EghtesadOnline: Insurance cover and export guarantees offered by the Export Guarantee Fund of Iran, a state-owned agency, reached $2.2 billion in the current fiscal (ends on March 20), indicating an annual 25% rise.
EGFI head Afrouz Bahrami said the value of guarantees and insurance cover provided by EGFI has increased 207% since 2014-15.
Recalling the fund’s mandate to help increase the penetration rate of export insurance services, she said short-term export insurance amounted to $850 million in the current fiscal, up 130% compared to last year and 1600% surge since fiscal 2014-15.
She said the fund has not been influenced negatively by the new US sanctions despite the mounting pressure on exports that renders the sector more vulnerable, Financial Tribune reported.
Bahrami pointed to lower export insurance cover in Iran despite the critical conditions in the region and higher export risks. “Out of the $19 trillion worth of exports across continents, 10% is hedged against risks by insurance companies while the figure for Iran is barely 5%”, she told a press conference, IRNA reported.
Risk Cover to Expand
The official announced EGFI’s aim to expand risk cover for export insurance by $2.5 billion in the next fiscal year and increase the penetration rate of export guarantees.
Of the projected figure, $1 billion will go to short term export insurance to help safeguard exports, $800 million for financial and credit export guarantees to facilitate exporters' access to export finances. The remaining $700 million will be used to fund export-based technical and engineering projects.
Citing latest report by the Organization for Economic Cooperation and Development (OECD) on Iran’s rating in risk classifications of the Participants to the Arrangement on Officially Supported Export Credits (CRE), she said the country’s rating downgraded to 6 in 2018 after US withdrawal from the nuclear deal while it was 5 a year before, expressing hope for improvement despite rough conditions.
The country risk classifications of the Participants to the Arrangement on Officially Supported Export Credits are one of the most fundamental building blocks of the arrangement rules on minimum premium rates for credit risk, according to OECD.