Export Guarantee Fund of Iran, the country's state-owned export credit agency, has managed to expand its support for exporters of non-oil goods and services, the Fund's financial statement shows.
Board members of the fund on Wednesday finalized its annual financial statement saying that the total value of issued insurance policies and guarantees amounted to $3.52 billion in fiscal March 2020-2021), the EGFI website reported.
Abdollah Sajjadi, the managing director, said the fund registered 33% increase in guarantees issued in the local currency and 116% growth in foreign currencies.
"The improvement was despite Covid-19 and the [US] economic sanctions," Sajjadi said.
Guarantees issued for export of technical services to neighboring countries accounted for the largest portion of the total coverage of the fund during the period.
The fund paid 1.65 trillion rials ($6.08 million) in claims to banks and policyholders during the year. It managed to recover 1.8 trillion rials ($6.64 million) in outstanding debts, 240% on the year before.
Total outstanding premium was 554 trillion rials ($2.04 billion) by the end of the year.
Established in 1973, the EGFI was recreated in 1994 as a legally and financially independent entity 100% state-owned and affiliated to the Ministry of Industries, Mining and Trade.
The fund helps boost non-oil export by covering political and commercial risks and issues credit guarantees to help companies meet their financial commitments.
Sajjadi named low capital adequacy of the EGFI, compared with its regional competitors, as one of the main challenges of the fund.
"Lack of awareness about EGFI services and other professional financial services among exporters is the other challenge.”
The High Council of Economic Coordination last year agreed to increase EGFI capital threefold by adding $200 million boosting it $300 million.
It is said that the increase is still not enough as the Fund covers approximately $3 billion in export risk, which is way above its current operating capital.
As per global norms, export credit agencies should cover risks ten times their capital.
"I hope we can play a bigger role in boosting non-oil exports amid the sanctions and in the absence of [international] banking ties," he said.
The fund says it managed to cover 10% of Iran's non-oil foreign trade last year, whereas in the year before it was 6.4%.
Iran’s foreign non-oil trade stood at 145.7 million tons worth $73 billion in the last fiscal year. Exports reached 112 million tons worth $34.5b and imports were 4.4 million tons worth $38.5b.
