The extended and failed debate over repaying foreign currency loans taken earlier from the National Development Fund of Iran (NDFI) has entered a new phase as the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) continues to reject NDFI demands.
In a press release ICCIMA on Saturday responded to criticism levelled by managers of the sovereign wealth fund over the private sector’s demand for reimbursing forex loans at the same rates when they were given.
The NDFI earlier threw out that demand, saying it would undermine its financial clout and deplete NDFI currency resources – already in short supply due to the US economic sacntions.
ICCIMA addressed criticism levelled by Mehdi Qazanfari, the NDFI boss, who last week said most borrowers from the fund export their products and earn forex. “Thus they can and should repay the debt in foreign currency.”
The ICCIMA said “most such private sector borrowers are power plants that are banned from exporting electricity and earning foreign currency”.
Moreover, they are hardly surviving because governments intervene in their pricing mechanism forcing them to sell heavily subsidized rates (up until the last fiscal year in March), it said. After that power tariffs have jumped moer than 1000% for households, a survey by the Financial Tribune showed on Saturday.
The chamber has said 84 companies have taken $2.2 billion from the NDFI and utilities (gas and electricity producers) account for $1.05 billion of the total.
Referring to legislation, the ICCIMA said rules require the government to support such businesses against unforeseen incidents such as steep rise in forex rates.
Forex loan defaulters have been unable or unwilling to meet their financial commitments due to a combination of factors, namely the prohibitive rise in currency rates, the US economic blockade and rising production costs.
Most of the unpaid forex loans were taken several years ago, when currency rates were way lower than today.
On several occasions the defaulting companies have asked the NDFI to calculate their forex debts either at the rates they had borrowed or at the least accept the rial equivalentof the unpaid dues. Both proposals have been rejected.
Data released by the Central Bank of Iran show that non-performing forex loans far outweigh the rial arrears. Accordingly, the NPL ratio was 13.2% for forex loans as of Dec. 21 -- up 5.6% on the same period a year ago.
The NDFI is independent of the government. It was founded in 2011 to curb dependency on oil and save a percentage of the earnings from oil and gas exports for future generations.