The press release published on EGFI's website announced that the fund has issued $3.06 billion worth of export guarantees during March 20-Dec. 20, 2020. This indicates a 43% growth compared with the total worth of export coverage during the corresponding period of last year.
The growth in demand for export finance services has considerably increased during the last two months of the period under review.
EGFI expects further growth in the total worth of coverage in the coming months. It has also issued 2.575 billion worth of export credit insurance policies during the period, which is 51% higher than the same period of last year.
Established in 1973, EGFI was reestablished in 1994 as a legally and financially independent entity, 100% state-owned and affiliated to the Ministry of Industries, Mining and Trade. The fund is set to help boost Iran’s non-oil exports by issuing export credit insurance policies to cover the major political and commercial risks of conducting trade, and issue credit guarantees to help them meet their financial requirements.
An export credit insurance policy insures exporting companies' accounts and protects their business from unpaid invoices caused by political risks, customer bankruptcy and other reasons.
The state agency has provided coverage for almost about 10% of Iran's total non-oil exports during the first 10 months of the current fiscal year, whereas the percentage was 6.4% last year.
Iran’s foreign trade, excluding oil exports, stood at 122.8 million tons worth $58.7 billion in the 10-month period ending Jan. 19.
Exports accounted for 94.54 million tons worth $28.06 billion, according to the figures released by the Islamic Republic of Iran Customs Administration. Compared with the corresponding period of last year, exports registered a 17.7% and 20% decline in weight and value respectively.
EGFI covered export risks worth $2.6 billion in the last fiscal year that ended in March, up 20% compared with a year earlier.
Apart from increasing penetration, EGFI said it devised support packages to curb the impact of sanctions and also mitigate the detrimental impact of coronaviruses outbreak on foreign trade.
Iran’s export sector has been hit hard by the deadly virus, as many border crossings were closed during the initial weeks of the coronavirus breakout last March.
To improve its ability to cover export risk, EGFI in June was allowed to boost its capital. The High Council of Economic Coordination, an ad-hoc body comprising heads of three branches of power, approved the move.
The council also agreed to increase EGFI’s capital threefold by adding $200 million. The agency’s capital until recently was $100 million, which hardly accounted for 2% of the total goods export.
Funding for capital increase was procured from the National Development Fund of Iran, the sovereign wealth fund.