Iran Expecting $50b in Foreign Finance
After the implementation of Iran's nuclear accord with world powers, the country has negotiated its way to attract $50 billion worth of foreign finance expected to flow into the country soon, a report by Economy Ministry's Organization for Investment, Economic and Technical Assistance of Iran has revealed.
According to the report, countries that have shown interest in Iran's investment potentials include South Korea, China, Japan, Denmark, Germany, Austria, Italy, Norway, Russia and Brazil.
"To foster foreign investment and develop ties with international banks and export credit agencies, the Ministry of Economic Affairs and Finance has put security of investment and stability in economic, political and legal affairs on top of its agenda," the report published by the official news service Shada reads.
In line with this, the Economy Ministry "entered into negotiations with more than 15 ECAs and banks, and as of March 2, negotiations have been held with various countries for approximately $50 billion of foreign investment in the form of finance".
Noting that a credit line from Russia worth more than €2 billion has been secured, the report says it is expected that the rest of the negotiations would bear fruit during the current fiscal year that began March 21.
Last year it was announced that German and Chinese banks provided €400 million in loan to finance deals between Iran and Siemens to jointly manufacture wagons and locomotives in the Islamic Republic. Siemens said it would supply components for 50 diesel-electric locomotives to Iran’s MAPNA Group.
As the report outlines, Iran faced a severe lack of foreign investment prior to the nuclear accord "because the bad management and reactionary policies of the previous government in economic, cultural, social and political areas, and lack of expertise on the part of their diplomatic team led to many countries ceasing their cooperation with Iran".
This period marked a total isolation from foreign banks and institutions, and a subsequent disruption of foreign finance meant that many construction projects were left incomplete, prompting pundits to call it "the economic winter of Iran".
This period brought about a hefty rise in inflation rate, an increase in unemployment, inability to create new jobs and a lack of finance to support big projects, the OIETAI adds.
But with recent developments, a fresh flow of finance will gradually reenter the Iranian economy and have many benefits, including "maintaining the administration's management role and eliminating investment risk".
A Shot in the Arm
A senior official with OIETAI also commented on the report, pointing out the many boons of such negotiations for foreign finance.
"Because the financial resources of the government and banks cannot address the need for financing various projects and this lack of resources currently exists in the country, this type of foreign finance will prove useful both for the public and the private sectors," Saeed Khani Oshani said.
He also noted that this measure will strengthen Iran's exports and tend to "one of the biggest problems of our country", namely unemployment, by kick-starting productive projects.
The official had earlier pointed to Iran's membership in the Asian Infrastructure Investment Bank, a China-led international financial institution, which aims to support infrastructure development in the Asia-Pacific region.
According to Oshani, representatives from AIIB had visited four Iranian provinces, following which the Ministry of Economy was able to approve about $600 million worth of funds for water and wastewater projects in the provinces of Gilan, Khorasan Razavi and Kermanshah.