Bank Markazi's latest figures, covering the period from 21 March to the end of September, show that oil and gas exports reached $9,795 million in the first half of fiscal 2002/03, largely due to the strong oil price, which remained in the upper half of OPEC's preferred price band of $22-28 a barrel throughout 2002. The performance was achieved despite crude production levels dropping to an average 3.4 million barrels a day during the first half of 2002/03, down almost 8 per cent on production in 2001/02.

The figures also suggest that oil and gas revenues for the whole fiscal year, ending 20 March 2003, will be similar to the $19,339 million in 2001/02. Since the autumn, Iranian output and oil prices have been rising as a result of the crises in Venezuela and - more importantly - Iraq.

First-half oil and gas receipts for 2002/03 accounted for 80.1 per cent of the government's total export revenues, which stood at $12,222 million, down 7.5 per cent on the corresponding period in 2001/02. The non-oil sector also increased its contribution to the external accounts. During the first half of 2002/03, non-oil exports reached $2,427 million, a year-on-year increase of 7 per cent.

Imports jumped by 20 per cent to $10,744 million in the first half of the Iranian year, resulting in the trade balance decreasing to $1,478 million, compared with $4,272 million in the corresponding period of 2001/02. A similar drop was recorded in the current account, which stood at $1,138 million compared with $4,215 million in the corresponding period last year.

Iran's positive economic performance in the past three years has led to a significant reduction in its gross external debt burden. Despite raising $675 million through its debut Eurobond issue in July, external debt stood at a manageable $8,338 million at the end of the first six months. While the figure represents a 16 per cent increase compared with the $7,214 million at the end of 2001/02, it is significantly below the $14,000 million in 1997/98. The Islamic republic's debt-to-gross domestic product (GDP) ratio remains relatively low by international standards at about 8 per cent, following December's second Eurobond issue (MEED 20:12:02; 12:7:02).

On the back of the recent strong economic performances, the Islamic republic has become a net external creditor. According to London-based rating agency Fitch, which assigned a B+ sovereign rating to Iran in 2002, net credit is projected to reach $28,000 million by the end of fiscal 2002/03.