Iran's CB Backs Non-Oil Foreign Trade

EghtesadOnline: The Central Bank of Iran will continue to promote non-oil trade with foreign countries, the bank’s deputy governor for currency affairs said.

News ID: ۷۴۹۱۹۷

16 December 2019

“CBI advocates the policy of managing foreign trade without crude oil,” Gholamreza Panahi told a gathering of diplomats in Tehran newly appointed to foreign capaitals.

In pursuing this policy, Panahi added, the CBI will draw on the full capacity and ability of the non-oil sector, the CBI website reported.

As some of the measures to expand foreign trade, he named diversifying import/export channels with the aim of sharing potential risks and developing barter trade, accordinmg to Financial Tribune.

He highlighted the role of commercial attaches and heads of diplomatic missions in expanding Iran’s foreign trade, underscoring the optimal level of interaction between the  CBI and the Foreign Ministry.

Pointing to money transaction as the essence of foreign trade, he recalled efforts to extend the scope of CBI’s SEPAM to facilitate links with foreign banks.

SEPAM (a Persian acronym) is a venue through which inter-bank transactions are conducted electronically. The systems is said to be capable of connecting with foreign banks.

Iran has connected SEPAM with Russian financial messaging service. Both countries said in September that they had connected their financial messaging services to handle two-way banking transactions.

The service became operative as an alternative to payments through SWIFT (Society for Worldwide Interbank Financial Telecommunication).

It was also aimed at “protecting bilateral trade and economic ties from sanctions of third states” as announced by the Russian presidential aide Yury Ushakov.

Under pressure and threats from the United States, the Belgium-based SWIFT announced in November 2018 that it would sever ties with individual Iran-based banks for the sake of what it described as the "global stability of the system."

Looking at Barter

Iran says it is in pursuit of connecting more countries to SEPAM. CBI governor Abdolnasser Hemmati has talked about a plan to connect with the Eurasian Economic Union (EEU) in the near future.

Tehran also is stepping up efforts to promote barter trade. Creation of a barter mechanism with China is on the agenda.

The president of Tehran Chamber of Commerce, Industries, Mines and Agriculture, Masoud Khansari announced last month that Iran’s private companies are in talks with the Chinese for creating a barter system, noting that “negotiations are in the final stages, and when implemented barter trade will be conducted in cooperation with China and Hong Kong”.

Promoting non-oil exports gained traction after the life-line of Iran’s economy, oil export, came under tough US sanctions in November 2018.

As per the official reports, the value of Iran’s non-oil goods exceeded $40 billion in the last fiscal year that ended in March 2019.

According to data from the Islamic Republic of Iran Customs Administration, Iran's overall non-oil foreign trade (minus crude oil, mazut, kerosene and exports via suitcase trade) during the first five months of the current fiscal year (March 21-Aug. 22) stood at $35.53 billion,

Overall exports stood at 60.73 million tons worth $17.8 billion during the period indicating a 29.86% growth in weight but down 9.14% in value compared to the same period last year.

China, Iraq, Turkey, the UAE and Afghanistan were Iran’s main export destinations.