Private Sector Prime Beneficiary of Foreign Finance Deals

EghtesadOnline: Following complaints from the business community that it is not getting its fair share from the recent inflow of foreign finance, Economy Minister Masoud Karbasian sought to put those concerns to rest, saying the private sector is at the vanguard of receiving the funds.

News ID: ۷۷۹۵۶۸

07 October 2017

"Credit lines worth $26.5 billion have been obtained, so we emphasize in our Cabinet meetings that the private sector must get priority for benefiting from these credit lines," Karbasian was quoted as saying by the official news website of Iran Chamber of Commerce, Industries, Mines and Agriculture.

The official made the statements at the latest meeting of the Government-Private Sector Dialogue Council, held regularly and attended by the economy minister and the head of ICCIMA, among others.

He called for further discussions of the issue in the council to help the private sector better utilize the credit lines, according to Financial Tribune.

Over the past weeks, banks from Austria, Denmark and France have announced investment deals with Iran worth €2 billion ($2.4 billion).

The wave of European financing began on Sept. 21, when Austria's Oberbank agreed to extend a €1 billion line of credit to 14 Iranian banks. The money will be used for infrastructure projects in Iran.

On the same day, Denmark’s Danske Bank signed a deal for a €500m line of credit with 10 Iranian banks. Since then, French state-owned bank BPI France has also agreed to provide a €500m credit line to French companies wanting to invest in Iran.

Iran has set up similar arrangements worth €8 billion over the past couple of months with Export–Import Bank of Korea and with a number of Chinese banks covering $35 billion worth of financing.

According to Karbasian, the country has a capacity to obtain $65 billion in foreign credit lines as part of the Sixth Five-Year Development Plan (2017-22) at low interest rates and long repayment periods.

"At present, good potentials have been created for foreign investment and we must prepare the grounds based on which the private sector could reap the full benefits of these potentials," he added.

In continuation of his support for the private sector, the minister said as part of the annual budget for the next fiscal year (starting March 21, 2018) which is currently being devised, the administration plans to outsource77, 000 construction projects to the private sector, which could provide more opportunities for work and investment.

"The country really needs the private sector to become more active with regard to investments, especially foreign investments, as the government is mainly active in the oil sector and looks to the private sector for the rest," Karbasian said.

For Improving Business Climate

ICCIMA Chairman Gholamhossein Shafei, called on all members of the Government-Private Sector Dialogue Council to regularly participate in its meetings with the aim of improving the country's business climate.

As decreed in the Sixth Plan that anything formally approved by the council must be ratified by the cabinet, he asked the minister to follow up the issue to enforce it.

Shafei also pointed to provincial councils, saying that it takes much longer for the approved directives to be implemented in the provinces.

"We expect provincial governors to help bring up these issues to the national council so that we can implement supportive measures for regions away from the capital," he said.

Mohammad Reza Pour-Ebrahimi, the head of Majlis Economic Commission who attends the council's meetings, pointed to the annual budget law and the administration's arrears to contractors, saying these could overshadow government expenditure in the coming year.

He also announced that a parliamentary investigation on banks' compliance with official interest rates would soon be released, shedding light on reports of violations in this regard.

In the wake of this months' interest rate enforcement by CBI, lenders embarked on a frenzied campaign, directly contacting major depositors and making tempting offers for them to retain their deposits in their banks.