The money is to be sourced from the National Development Fund of Iran, the country’s sovereign wealth fund. If okayed, the fund's capital will rise to €200 million, while "ECA's minimum capital is expected to be equal to 1% of the total export," says Afrooz Gholami, the EGFI boss.
"Given the total volume of non-oil exports, EGFI's capital should be increased to €500 million to be able to meet international standards. We are working to increase the share proposed in the budget bill," IRNA quoted her as saying.
Earlier in the month, President Hassan Rouhani submitted the budget bill for the upcoming Iranian year to the parliament, Financial Tribune reported.
Bahrami believes the guarantee cover EGFI provides is the best substitute for letters of credit at a time when the economy is saddled with tough US economic and banking restrictions.
“The fund is trying to offer guarantees to ensure foreign trading partners that their money will be paid on time.”
In August, in a letter to President Hassan Rouhani, private sector representatives urged the government to give more authority to the EGFI regarding issuance of export guarantees.
The president was requested to authorize the EGFI to shift its course from the banking sector regarding export guarantee.
EGFI was established in 1973, as the first export credit agency in the MENA region. The state-owned body, affiliated to the Ministry of Industries, Mining and Trade, promotes Iran’s non-oil export by providing local companies export guarantees and insurance to cover risks in and emanating from export.
The fund is capable of providing cover for export risk to the tune of $2.3 billion – or 5% of Iran’s $40 billion non-oil export market.