EghtesadOnline: The Export Guarantee Fund of Iran and Iraq’s Kurdish Regional Government signed a memorandum of understanding based on which a credit line worth $200 million will be opened for traders exporting to the region, according to the head of Iranian organization.
“Iranian exporters will be able to sell goods in the region on 40-day credits or more,” Afrouz Bahrami said, adding the local government will guarantee the trade and credibility of buyers.
Head of Iranian export credit agency pointed to the government strategy to promote foreign trade particularly with 15 neighboring countries, noting that Iraq is a priority nation.
Despite the need to boost trade with neighbors, especially at the time when Iran’s foreign trade is under the toughest ever economic sanctions, the CEO estimated earlier that exports account for hardly 2.5% of the total imports of the 15 neighbors, according to Financial Tribune.
Over the past ten years EGFI has provided $3.5 billion in export guarantees for trade with Iraq and paid $113 million in claims.
More recently it issued export guarantees worth $630 million for companies exporting to Iraq, which accounts for almost 40% of the fund’s total commitments.
EGFI Office in Iraqi Kurdistan
To help facilitate the process of assessing the creditworthiness of Iraqi companies, the EGFI has opened on office in the Kurdistan region, Bahrami said.
She pointed to the traditional methods of doing business in Iraq as one of main hurdles in assessing their credibility, saying Iraqis mostly trade as natural entities.
“To assess their credibility, we need to check documents such as their financial turnover or financial statements from banks, which many Iraqi traders lack,” Bahrami said.
“Therefore, we had to be physically present in the Iraqi market for credibility assessment,” she said, noting that the main reason for opening the EGFI office in the Kurdish region was to minimize trade risks
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 guarantees and insurance to cover export risk.