Gov’t Sole Guarantor of Foreign Finance Deals

Following misleading reports in the media, the Central Bank of Iran has sought to set the record straight on the recent stream of foreign finance deals, saying the government is their sole guarantor and that oil revenues are not involved.

"Foreign finance deals negotiated in recent months involve loans that will be allocated based on guarantees by the government and permits issued by the Economic Council. Nothing but the guarantee of the government has been considered as their collateral," reads a statement published on the official news website of CBI.

Last week, CBI Governor Valiollah Seif headed a delegation to Beijing of top officials and CEOs of five banks who signed a finance agreement worth $10 billion with CITIC Trust, a Chinese state-owned investment company.

The memorandum of understanding for another finance deal worth $15 billion was signed during the trip while negotiations are being held with the Export–Import Bank of China for a $10 billion finance whose first tranche was finalized in late June to finance the electrification of a railroad from Tehran to the eastern city of Mashhad.

Shortly before that, the Korea Export–Import Bank agreed to finance up to €8 billion ($9.5 billion) of Iranian projects while the Korea Trade Insurance Corporation (K-Sure) approved that it will guarantee up to €5 billion ($6 billion) of South Korean ventures in Iran.

This wave of much-needed foreign finance has received extensive media coverage, some of which has been critical of the administration, claiming that the government of President Hassan Rouhani is using the oil income as collateral for the deals.

"Claims that oil revenues are being offered as collateral and other such baseless claims, which are being put forward as a result of lack of information or partisan politics, are completely false," the central bank asserted.

The statement noted that these reports wish to pressure the government into disclosing confidential facts and make false claims that other countries publish full fact sheets of their foreign deals.

The CBI reassured that contrary to what has been reported, "there are no limitations for the private sector to use the finances based on domestic and international regulations".