Gov’t to Devise Spending Plan for $12 Billion Foreign Finance
EghtesadOnline: First Vice President Es'haq Jahangiri has officially ordered three Cabinet members to devise a spending plan for the $12 billion foreign finance finalized in the post-sanctions era by prioritizing the country's most urgent needs.
During a meeting held to discuss obstacles to using foreign finance in key projects on Monday, Jahangiri announced that since the signing of the landmark nuclear deal with world powers in 2015, Iran has finalized $12 billion in foreign finance.
He then ordered Minister of Economic Affairs and Finance Masoud Karbasian, Governor of the Central Bank of Iran Valiollah Seif and the head of Management and Planning Organization, Mohammad Baqer Nobakht, as well as his own deputy for coordination and supervision to prepare a blueprint for the use of foreign financial resources in priority projects.
"A committee or taskforce for identifying priority projects should be formed to determine schemes and projects that qualify for the use of foreign finance," Financial Tribune quoted him as saying.
Jahangiri has the full mandate from President Hassan Rouhani to lead the economy out of its current sluggishness and boost employment. He also commands the Headquarters for Resistance Economy–an entity charged with implementing principles devised for reducing the country's reliance on oil and fostering domestic production.
Although excitement for investment ran particularly high in the immediate aftermath of the nuclear deal, the initial enthusiasm died down as residual US sanctions reared their head.
However, through continued diplomacy, Iran succeeded in attracting a considerable amount of finance in 2017 from Europe and Asia. It also saw its risk classification improved twice since 2015 by the Organization for Economic Cooperation and Development, which is expected to further accelerate the flow of much-needed foreign finance into the country.
Jahangiri said the country had signed about $30 billion worth of foreign finance with China and some European countries, $12 billion of which have been finalized, meaning that they will be soon implemented through the opening of letters of credit.
Iran signed a $5 billion deal with Italy in January, which marked the biggest finance received by the country from a European nation.
The agreement was signed in Rome between the Iranian state-owned Bank of Industry and Mine and the privately-run Middle East Bank, with the investment arm of Italian state-owned holding Invitalia.
In late September, Austria’s Oberbank signed a major finance deal with over a dozen Iranian banks, based on which it would provide €1 billion in credits to the country’s companies that invest in the Iranian economy.
Oberbank’s initiative–considered as the first finance agreement to be implemented post-sanctions–was followed the same day by a similar agreement between Denmark’s Danske Bank and several Iranian banks.
Accordingly, Danske Bank would allocate a credit line worth €500 million for investments by Danish businesses in Iran.
On a related front, France’s state investment bank Bpifrance (BPI) announced in September that it planned to provide funds to French companies that invest in the Iranian economy as of next year.
BPI chief, Nicolas Dufourcq, was quoted by media that his bank would grant up to €500 million in annual credits to companies that venture into the Iranian market.
Jahangiri also announced that a portion of foreign credits will be used by MPO for important infrastructure projects, with the government guaranteeing their repayment.
Monday's meeting was also attended by Oil Minister Bijan Namdar Zanganeh, Energy Minister Reza Ardakanian, Heath Minster Hassan Qazizadeh Hashemi and the head of the Organization for Investment, Economic and Technical Assistance of Iran, Mohammad Khazaei.
Khazaei noted that more than $29 billion worth of finance agreements with foreigners have been signed, $12 of which will become operational soon.
Among projects to benefit from the funds, Khazaei referred to the electrification of the 926-km Tehran-Mashhad Railroad, which was kicked off through a contract between the Exim Bank of China and Iran’s Bank of Industry and Mine and the electrification of the 600-km segment of the Garmsar–Inche Borun Railroad financed by the Eximbank of Russia.