CBI’s Six-Point Roadmap on Foreign Finance Projects
[Window Title] Network Error [Main Instruction] Windows cannot access \\1-FT-06 [Content] Check the spelling of the name. Otherwise, there might be a problem with your network. To try to identify and resolve network problems, click Diagnose. [V] See de
Economy, Business And Markets

CBI’s Six-Point Roadmap on Foreign Finance Projects

In his latest directive to the chief executives of banks, Governor of the Central Bank of Iran Valiollah Seif has laid down guidelines on how to spend any absorbed foreign finance to optimally boost national growth.
Owing to the significance of foreign finance for the Iranian economy, in his missive which contains six points, Seif directs the CEOs to focus on profitability and return of investment while paying attention to planning and forethought.
“As you are very well aware, one of the main goals of the banking system is to help the growth and development of national economy, and finance construction and production projects through local and foreign resources,” Seif  wrote in the directive reported by the official news website of CBI.
To achieve an 8% GDP growth rate earmarked as part of the Sixth Five-Year Development Plan (2017-22), he adds, $20 billion in foreign finance have been considered.
In line with this goal, officials have been hard at work to reestablish foreign credit lines and accept foreign finance while “we are now witnessing that foreign finance deals are struck with international banks”.
The latest and biggest foreign finance deal was finalized last month with South Korea whose Korea Export-Import Bank (Kexim) is to provide €8 billion to finance Iranian projects while the Korea Trade Insurance Corporation (K-Sure) is to insure up to €5 billion of risks for Korean businessmen working in Iran.
But more recently, the head of the Organization for Investment, Economic and Technical Assistance of Iran announced that foreign finance deals worth about $30 billion will be clinched soon.
“Deals worth $29-30 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 August 29.
On the other hand, while a more realistic target of $20 billion in foreign finance has been earmarked in the nation’s development plan, as the head of the Tehran Chamber of Commerce, Industries, Mines and Agriculture said in a private sector meeting on Monday, the country “needs to absorb $50 billion in foreign finance a year”.
The CBI governor in his directive to bank CEOs stresses that to improve the risk rating of the country, “the attracted foreign funds must strictly be used to finance projects whose technical, financial and economic evaluations have been completed and whose profitability and ability in returning the loans on time has been approved by the agent bank”.
Seif noted that projects, whose ability to pay back the foreign loans by the time of their maturity is in doubt, should not be able to use the funds.
“It is mandatory that before signing foreign finance deals, [agent banks] make assurances that all the necessary internal permits have been obtained and the projects adhere to regulations on maximizing productive capabilities,” he said.
As his third point, Seif stresses that a strict and sustained supervision over the implementation of projects that use foreign finances is obligatory and banks must adopt timely disciplinary measures should they see any deviation in the allocation of funds.
In this regard, he adds, “banks must draft cyclical reports on the physical progression and the implementation process of the projects” without specifying a timeline.
To fully manage and execute the contents of foreign finance deals, the CBI governor directs the chief executives to come up with detailed operational plans and choose an expert and efficient workforce.
In cases where employers, contractors or other related persons are obligated to make commitments regarding the projects and their implementation based on the foreign finance deals, “banks are legally bound to write down the specific conditions in the deals signed with customers and exert precise oversight”.
In line with this, the central bank chief calls on the banks to draft their deals in a way that will give them enough authority to make the other end of the deal stick to its commitments.
As his last point, Seif notes that “it is mandatory to receive necessary and sufficient collaterals from the applicants of foreign finances” because should they find themselves unable to provide the rial or foreign exchange amounts at the time of the deal’s maturity, “it would undermine the banks’ commitments to repay the installments of the received loans on time”.


Short URL : https://goo.gl/RUvNdJ
  1. https://goo.gl/gPqxet
  • https://goo.gl/mv7G8Q
  • https://goo.gl/dGn44M
  • https://goo.gl/gMv4pf
  • https://goo.gl/S7ZSFj

You can also read ...

Currently, each US dollar is reportedly being traded for as much as 75,000 rials in Tehran’s black market.
Seventy days after the government decided to unify the US...
Turkey Worries Over Impact of Anti-Iran Sanctions
Turkey’s Economy Minister Nihat Zeybekci said his country “...
Gao Feng
China will maintain normal relations with Iran, the Commerce...
Fintech Event Highlights Women Business Leaders
The 5th round of Iran’s Financial Technology Event known as...
Iran’s startup ecosystem has boomed in recent years.
Privately owned Bank Pasargad is poised to increase its...
Iran’s Minister of Industries, Mining and Trade Mohammad Shariatmadari (L) and Serbian Minister of Trade, Tourism and Telecommunications Rasim Ljajic (2nd R) address a press conference in Belgrade on June 21.
Iranian Minister of Industries, Mining and Trade Mohammad...
Train Fares  Rise 10%
Train fares have risen by 10% as of June 22, a member of the...
Cigarette Paper Imports at  $14 Million
More than 4,000 tons of cigarette paper worth 474.8 billion...

Add new comment

Read our comment policy before posting your viewpoints