Economy, Business And Markets

Listing Forex Loan Debtors

Listing Forex Loan DebtorsListing Forex Loan Debtors

The Money and Credit Council is considering categorization of 5,200 manufacturing units that have received foreign currency loans without paying it back.

The manufacturing units will be categorized according to the type of their activity, the amount of the debt, and the time they have received their loans.

A few weeks ago, the council had passed a directive that instructed the debtors to repay their debts in market prices for foreign exchange. However, the directive was not put into effect, as it drew strong criticisms from the businessmen.

“The council had at first decided that the debtors pay their debts in daily foreign exchange prices as announced by the central bank,” the head of the investment commission of Tehran Chamber of Commerce, Industries, and Mines, and Agriculture told MNA on Saturday.  

However, after receiving a negative feedback from the businesses, it was planned that the council reexamines the directive in the presence of representatives from the private sector, Mohammad Raiszadeh added.

Later on, the council decided to establish a working group consisting of representatives from the central bank, businesses and the judiciary to decide upon setting a rate for debtors to pay back their debts.

According to Raiszadeh, the council has considered two approaches to deal with the problem so far.

“The first approach was to anticipate a fund for financing the difference in the currency rates for the borrowers,” said Raiszadeh, adding that “however, as it will impose a heavy burden on the government, it was not implemented.”

The other approach, according to the TCCIM official, included establishing a working group being made up of a lawmaker as the supervisor and representatives from the central bank, chamber of commerce, and the judiciary. The working group is specifically tasked with working on categorizing the debtors.

Some of the debtors borrowed loans in foreign currency back in 2001 – long before the rial was depreciated - and has not paid the loan back so far. However, there are other debtors who, for example, received such loans in 2009, a few years before the rial lost more than two thirds of its value against most foreign currencies.

Among the second group of debtors there are a group who have regularly paid back their installments, until they faced the currency shock in 2012, when rial was sharply devalued against the dollar and the debtors whose loans was denominated in foreign currency went into big trouble.    

The working group will formulate a charter, which is to be approved by the Money and Credit Council, and then will be declared and implemented. The process, however, will be time-consuming, said Raiszadeh, who predicted that the council might agree on an intermediary rate – which is different from the market price – and instruct the debtors to repay their debts based on the same rate.