Government’s Top 5 Creditors

EghtesadOnline: The Social Security Organization, Islamic Treasury Bill holders, the Central Bank of Iran, and public and private banks top the list of government creditors.

News ID: ۷۸۲۱۲۶

14 March 2018

The Ministry of Economic Affairs and Finance added that SSO is the biggest creditor to the Iranian government, as the organization accounts for 33% of the government’s total debts, IRNA reported.

Recently, the Persian daily Shargh put the government’s outstanding debt to SSO at over 1,500 trillion rials (about $33 billion).

As the government’s indebtedness to SSO is scaling new heights by the day, the organization is now in great distress, Financial Tribune reported.

The government continues to encourage the cash-strapped organization to sell off its shares owned by Social Security Investment Company (known by its Persian acronym Shasta). It controls nine holdings operating in a wide range of sectors, including petroleum, petrochemicals, pharmaceuticals, cement, transportation and finance. These holdings manage about 200 subsidiaries and have 1,000 board members.

According to Morteza Lotfi, an official with Shasta, the company acquired more than 90% of its assets as a result of the previous government’s debt settlement and 70% of them are either running at losses or underperforming.

Islamic Treasury Bill holders constitute the second largest group of creditors to the government, who make up 16% of the government’s overall debts, while the money the government owes to CBI comprises 15% of its total debts.

The Iranian government issued its first batch of ITBs back in September 2015. The bonds were given as debt repayment to contractors who had the option to resell them in Iran Fara Bourse over-the-counter market or wait and redeem them at maturity.

Mutual funds and investment companies are said to be the main customers of the bonds that are sold at a discount to their face value and bear no coupons, meaning they are traded at a lower price than their face value, but are redeemed at face value on maturity.

The funds raised by the debt issue, according to Chairman of Iran Management and Planning Organization Mohammad Baqer Nobakht, will be spent to finish the array of incomplete development projects across the country.

The latest batch of Islamic Treasury Bills issued on Iran Fara Bourse had their yield to maturity reach about 20% to compete with the no-risk high-return certificates of deposit issued by the Central Bank of Iran for a period of two weeks.

Bank Melli Iran and Tejarat Bank are the government’s top creditors among banks, the IRNA report concluded.