EghtesadOnline: The National Development Fund of Iran is allocating $2 billion in lines of credit for consumers in Iran’s primary export destinations this fiscal year (to end March 20, 2018), the chairman of Iran Trade Promotion Organization has announced.
“This credit will be funded by the National Development Fund of Iran in the form of export incentives,” Mojataba Khosrotaj, who is also a deputy minister of industries, mining and trade, was also quoted as saying by IRNA.
NDFI, Iran’s sovereign wealth fund, was created in the 2000s to save oil revenues to develop Iran and invest overseas for future generations. Mohammad Hosseini, who represents the parliament on the NDFI board, said in June the fund had $91 billion in reserves.
“The LOC will enable consumers to purchase Iranian goods in installments of up to two years depending on the product purchased,” Financial Tribune quoted Khosrotaj as saying.
Earlier, Economy Minister Masoud Karbasian said the interest rate on these export loans will be 4%.
A line of credit is an arrangement between a financial institution and a customer that establishes a maximum loan balance that the lender permits the borrower to access or maintain. The borrower can access funds from LOC at any time, as long as he does not exceed the maximum amount set in the agreement and as long as he meets any other requirements set by the financial institution, such as making timely minimum payments.
According to Khosrotaj, a certain amount of credit will be allocated to each export destination, which will have a direct correlation with the volume of demand in each.
“Iraq is expected to have the lion’s share, considering the ease of exporting to the western neighbor for Iranian firms,” he said.
The country is one of Iran’s primary export destinations. It accounted for $3.17 billion of total exports in the first half of the fiscal year (March 21-Sept. 22), claiming the second spot in Iran’s export destinations and posting a 5% year-on-year growth.
Tomato paste, spaghetti, flour, dairy products, petrochemicals and industrial lubricants are among Iran’s main products exported to Iraq.
According to the Islamic Republic of Iran Customs Administration, Iran exported 58.63 million tons of non-oil goods worth $20.54 billion in H1, indicating a 3.2% decline year-on-year.
China was the main customer of Iranian products in H1, as Iran exported $4.31 billion worth of goods to the Asian country, 7% more than the corresponding period of last year.
Other major export destinations included Iraq, the UAE ($2.95 billion), South Korea ($2.06 billion) and India ($1.33 billion).
“Iran and Iraq are targeting an annual trade of $20 billion,” Yahya Al-e Es’haq, the head of Iran-Iraq Chamber of Commerce, said.