The government is short of cash, despite having considerable assets at its disposal, Economy Minister Ali Tayyebnia said on Tuesday evening.
It is working to utilize those by first creating a database of government assets and then using new financial instruments to get more out of them.
According to Tayyebnia, the government owns over 12,000 trillion rials ($342.8 billion at market exchange rate).
The minister was speaking in the unveiling ceremony for “the information system for the executive bodies’ assets”.
“Government assets are not being used properly,” he said.
The administration of President Hassan Rouhani inherited a crisis-hit country from the previous conservative administration of Mahmoud Ahmadinejad. Iran’s economy shrank in two of the past five years and sanctions have left its industry in want of breath.
Moreover, the government has considerable debt to banks and the private sector.
Left With Little Choice
Resolving the situation needs money the government does not have. Even an increase in crude oil output, done after the lifting of sanctions, will not bring the government the money it needs. The ongoing slump in crude prices has ensured that.
Iran emerged from years of economic isolation in January when world powers led by the United States and the European Union lifted crippling sanctions against OPEC’s No. 3 oil producer in return for curbs on Tehran’s nuclear ambitions.
The sanctions had cut Iranian crude exports from a peak of 2.5 million barrels per day (bpd) before 2011 to just over 1 million bpd in recent years, according to Reuters.
Full Mobilization
So the government is mobilizing all that is at its disposal. It is establishing a bond market and borrowing through it in various bond forms from selling oil in advance to Islamic Treasury Bills.
Just this week, Ministry of Roads and Urban Development announced it would issue 24 trillion rials ($685 million at market exchange rate) of Islamic bonds to develop Iran’s transport infrastructure early March.
The administration has also revised tax and tariffs for the upcoming year on March 20.
Most importantly, the income tax code has been simplified to make taxation faster, easier and fairer.
Now, the Economy Ministry is turning its eye towards the government’s long list of assets with a plan called “of government assets”.
“[The plan] is one of the projects that will help the government have precise information about its assets, so that it can make proper plans based on them,” said the minister in the ceremony, state-owned IRNA reported.
“Right now, many government bodies have excess assets while other departments are renting assets and this shows government assets are not being managed right.”
Asset Securitization
Tayyebnia added that some of these assets can be put up as collateral for issuing financial securities in stock and bond markets.
In line with this objective, the Bourse High Council on Tuesday discussed issuing a new form of sukuk based on revenues generated by assets. The instrument will be called “Profit Sukuk”.
“This year we were unable to back enough sukuk due to lack of a comprehensive database of government assets,” said Tayyebnia.
“The first step is valuing our assets. The second one will be to manage them effectively.”
Also on hand for the event were the head of Management and Planning Organization, Mohammad Baqer Nobakht, and Vice President for Legal Affairs Elham Aminzadeh, among others.
