Iran’s Foreign Debts, Assets Rise

EghtesadOnline: The last report published by the central bank shows increase in Iran’s external debts and assets.

News ID: ۷۵۱۳۹۹

04 November 2020

Bucking a declining trend, foreign debt registered 7% growth at the end of the second quarter of the current fiscal year (June 21- Sept.21) compared to the end of the March-June quarter.

Overseas debts rose from $8.65 billion at the end of the first quarter of current fiscal (started on March 20) to $9.275 billion, up $620 million.

Medium and long-term debt rose slightly to $7.34 billion, but accounted for almost 80% of the total. The rise was mainly related to short-term debt, which was $1.92 billion on Sept. 21, up $1.49 billion reported in Q1.

The CBI report did not say why or how Iran’s international financial commitments had increased given the tough US sanctions imposed on the entire financial sector.

Increase in external debt could be partly explained by the Tehran’s efforts to raise funds for fighting the Covid-19 pandemic in the first months of the plague in Iran.

Iran received $50 million from the World Bank to help the health sector cope with the coronavirus pandemic, a deputy health minister has been quoted as saying.

In the meantime, the OPEC Fund for International Development also approved $500,000 in emergency grant to Iran to buy equipment needed to fight deadly disease.

Iran has solicited multilateral development banks for funds, in which the country is a member, namely the Islamic Development Bank and Asian Infrastructure Development Bank.

CBI’s request for a $5-billion emergency loan from the International Monetary Fund was turned down by the crisis lender under US pressure.

Forging Assets

As per the CBI report, the total foreign assets of banks was  12,848.2 trillion rials ($47b) at the end of Sept. 21 increasing by 25.3% on an annualized basis.

Total assets of banks, including foreign assets plus government and non-government debt to lenders, reached 62,728.5 trillion rials ($232b) by the end the Q2, up 24.2% compared to the same period a year before.

The government sector, including government and state-owned companies, owed 5,096.5 trillion rials ($18b) to banks by Sept. 21 indicating 36.9% annual growth.

Likewise, commercial banks had 9,093.5 trillion rials ($33b) in assets by the end of Q2, 44.5% higher than the same quarter last year. Their foreign assets accounted for 744.5 trillion rials ($2.4b), posting 39.3% annual increase.

The value of assets held by specialized banks was 8,534.4 trillion rials ($37b), 46.4% higher than Q2 of last year. Total value of foreign assets held by specialized banks reached 1,947.8 trillion rials by Sept. 21 – up 14.8% in one year.

Finally, assets of non-government banks and credit institutions amounted to 53,979.7 trillion rials in the period showing 34.5% annual increase. Non-government lenders had 7,297 trillion rials in foreign assets, which was 30.5% higher than last year’s Q2.