Foreign exchange facilities of the Export Development Bank of Iran have gone up by 40 percent in line with Iran’s rising exports as sanctions against the country ease.
Around $535 million dollars of loans and letters of credit were paid to clients from March to September 2014, the bank reported. This shows a $153-million-dollar increase from the $382 million of financing in the Iranian fiscal year starting March 2013.
Over 28 trillion rials ($835 million at market rate) of financing was done by the EDBI during the first seven months of the current fiscal year. These include both facilities in foreign currencies and loans, which were given out in Iranian rials. Total loans show a 28 percent increase for the first seven months of this year versus the last fiscal year. Total loans were 22 trillion rials ($647 million) in the last fiscal year.
The top 20 clients of the bank took home 63 percent of total loans in the period, according to the bank’s report. These clients came mainly from manufacturing, electricity, petroleum and petrochemical industries.
Domestic letters of credit show a seven-fold rise from 100 billion rials last year compared to 811 billion rials in the first seven months of this year. The rise is due to increase economic activity as the Iranian economy moves out of recession.
The growth of foreign currency letters-of-credit (LCs) was stifled by sanctions against Iran’s banking sector. Iran is currently under sanctions by the UN, EU and the US, which are aimed at restraining its nuclear energy program. In order to lift the sanctions it is negotiating with six world powers known as the P5+1, which constitutes the US, Britain, France, Germany, China and Russia.
The EDBI also claims that the issuance of LCs is hindered by the central bank’s directive to take collateral equal to the LC’s value.
Stats show non-oil exports rose 19.7 percent in the first seven months of this fiscal year to $31.5 billion. “We hope that with the continuation of this trend non-oil exports reach $50 billion by the end of the year,” said President Rouhani.
To help boost exports even further, Rouhani said on Monday, “We plan to give one billion dollars to the EDBI from the National Development Fund of Iran – Iran’s sovereign wealth fund – to alleviate the needs of exporters for marketing and entering new foreign markets.”
The Export Development Bank of Iran is an export credit agency. It is totally owned by the Iranian government, which provides financing and risk management services to Iranian exporters and investors, with offices spread across all provinces in Iran, and has permanent representatives in regional and international foreign markets.
