Parsian Bank, EGFI Agree to Finance Non-Oil Export

EghtesadOnline: The Export Guarantee Fund of Iran, the state-owned export credit agency, and Parsian Bank signed an agreement Sunday to jointly finance and guarantee loans to exports of non-oil goods.

News ID: ۷۵۱۱۸۹

05 October 2020

Parsian also agreed to allocate a higher portion of its loans to non-oil export firms in the form of seller credit, the EGFI website reported. Seller credit or seller contribution is money the seller gives to pay for closing costs.

The credit helps ease the process of receiving bank loans for exporters in line with measures to boosting non-oil exports, Afrouz Bahrami, the EGFI chief, was quoted as saying.

The two entities will also expand cooperation in developing financial tools to address the needs of exporters.

In the past Bahrami criticized the visibly poor performance of banks in supporting export companies, saying that robust financial support for export companies is critical due to the hostile US economic sanctions.

"Banks and credit institutions hardly allocate 2% of their funds to help businesses involved in exporting goods and services," she complained.

EGFI is a state-owned export credit agency and has prioritized aid to help expand exports.  Affiliated to the Ministry of Industries, Mining and Trade, it is in charge of promoting the non-oil export sector by providing export guarantees and insurance to cover risks.

It covered export risks worth $2.6 billion in the last fiscal year that ended in March -- up 20% compared with a year earlier. Short-term insurance cover amounted to $1.2 billion or 46% of the total.

To improve its ability to cover export risk, the EGFI in June was allowed to boost capital. The High Council of Economic Coordination, an ad-hoc body comprising heads of three branches of power, gave the okay.

The council agreed to increase EGFI capital threefold by adding $200 million. Its capital until recently was $100 million, which hardly accounted for 2% of the total export. Funding for capital increase was procured from the National Development Fund of Iran, the sovereign wealth fund.

Iran's non-oil export in the first half of the current fiscal year (March 20-Sept. 21) amounted to 46.31 million tons worth $13.56 billion -- down 35% in the value compared to the corresponding period last year.