Banking Arrears of Iran Gov’t at $60b

The government’s  payment arrears to the country’s banking system in the month ending Aug. 22–which includes  dues to central bank, state-run commercial and specialized banks as well as private  lenders–exceeded 2.3 quadrillion rials ($60 billion), marking an increase of 16.7% year-on-year.

According to the latest statistics published on the Central Bank of Iran’s  official website, government-affiliated companies and institutions only accounted for 13% of the arrears at 289 trillion rials ($7.4 billion) while the administration’s debts exceeded 2 quadrillion rials ($51.3 billion).

Government-affiliated companies and institutions have reduced their debts to the banking system by 9.8% year-on-year, but the government’s arrears have registered a 21.7% increase during the same period.

As cited in the report, the government’s biggest creditors are private lenders as they hold more than 32% of the government’s liabilities to banks. The figure for the government’s private bank arrears reached 750 trillion rials ($19.2 billion) by Aug. 22, recording a 29.1% jump compared with the previous year’s corresponding period.

After private banks, CBI owns the biggest portion of government arrears to the banking network, accounting for 26.5% of total liabilities. The figure for the government’s debts to CBI stood at 620 trillion rials ($15.9 billion), marking a YOY drop of 1.4%.

The Iranian government also owes 499.4 trillion rials ($12.82 billion) and 467.4 trillion rials ($12 billion) to public specialized and commercial banks respectively. The amount of debts to these entities has increased by 12.8% and 33.5%, respectively.

President Hassan Rouhani on January 2017 notified a measure approved by his Cabinet, which decrees that Planning and Budget Organization “is authorized to allocate a maximum of 146.2 trillion rials ($3.78 billion) from the surplus assets of the Central Bank of Iran to clear the confirmed debt of the government to agent banks”.

This is while up to August 22, the figure of private banks’ debts to CBI has registered a significant leap of 212.2% to reach 507.4 trillion rials ($13 billion).

  Other Arrears

On the other hand, specialized and commercial banks have managed to reduce their liabilities to CBI during the year ending Aug. 22 by 17.2% and 33.6%, respectively.

The figure of specialized banks’ debts to CBI stood at 477.3 trillion rials ($12.2 billion) while commercial banks succeeded in bringing down the figure to below 120 trillion rials ($3.07 billion).

By the end of Aug. 22, the private sector’s debts to Iran’s banking system also experienced an annual increase of 22.1% to reach 9.7 quadrillion rials ($248.7 billion), which manifests the lasting effects of recession on private business. But the figure also shows a slight decline of 1.5% compared to its previous month. Private banks and non-bank credit institutions are major creditors of the private sector. This is while the private sector’s debts to private lenders until April 20 reached 6.78 quadrillion rials ($173.8 billion), registering an increase of 25.7% year-on-year.

By August 22, specialized and commercial banks were respectively owed 2.14 quadrillion rials ($54.8 billion) and 1.51 quadrillion rials ($38.7 billion) by private businesses, up by 12.5% and 22.8% compared with the corresponding period of last year respectively.

On the whole, the debts of both the private sector and the government owed to the banking system by the end of the last Iranian year (March 20, 2017) collectively reached 12.07 quadrillion rials ($309.4 billion), climbing by 21.4% compared with last year’s figure.

CBI’s data indicate that the private sector is responsible for more than 80% of total debts to the banking system by the end of the five-month period.