Iran economists criticise govt economic management

TEHRAN, June 13 (Reuters) A group of 57 economists have written an open letter criticising the government for policies they said hurt growth, pushed up inflation and failed to deliver on the cabinet's goal of sharing out Iran's wealth more justly.

The letter, published in newspapers yesterday, also said government foreign policy ''had not been constructive'', drawing UN sanctions in a row with the West over Iran's atomic plans.

It echoed a missive issued by economists at the same time last year and which also accused President Mahmoud Ahmadinejad's government of economic mismanagement.

Since then, inflation has surged to more than 17 per cent, growth has continued to fall short of long-term planning targets and foreign firms, and even some Iranian businesses, have voiced increasing worries about investing in Iran.

Ahmadinejad came to power in 2005 pledging to share out Iran's oil wealth more fairly but lawmakers, the press and ordinary Iranians have grumbled increasingly loudly about rising prices and other economic problems.

''The government's wrong impression and understanding about the banking system caused unscientific ... decisions,'' the authors' wrote, saying this ''disagrees with targets announced by the government itself, particularly on seeking justice.'' The president was criticised in May for calling for interest rates in both state and private banks to be cut to 12 per cent, a level well below inflation. The order was not implemented but critics say it was an example of a decision based on a populist agenda without thought for long-term consequences.

The government defends its economic handling and says, for example, that problems like inflation have beset previous governments but that it is controlling price rises.

MISSING TARGETS ''The government policies regarding its interaction with big industrial countries was not constructive and has made the country face sanctions,'' according to the authors, who were listed as university academics.

The authors also included former officials such as an ex-head of the Tehran stock exchange.

The UN Security Council has slapped sanctions on Iran, including targeting a big state bank, for not reining in atomic work the West says is to build bombs. Tehran denies the charge.

The economists said foreign trade had been hurt due to limitations imposed by international financial institutions on credit and investment. Foreign investment had dried up, they said.

Many foreign banks have stopped US dollar transactions because of pressure from the United States, Iran's arch foe which is leading efforts to isolate Iran.

The letter dismissed what it said were government claims to have created 2 million new jobs, saying the figure failed to take into account job losses elsewhere at the same time.

Growth rates, hovering at a little more than 5 per cent, were about 2 per cent below long-term planning targets, the economists wrote, adding that the government was ''wasting oil resources''.

The government has been accused of tapping the Oil Stabilisation Fund for current financing needs, when the fund was set up to park extra oil revenues for use in times of need or for investment.

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