“This is in spite of the fact that the level of non-oil exports remained unchanged during this period,” Afrouz Bahrami, the head of EGFI, was quoted as saying by IBENA.
Speaking at a conference on insuring and financing exports, Bahrami underlined the mission of EGFI in protecting export companies against risks, stressing that insurance coverage is the best substitute for letters of credit at a time when the economy is saddled with mounting economic and banking hurdles imposed by the United States.
In addition to covering commercial and political risks, Bahrami noted that EGFI is ready to help fund export companies in tandem with the banking system, adding that in cooperation with Export Development Bank of Iran, the fund has contributed to 30% of total finance needed by non-oil export ventures, Financial Tribune reported.
EDBI has been tasked with contributing to the development of non-oil exports by allocating cheap loans and other resources as outlined in the Sixth Five-Year Economic Development Plan (2017-22).
She referred to a decision approved by the Money and Credit Council—a top monetary decision-making body affiliated with the Central Bank of Iran—based on which export companies can receive low-interest financial facilities granted by EGFI.
Accordingly, the fund offers loans in foreign currency at an interest rate of 2% and loans in rials at an interest rate of 1%.
EGFI is currently the second top export credit agency in the region and its insurance coverage is valid in all countries and comprises all categories of goods.
The entity had announced earlier that it wants to expand risk cover for export insurance by $2.5 billion in the current fiscal year (started March 21) and increase the penetration rate of export guarantee.
The official noted that EGFI is cooperating with Iran Mercantile Exchange and aims to improve the efficiency of the fund in extending facilities to export companies.
Bahrami recalled the impact of forex volatilities on devaluating the national currency and people’s livelihood, admitting that forex rate hikes have provided a good opportunity for exporters.
“With the surge in forex rates, smuggling of goods [into the country] lost traction and exports thrived,” she said, adding that under the present economic conditions, the significance of export is known to all.
The national currency lost about 75% of its value and reached an all-time low of 190,000 rials against the US dollar in September 2018. It has since regained some lost ground, thanks to government intervention and declining demand for forex, and now stands at about 130,000 rials against the American greenback.
According to media reports, EGFI is able to provide cover for export risk to the tune of $2.3 billion that accounts for 5% of Iran’s $40 billion non-oil export market.
The figure is almost half the cover provided by many developed countries and about a quarter of export guarantees offered in East Asian countries.
EGFI was established in 1973 as the first export credit agency in the Middle East and North Africa region. The state-owned body, affiliated to the Ministry of Industries, Mining and Trade, promotes Iran’s non-oil export by providing Iranian companies with export guarantees and insurance to cover export risks.