IRAN: A government bailout for an ailing stock market?
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Are Iranian officials finally admitting that the woes of the international financial crunch have hit the Islamic Republic?
An Iranian newspaper said on Tuesday that Iran’s government plans to inject $300 million into Tehran’s plunging stock exchange market (TSE).
But the news was not be confirmed by any official in Tehran. Even Reuters, which reported the Iranian newspaper’s story, cast doubt on the authenticity of the information. The only source the agency quoted about the alleged bailout plan is an unnamed official, who told them that he had no knowledge of the action.
The official even noted that “a government minister had recently said it had no plans to add liquidity to help the market,” according to Reuters.
The initial report in the Kargozaran daily said that the head of the TSE, Ali Salehabadi, had met with conservative President Mahmoud Ahmadinejad to discuss a government’s bailout plan.
The Iranian newspaper, which is close to Ahmadinejad rival and former president Hashemi Rafsanjani, said, without citing sources, that it was decided the cash would be injected soon.
What is certain is that Tehran’s stock exchange has been witnessing steep losses in the past months.
The all-share index has so far fallen by about 9% as oil prices continued to plunge, according to Reuters.
AP reported last week that the index has decreased by 18% since October, hitting its lowest level in five years.
The agency said that the drop was due to falling commodity prices. Most of the 356 listed companies in Iran’s market are producers of steel, copper and chemicals.
Ahmadinejad has repeatedly said that his nation was relatively immune to the crisis induced by the “Godless” West.
Iran’s economy has been more or less isolated from the rest of the world because of sanctions imposed by the United States and the United Nations in response to Tehran controversial nuclear program. But if the sharp decrease in oil prices continues, the economy in Iran would not be in good shape. And this is bad news for Ahmadinejad who is running for a second term in the next presidential election scheduled in June 2009.
Reformist critics and potential candidates in the upcoming presidential race accuse Ahmadinejad of adopting faulty policies that have squandered the nation’s oil revenues. They warn that his reelection would hurt further more the Iranian economy.
-- Raed Rafei in Beirut
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