Iran General NewsIran c.bank governor quits amid economic shake-up

Iran c.bank governor quits amid economic shake-up

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Reuters: Iran’s central bank governor has resigned, media said on Sunday, in a move analysts saw as part of President Mahmoud Ahmadinejad’s shake-up of his economic team to tighten a grip on policy before a March parliamentary election. By Edmund Blair

TEHRAN (Reuters) – Iran’s central bank governor has resigned, media said on Sunday, in a move analysts saw as part of President Mahmoud Ahmadinejad’s shake-up of his economic team to tighten a grip on policy before a March parliamentary election.

A former economy minister is expected to be appointed as the new central bank chief, replacing Ebrahim Sheibani who analysts said differed with the president over interest rate policy. Sheibani’s fate had been subject to weeks of rumours.

Ahmadinejad, who critics blame for policies that have fuelled inflation, changed his oil and industry ministers this month, a step analysts said aimed to ensure unity among top economic officials before the March vote.

Both ministers, like Sheibani, had differed with the president on his policy matters, the analysts said.

“The president, Mr Ahmadinejad, accepted this resignation (of Sheibani),” government spokesman Gholamhossein Elham was quoted as saying by Fars News Agency. The official IRNA news agency carried a similar report.

Elham said Sheibani would stay in post until an official decree due out on Tuesday was issued about the new governor, expected to be Tahmasb Mazaheri, an economy minister in the previous administration, the news agencies reported.

There was no immediate statement from the central bank on the reports. Mazaheri’s office had no comment.

Economic analyst Saeed Laylaz earlier said he had expected Sheibani to be replaced because the governor opposed Ahmadinejad on issues such as the president’s call to cut interest rates.

Bank rates were cut on the president’s recommendation in June, a move criticised by economists at a time when inflation has surged to 16 percent or more.

“Mr Ahmadinejad is trying to reorganise his cabinet for the next parliament election … He wants to have one cabinet with all members behind the cabinet,” Laylaz said, adding the central bank change could herald a more interventionist monetary policy.

WAIT-AND-SEE

Ahmadinejad vowed to share out Iran’s oil wealth more fairly when elected in 2005 but economists have blamed soaring prices on his government’s spending policies which have been fuelled by windfall revenues from high oil prices.

Although public grumbling about the cost of living has risen, analysts say the government has a cushion of petrodollars to keep the economy growing, even if below potential.

International bankers, already wary of dealing with Iran after U.N. and U.S. sanctions were imposed because of a row with the West over Tehran’s nuclear ambitions, have previously said they would be concerned if Sheibani were replaced.

“He was appreciated by the international community,” said one international banking source, who asked not to be identified. “We have to see who will follow him.”

Bankers say Sheibani earned respect by seeking to keep politics out of monetary policy and also by fighting hard, with limited tools, to control prices.

Many foreign banks have already stopped dollar transactions and some have cut all dealings with Iran, the fourth largest oil producer which says it wants nuclear technology for civilian purposes not atomic bombs as the West fears.

(Additional reporting by Fredrik Dahl and Zahra Hosseinian)

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