Gov’t Clearing Debt Through Swap Arrangements

The government has repaid 10 trillion rials ($311 million) of its debts to the private sector through restructuring deals since April 2015, said Mehdi Banaei, director of Debt Management Division at the Ministry of Finance and Economic Affairs.

“In April 2015, the government enacted the 'Law for Removing Hurdles to the Production Sector' [allowing, among other things, clearance of government debt through restructuring]. Creditors send their applications to us. We review the requests and refer those eligible to the Cabinet for final approval,” the official told Fars News Agency on Tuesday.

 “The volume of debt is a key factor in assessing the eligibility of applicants” claiming their money, he said without elaboration.

In August Economy Minister Ali Tayyebnia said total government debt to contractors inherited from the previous administration amounted to a staggering 5 quadrillion rials ($165 billion).

The law to promote domestic manufactures will not expire, he said. “We will keep reviewing all applications sent to the debt management department.”

As per this law, the government should swap its debt to private companies, individuals and cooperatives with debts incurred by these entities to government-owned companies,” he said.

The government owed 3.59 trillion rials ($111.9 million) to Pasargad Energy Development Company (affiliated to Bank Pasargad), Parsian Oil & Gas Development Company, Pars Switch Co, Nirou Trans Co, and Parre MAPNA Co, according to the official.

“The government recently approved swap deals for (creditor) companies’ debts to the Tax Administration and the Iranian Privatization Organization,” Banaei said.

According to Banaei, private banks and insurance companies are also allowed to receive their dues through the swap deals.

Government debt to the banking sector jumped to 2.041 quadrillion rials ($64 billion) by the end of the sixth month of the Iranian fiscal year (September 21).