August 06, 2021
The public has almost completely stopped buying the bonds the government is selling weekly in an effort to close the budget deficit.
In the eight bond auctions so far this Persian year, the government has sold a mere 50 trillion rials ($208 million) worth. That is down 88 percent from the last eight bond auctions held last year.
The Eqtesad News website pointed to the low yield and long maturity dates as the two main reasons behind the government’s failure to attract buyers, warning about high inflation unless the government finds ways to fund the budget. The government is said to be in the red by about 3,200 trillion rials ($13 billion) this year.
Bond sales in the eighth week carried a 21 percent yield and mature in July 2023 and June 2024.
Bond offers started in May 2020 when banks, investment funds and stock market investors were asked to take part. Last year the government held 42 auctions and generated 1,257 trillion rials ($5.4 billion).
The Rouhani administration has opted to sell bonds instead of borrowing from the Central Bank, which has been one of the main drivers of the exploding money supply and inflation.