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Sat 16 Feb 2008 05:17 PM

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Iran bullish about economy despite US sanctions

Tehran claims FDI hit $10.27bn last year, oil income helped reduce effect of sanctions.

Iran's foreign debt ratio has declined and its economic growth is expected to increase, the economy minister said on Saturday, shrugging off the impact of international sanctions over Tehran's nuclear programme.

"Sanctions have had no impact on Iran's economic condition," Economy Minister Davoud Danesh-Jafari told newswire Reuters on the sidelines of a meeting of the Islamic Development Bank in Tehran.

Analysts say western companies are becoming more wary of investing in Iran, the world's fourth-largest oil exporter, due to perceived political risk and increasing difficulties in securing trade finance as a result of US pressure.

The state-dominated Iranian economy is also struggling with double-digit inflation, which critics blame on the government's profligate spending of petrodollars.

But Danesh-Jafari painted an upbeat picture of Iran's economy, saying foreign investment hit $10.27 billion last year.

"Iran's economy, despite unilateral economic pressure from America, has achieved stable growth... and it is predicted that Iran's economic growth will increase," he was quoted as saying by the ISNA news agency in a speech at the conference.

He did not give details about his expectations for economic growth, which reached 6.7% year-on-year in the six months to September, according to the central bank.

Iran's foreign debt has declined to 13.5% of gross domestic product from 17.4%, Danesh-Jafari said according to ISNA, whose report did not specify over what time period this happened.

The UN Security Council is considering a fresh round of sanctions on the Islamic republic over its refusal to halt atomic work that the West fears is aimed at making bombs. Iran says it only aims to produce electricity.

The draft UN resolution calls for asset freezes and mandatory travel bans for specific Iranian officials and vigilance on all banks in Iran.

The US, leading efforts to isolate Tehran over its nuclear work, has imposed its own sanctions targeting four of Iran's major banks and is also encouraging banks and firms from other countries to stop doing business with the country.

But Danesh-Jafari said Iran's oil income - Tehran expects to earn about $63 billion in the Iranian year that ends in March - helped it avert the impact of such measures.

"More than they were able to increase expenses for us we were able to make up for with oil income," he told Reuters.

Central Bank Governor Tahmasb Mazaheri also played down the sanctions impact, saying Washington's "hostile actions" caused some difficulties but no major problems for Iran.

"The world is big enough for a country like Iran not to be faced with problems as a result of these sanctions," he told reporters. (Reuters)

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