Head of the Trade Promotion Organization said it wants to use resources designated to bolster export by the National Development Fund of Iran, the sovereign wealth fund, to issue supplier credit.
“We are planning to use NDFI resources to issue supplier credit for export,” Alireza Peyman-Pak was quoted as saying by the TPO news website.
A supplier credit is an agreement in a commercial contract under which an exporter sells goods or services to a foreign buyer on credit. Payment on credit means the foreign buyer will either pay a lump sum at a later date or in instalments on specific future dates agreed mutually. Credit of this type allows the buyer to receive the goods he needs in the present time.
Supplier credit is apparently on the TPO agenda along with other measures to promote export. Peyman-Pak, however, said that the plan needs government approval.
Under this model, the company selling the goods extends credit to the buyer with the plan of offering them for sale at a profit. The supplier may issue a line of credit to the importer, assuming that the client can demonstrate to the supplier that the importer is creditworthy.
Recalling recent measures to promote export and ease the conditions for repatriating overseas forex incom, Peyman-Pak said small export companies can return the money via the so-called “currency barter trade” between importers and exporters.
Under the barter deal exporters use their earnings to import goods, raw material and machinery either for their own need or for a third party.
Enumerating some exceptions, the official said that “export in lieu of import” is available for export of almost all goods. Giant steel companies, cement producers and petrochemical companies are known exceptions, which must sell their currency income via hawala on Nima platform. The locally designed platform enables exporters’ to sell forex directly to importers.
The official did not deny the possibility of using innovative blockchain technology and cryptocurrency for paying import bills, saying the “the TPO has prepared the groundwork.”
Government bodies have been working on ways and means for the use of digital currency to evade international restrictions imposed on trade and money transfer to and from the country as a result of the 2018 US sanctions.
In late 2020, the government ratified regulations to legalize cryptocurrency mining that allows digital currency to be used for imports. The measure, proposed by the CBI and Ministry of Energy, so far requires cryptominers to sell the coins they mine only to the CBI.
