Economy, Business And Markets

Gov’t Pays $110m Debt to Bank Saderat

Gov’t Pays $110m Debt to Bank SaderatGov’t Pays $110m Debt to Bank Saderat

The government has paid 3 trillion rials ($110 million at official exchange rate) of its debts to Bank Saderat Iran in cash, IRNA reported.

The measure has been taken to increase the ability of banks to provide loans to the manufacturing sector. The incumbent administration has now successfully repaid parts of the debts of the previous government to the banks, which are already suffering from shortage of capital.

In the first eight months of the fiscal year, Bank Saderat managed to provide 442 trillion rials ($16 billion) in loans for different sectors including agriculture, industries and mines, trades and services, exports, roads and real estate.

In the past, governments would settle its debts to banks by giving them control of companies or businesses, the agency said. This is the first case any government has ever repaid debts to the banking system in cash.

An assessment of governmental participatory bonds indicates that by the end of the current fiscal year (March 20) the number of bonds approaching maturity will increase. The amount of such bonds is estimated to be nearly 218 quadrillion rials ($7.8 billion), according to the report.

The government and the ministry of economic affairs and finance have been reluctant to issue new participatory bonds. Although the budget law allows the government to issue participatory bonds worth up to 265 trillion rials ($49.5 billion), the amount of bonds so far issued are nearly 16 times as less in worth than the maximum set limit.