Economy, Business And Markets

Half of Money Supply Blocked

Half of Money Supply BlockedHalf of Money Supply Blocked

Iranian banks’ illiquid assets must be sold to boost economic growth, said presidential advisor Akbar Torkan on Thursday.

“Around 50% of the country’s money supply are locked, including those officially and unofficially accounted for assets,” said the veteran bureaucrat.

Banks are low on financial recourses and to help the economy and manufacturing grow, their locked up assets must be freed. The government is pushing commercial lenders to sell their non-banking assets, to increase their lending power.

“The sale of bank assets is one of the solutions provisioned in the constitution so that banks can boost the economy,” said Torkan.

Some of these assets are non-performing loans and the rest are loans whose due dates are rescheduled to make financial records look healthier but are in effect NPLs as well. Based on recent estimates, the total non-performing loans of banks are estimated to be worth over $60 billion. The figure does not include foreclosed businesses and non-banking assets of Iranian commercial lenders.

The government also owes lenders over $30 billion, further exacerbating their lack of liquidity.

“500 trillion rials ($17.2 billion at official exchange rate) of the government’s debt come from financing Mehr housing project, which has a 15-year repayment period,” said the official.