$5.6b of Foreign Funds Finalized in 100 Days

EghtesadOnline: Foreign finance agreements signed in the first 100 days of President Hassan Rouhani’s second term amounted to $5.6 billion.

News ID: ۷۴۴۵۳۳

09 December 2017

This was announced by Mohammad Khazaei, the director of the Organization for Investment, Economic and Technical Assistance of Iran–the main entity in charge of negotiating foreign finance deals.

Rouhani was reelected president in May.

“Of these projects, 57 have received the official green light to employ funds worth more than $5.6 billion,” Financial Tribune quoted him as saying.

“In the past three years, credit line deals have amounted to about $27 billion, but the volume of the memoranda of understanding signed is much more and goes beyond $50 billion,” Khazaei added in an interview published by the news portal of the Economy Ministry to mark his 100-day performance report.

The official noted, however, that the Sixth Five-Year Development Plan (2017-22) has envisioned $60 billion in foreign finance and foreign investment, so there is still room for more.

Iran has so far signed deals with China, South Korea, Austria and Denmark to receive foreign finance for its projects while negotiations with Japan and Italy are continuing.

The administration has had to respond to a number of criticisms, namely to claims that the Economy Ministry has paid little attention to the possibility of sanctions snapback.

“Our negotiations with countries such as Italy, China and South Korea with the aim of signing contracts took about three years so that issues such as this would be taken into account,” Khazaei said.

“Negotiations on interest rates, insurance fees and similar matters are not the main issues taking up the bulk of time and are resolved in a matter of few meetings. The main topics of discussion include the possibility of sanctions snapback,” he added.

Sticking Issues

The OIETA chief noted that in addition to the likelihood of sanctions snapback, global concerns such as anti-money laundering and combating the financing of terrorism  are also of utmost importance in such deals, causing them to drag for months on end.

“At present, we are negotiating with Italy and I hope negotiations will be finalized in the next few weeks,” he said, adding that the members of Italian negotiating team have changed several times in the past few years.

Khazaei further said Iran must show to the world through these deals that its banking system is credible and able to clinch deals with international counterparts because even if a portion of the potential funds remain unused, it would improve the country’s credit risk rating.

The Organization for Economic Cooperation and Development in 2016 upgraded Iran’s rating in the country risk classifications of the Participants to the Arrangement on Officially Supported Export Credits. The international body improved Iran’s ranking one notch, moving it from 7 to 6.

The official noted that Iran has made headways in returning to the global economic scene, even as its relations with major international banks have yet to completely normalize.

Khazaei points to Iran’s status in the Asian Infrastructure Investment Bank as a founding member, which includes strong voting rights.

“It is no insignificant thing for Iran to count itself among the major founding members of a bank that is to become a competitor for the World Bank and the International Monetary Fund,” he said.