlook the effects of sanctions and structural problems on the budget in diverting the issuance of Islamic securities from its original path. But it seems that the repayment of these bonds at maturity, even if the operating budget deficit is about 320 thousand billion tomans and sanctions remain in place at least until the middle of next year, will be a little difficult. However, Khanloo had announced the repayment of 130,000 billion tomans of bonds that will be due next year in the budget.

According to the spokesman of the Program and Budget Organization, the government is supposed to provide 298 thousand billion of the 841 thousand public budget resources next year by transferring financial assets, of which the share of resources from the sale and transfer of Islamic financial securities in the public budget resources is 125 thousand. It is a billion tomans. The government had issued about 25,000 billion tomans of bonds in budget 93. Although from the first budget of the Eleventh Government to the last budget of the Twelfth Government, the issuance of bonds increased by 400 percent, but only 3.4 percent was added to the share of these bonds from public budget sources; In 1993, the share of bonds in public budget resources was 11.4 percent, which will reach 14.8 percent next year. The point to be noted in this regard is the not-so-serious increase in the share of securities in public budget resources relative to budget resources. During this period, public budget resources increased by 233 percent, while the share of securities was low. However, perhaps the reason for this is that the economy is “inflationary” and inflation outperforms the profits of these securities, which reduces the interest in them. However, due to the continuing economic problems stemming from the corona, as well as the possibility of declining demand and the consequent fall in oil prices, it is possible that Islamic bonds will be issued with more special concessions.

Goals that were not achieved

According to the official statistics of the Central Bank, liquidity has increased by 471% from September 1992 to September this year and has reached 2895 thousand billion Tomans from 506 thousand and 396 billion Tomans, and the increasing coefficient in September of this year is 7.78 and changes in this coefficient since the end of March 1998. As of September 1999, it was 11.1 percent. In the seven years from 1992 to September 1999, the monetary base volume increased from 98 thousand and 472 billion tomans to 372 thousand billion tomans. Despite the fact that 343 thousand billion Tomans of financial securities have been issued during this period, the volume of government debt to the Central Bank has also increased by 342% from 31 thousand and 427 billion Tomans in September 1992 to 97 thousand billion Tomans in June of this year and to 139 thousand Billion tomans reached the end of September this year.

But another point that official statistics show is a 43.2 percent increase in government debt to the central bank from June to September this year. This shows that in a seven-year period, the government has practically failed to disregard the central bank’s resources, and given the financial constraints and the possibility of low government forecasts in next year’s budget, printing money on the table seems to be an option for repaying maturities. Statistics show that during this period, due to the incompatibility of fiscal and monetary policies with the economic realities of the embargo period, not only did the issuance of Islamic securities not reduce liquidity in society, but at least in the last two years more money was sent to markets. Capital and ultimately fueling inflation. The statement claims that prices in the foreign exchange, housing, gold and even consumer goods markets are rising. Annual inflation and December points of this year are reported at 30.5 and 44.8 percent. “35 percent of the population, or 28 million people, are at risk of poverty,” the director general of the Office of Economic Studies at the Parliamentary Research Center said on Sunday. Provincial inflation statistics also show that 17 provinces are at risk of further shrinking food rations. On the other hand, rising prices in capital markets have further weakened the value of the national currency, which has resulted in nothing but emptying people’s pockets. Therefore, if Islamic securities are to be sold, they may be less fortunate by real people. So banks are forced to buy them. This action will only result in further increase inflation and stimulate the growth of economic indicators.

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