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Iran Close to Finalizing $30b Foreign Finance Deals

Finance Desk
Iran Close to Finalizing $30b Foreign Finance Deals
Iran Close to Finalizing $30b Foreign Finance Deals
Deals for foreign finance worth $29 billion to $30 billion will be signed with four European countries and one Asian country within the next month

Foreign finance deals worth about $30 billion will be clinched soon, the head of the Organization for Investment, Economic and Technical Assistance of Iran announced at a major economic event.

"Deals worth $29 billion to $30 billion will be signed with four European countries and an Asian country by next month," Mohammad Khazaei also said at the 28th Annual Islamic Banking Conference held in Tehran on Tuesday.

The official, who is also a deputy economy minister, reassured that the country will not be heavily indebted as a result of these deals.

On the sidelines of the event, Khazaei added that the funds will be attracted from Austria, Denmark and Italy, while negotiations with Japan "will most probably lead to a deal in the next few months".

He stressed that to facilitate these deals that would be highly consequential, especially at a time when the US is still trying to pressure the Iranian banking system, ties with international lenders are of utmost importance.

Key Parameters

Another keynote speaker at the confab, which is the oldest event of its kind, was the newly-appointed Economy Minister Masoud Karbasian who also emphasized the importance of establishing correspondent relations with major international banks to absorb foreign finance.

"Under the current circumstances, one of the most important parameters exerting an effective influence on the process of attracting foreign finance is how much our banking system is ready to engage in international interactions," he told an audience consisting of top-tier officials, executives and pundits, Financial Tribune reports.

Karbasian noted that in order to establish constructive ties with international counterparts, the Iranian banking system must work hard to increase its stability and health.

He also called for "facilitating policies" that would make it easier for other nations to allocate funds to Iranian projects.

Karbasian also discussed the importance of improving economic transparency, supporting production mainly by reducing interest rates, upgrading the capital adequacy ratio of banks by raising their capital, reducing the government's hold on banks and developing the debt market.

The minister, who recently enjoyed a strong vote of confidence by parliamentarians, called for cooperation among his ministry, the Central Bank of Iran and the Audit Organization of Iran in devising financial reporting standards, based on which lenders will draft their balance sheets.

The disagreement over the issue plaguing the banks, which have been forced to come up with two balance sheets, has prevented many of them from holding their shareholders' annual general meetings on time.

CBI Governor Valiollah Seif took to the podium to outline major economic points of interest, issues facing the banking system and efforts undertaken.

He pointed to last year's strong GDP growth and said non-oil sectors will play a strong role in promoting economic growth, predicting a single-digit inflation rate for the current fiscal year. 

"In its future plans and in line with establishing the necessary conditions for a complete implementation of the plan to unify the [dual] foreign exchange rates, CBI still emphasizes on maintaining market stability and devising regulations to oversee the market," he said.

The monetary policymaker said "no illegal credit institutions are now active" while referring to high interest rates offered by these institutions as the embodiment of all that has gone wrong in the banking system.

However, Seif remains optimistic of future endeavors to fix the beleaguered banking regime, i.e. the administration's central agenda to reform the system through its Banking Reform Bill and Central Bank Bill.

GDP Target

Mohammad Baqer Nobakht, the head of Management and Planning Organization, referred to the 8% GDP growth rate earmarked for the current fiscal year to March 2018 and what is required to realize it.

"One of our goals in the Sixth Five-Year Development Plan (2017-22) is to improve employment that calls for 955,000 job opportunities and 7.7 quadrillion rials ($200 billion) of investments," he said.

He noted that the number is twice the 3.35 quadrillion rials ($100 billion) earmarked for the previous year and requires cooperation between the economy minister, CBI and the Management and Planning Organization.

The official stressed that the administration must do its best to invest 990 trillion rials ($26 billion) in construction projects of provinces.

In conclusion, Nobakht emphasized that the administration will continue to support state-owned banks by gradually clearing its debts to them by raising their capital.

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