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EGFI Outlines Mandate, Warns Businesses

EGFI Outlines Mandate, Warns BusinessesEGFI Outlines Mandate, Warns Businesses

The Export Guarantee Fund of Iran provides exporters with guarantees for collecting money for their exported goods, said the chairman and CEO of EGFI during a visit to the southern city of Bushehr on Wednesday.

“The fund will provide a guarantee for credit risks for exporters who choose credit methods over cash payments in receiving the money for their exported goods,” said Taher Shah-Hamed.

There are a variety of methods of payment for exported goods, including cash in advance; documentary letter of credit; documentary collection or draft; open account; and other payment mechanisms, such as consignment sales.

Shah-Hamed criticized the exporters who choose to receive their cash in advance, arguing that “the action has created a negative competitiveness among sellers and forced them to reduce the price of their goods.”  

He said, “when the buyers are charged in advance, it isn’t often a competitive option for the exporter.” This is especially the case when the buyer has other vendors to choose from.

Instead, he proposed that especially when it comes to export of non-exclusive and competitive goods, exporters would better choose credit methods of payment, and enjoy transferring the risk of non-payment to the EGFI.

The fund’s CEO said that EGFI supports exporters during the whole export procedure, adding that the fund also will act as a guarantor for exporters with regard to their credit history, “in case they face any problems in receiving bank credits.”

The services offered by the EGFI fall into three categories, said Shah-Hamed, including issuing credit insurance contracts, issuing guarantees, and issuing investment insurance contracts.

He said that in the first five months of the current Iranian year (started March 20), Bushehr Province ranked first in exports; however, the province ranked 22nd in receiving bank credits.

Financialtribune.com