Economy, Business And Markets

Iran to Settle Hermes Cover Debt With Germany

Iran to Settle Hermes Cover Debt With GermanyIran to Settle Hermes Cover Debt With Germany

The German government has demanded that Iran clear its €500 million ($560 million) debt before it resumes providing guarantees for German exports to the Islamic Republic.

An official at the ministry of economic affairs and energy in Berlin said  Iran and Germany are holding talks to settle Iran’s debts and the sides  are “close to reaching an agreement,” IRNA reported on Sunday. The official, who was not named, confirmed that the government would issue Hermes cover for ‘’low-risk” business with Iran once the debt is repaid. “German exporters might start applying for export credit guarantees.”

Hermes cover is a common way of referring to an export credit guarantee (ECG) by the German government. These guarantees are an important part of German foreign trade policy and protect German companies in the event of non-payment by foreign debtors. The export credit guarantees of the Federal Republic of Germany offer an array of insurance options which are mainly targeted at exports to developing countries and emerging markets.

“We hope talks are finalized quickly so that German companies would be able to start trade with Iran as soon as possible,” the official said.  Some loans had been guaranteed for trade with Iran through Hermes cover in the past but the country was unable to meet its commitments due to the international sanctions and lack of access to SWIFT interbank messaging service.