In the name of Allah
Dr. Komijani’s speech in the 6th  General Assembly of the Ahlual-Bayt *
Tehran
August 16, 2015

Dear Mr. Chairman, Honorable guests and Excellencies:
I am deeply honored to attend a meeting which has gathered respectable scholars and Muslim elites from various Islamic countries and present a report on common grounds for mutual cooperation between Islamic states and also about the latest economic developments in Iran.
A brief comparison of the current situation in Islamic countries with that of the past reveals the gap between them and the developed nations.
With a population of about 1.64 billion, the 57 member nations of the Organization of Islamic Countries (OIC), contribute to almost one fourth of the world population. In 2014, their GDP amounted to nearly 8.7 percent of total world GDP. This huge gap reveals lack of proper employment of human and non-human resources in Islamic countries. Data related to other indices also depict an unfavorable picture.
The value of exports for member states of the OIC contributes to 13.5%of total world export.   Of course, with exclusion of oil and gas exports, this percentage drops significantly.
In 2013, the average per capita income remained at less than $3000 a year. Among 57 OIC member countries, 27 are classified as lower-income, 25 as medium-income, and only 6 as high-income nations.
Other socio-economic indices such as labor participation, dependency ratio, education, business environment and infrastructures also represent weak performance of the Islamic nations in utilization of their socio-economic potentials.
However, such weaknesses are by no means the roads to disappointment and causes for ignoring existing capabilities. Despite the gaps, there are numerous social, cultural, and economic strengths in both regional and international levels which can revive and promote the situation of Islamic Ummah.
Latest figures indicate that about 53.5% of the population of member countries is less than 24 years old, while 4.9% is over 65. This young population provides a unique opportunity for these nations to enhance the quality of their human resources through education and training so as to foster the growth and development processes.
Moreover, according to existing data, the ratio of foreign reserves to GDP rose from 13.7% in 2000 to 29.4% in 2010. Meanwhile, the foreign debt level of member countries is at the lowest levels based on debt to GDP and debt to export ratios. These potentials provide suitable conditions for financing cross-country investments among the OIC.
In addition, recent estimates indicate that about 65% of the world oil reserves belong to member countries of OIC. Half of the world oil reserves belong to just five member countries. With regard to gas reserves, 58% of the world reserves exist in Islamic countries, among them Iran with 17%, Qatar with 13%, and Turkmenistan and Saudi Arabia each with 4% hold the highest positions.
Relatively low tax levels for economic activities provide another opportunity for mutual cooperation between Islamic nations and absorption of foreign investments in their economies. In 2011, the average tax ratio in the OIC members was far lower than the rest of the world.
Also, common cultural and religious heritages provide the grounds for expansion of tourism in member countries which, in turn, can play an effective role in job creation and generating revenues.
All the above-mentioned potentials require more economic and business cooperation among the Islamic countries. Although, indices such as foreign trade to GDP ratio represent the relative openness of these economies, however, the volume of trade between Islamic countries remains far from satisfactory. Policies including reduction and gradual removal of trade tariffs, trade agreements, and joining Trade Preferential System of OIC can be recommended to enhance the volume of trade among Islamic states.
It should be reminded that foreign trade requires facilitation of financial and banking relations. It is almost impossible to develop foreign trade without advanced and effective financial systems. The Central Bank of the Islamic Republic of Iran (CBI) has paid special attention to international banking relations and recently reviewed its regulations concerning the establishment of foreign banks in Iranian free trade zones.
Given the prevalent religious beliefs and the Muslims’ commitment to use those financial services which are Shariah-compliant, it is crucial to pursue the development of the Islamic banking system in member countries. The underlying efficiencies in the Islamic banking assist Islamic countries to reduce their gaps with developed nations. The positive impact of the Islamic banking has been proven in several studies including some conducted by the IMF. The desirable performance of the Islamic banking in recent financial crisis, considerable growth of banking services and products, increase of trade between Islamic countries, and providing retail finance for those deprived from conventional banking services are all among the main factors which contributed to the success of Islamic banking. Now that, world has recognized the potentials and capabilities of the Islamic banking, it is the responsibility of the Islamic countries to introduce Shariah-compliant financial instruments and respond to the needs of the investors.
In line with economic transformations and subsequent demands for financing, the CBI has introduced new financial instruments and reviewed the existing procedures. Participation papers to finance public enterprises and municipalities in 1997 and the CBI participation papers as a monetary policy and liquidity management instrument are among the measures taken by the CBI.
 

