Economy, Business And Markets

New Loans Higher Than Expected

New Loans Higher Than ExpectedNew Loans Higher Than Expected

The new loans provided by commercial banks in the 11 months to February 19 exceeded 2.91 quadrillion rials ($104 billion at official exchange rate), new data shows.

Compared to the same period a year earlier, the figure increased by 760 billion rials ($27 million), ISNA reported, citing the official data. The amount has surpassed the predicted 2.85 quadrillion rials ($101.8 billion) Valiollah Seif, governor of the Central Bank of Iran, had earlier projected.   

The hike in new loans however has raised concerns among several officials. Akbar Komijani, CBI’s deputy governor, warned earlier that the growing amounts of loans are at odds with CBI’s main priority, which is, curbing inflation, “especially in the light of the fact that several lenders have already borrowed much from the CBI.”    

CBI statistics indicate that out of the total loans provided, 60.3 percent was given to help shore up cash flow of businesses in a depressed market. The figure increased by 54 percent compared to the same period a year earlier.

Nearly 30.9 percent of the loans went to the industries and mining sector only, indicating a 39.7 percent growth. Out of the loans provided to this sector, 81 percent was granted to address cash flow problems.

Komijani said it’s a good sign that most of the loans were used to support businesses but warned that such huge liquidity could jeopardize CBI’s efforts to reduce inflation further. The inflation rate has dropped from once 40 percent to around 16 percent now.

He has predicted that the new loans will amount to at least 3.2 quadrillion rials ($115.7 billion) in the 12 months to March 20.