Other complementary measures include:
  • Establishment of the CBI Shariah Committee, which comprises of religious and technical scholars in the field of Islamic finance to assure that the new instruments comply with Shariah principles.

• Separation of Gharzulhassanah resources in the banks from other resources to ensure that they are merely allocated to Gharzulhassanah facilities
• Making grounds for issuance of Ijarah and Istisna Sukuk in the banking system through provision of required regulations and guidelines
• Setting the regulations governing Istisna, Murabahah and Bay-al-Dayn so as to increase the number of contracts used in banking operations
• Making provisions for issuance of Murabahah-based credit cards to offer Islamic finance services to households
• Cooperation in paving the grounds for issuance of the Islamic treasury bills to settle the government debts to contractors
• Unification of contract documents for banking facilities in the banking network in order to improve banking supervision
• Review and reforms of the regulations governing collective profits in order to clarify the method of recognition of the profits for depositors and to properly implement the principles of usury-free banking system
However, I am pleased to announce that the CBI is prepared to share its experience in this regard with other Islamic countries.
Dear Audience,
In the second part of my presentation, I would like to briefly share with you the latest economic developments in Iran.
In 2011 and afterwards, the Iranian economy experienced a weak performance. High and volatile inflation, deep recession, considerable reduction of investment and volatility in foreign exchange market characterized the Iranian economy. Since Mr. Rouhanies’ government took office, the CBI concentrated on monetary discipline, proper liquidity management, stabilizing foreign exchange market, healthy financing of economy and directing resources towards productive activities.
Besides, based on the declaration of Economic Resilience General Principles by the supreme leader, the CBI established a committee to operationalize the policies of resilient economy in the area of money and banking and, then, took appropriate measures in the fields of theory, policy-making, and implementations. Macroeconomic Stability was set as the main goal while three objectives of “Price Stability”, “Financial Stability”, and “External Sustainability” were defined to pursue this goal.
Some of the economic policy achievements based on the above strategy can be mentioned as follows:
• Reducing liquidity growth
In 2014, the liquidity growth decreased to 22.3% below the target of 23-25% set by the CBI, the liquidity growth was at 30% in 2012.
• Inflation control
The average 12-month inflation dropped from its peak of 40.4% in October 2013 to 15.6% in July 2015. Point-to-point inflation rate also declined from 45.1% in June 2013 (at the time of presidential election) to 14.2% in July2015.
• Stability in foreign exchange market
Despite uncertainties about reaching a nuclear deal and considerable drop of oil prices, the average exchange rate in the market in 2014 experienced just 3% depreciation. The foreign exchange rate volatility (USD/IRR) reduced by 42.4% in Performance related to the first quarter of current Iranian year represents strong stability in foreign exchange market 2014 in2015.
• Improved economic growth
Following the monetary discipline, reduction of inflation, relative stability in foreign exchange market, and proper allocation of financial resources of the banks to production units, the economic growth rate reached to 3% in 2014 from its lowest level of -6.8 % and -1.9% in 2012 and 2013, respectively.
• Improved gross investment growth

Investment growth reached to 3.5% in 2014 from its lowest point of -6.9% in 2013. Investment growth rate in machineries and equipments, rose from -16.1% in 2013 to 8.7% in 2014
Dear audience,
Overall, these macroeconomic developments are indicating that the Iranian economy has moved away from the severe stagflation and we hope such positive developments on the basis of the well-defined policies will continue in the future.
In the end, I would like to express my sincere appreciation for your patience and kind attention.
Thank you.