EghtesadOnline: Iranian exporters’ difficulties in getting paid by their foreign buyers is a major risk to their business, says the managing director of Export Guarantee Fund of Iran.
Pointing to the dire financial conditions of their overseas partners due to coronavirus pandemic, Afrouz Bahrami said it has raised commercial risks for exporters.
“Businesses of foreign partners could go bust and this could apparently increase risks for Iranian exporters,” she was quoted as saying by Fars News Agency.
“Commercial risks have particularly increased due to the coronavirus spread and falling crude oil prices,” she added, recalling that the EGFI has raised its risk cover in proportion to the rising export risks.
She recalled that 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.
However, there are some positive signs that exports to neighbors are resuming gradually as border restrictions are eased.
Non-oil export increased 71% in weight and 60% in value in the past three weeks compared to the month earlier.
She pointed to political risks emanating from the US sanctions as another obstacle Iranian exporters are grappling with, adding that some foreign trading partners tend to use (abuse) the sanctions to crate difficulties for exporters. She did not elaborate.
To cope with such issues and help promote exports, the chief of Iran’s export credit agency said the administrative bodies, such as the Industries Ministry, are working to find new target markets, saying that this is a sign of “exporters’ willingness to enter new markets”.
Bahrami said increasing exports to Iran’s 15 neighbors is important concurring that the neighboring countries are mostly categorized as “high risk” countries when it comes to doing business.
Promoting trade with neighbors is seen as one effective way to mitigate economic losses imposed by the hostile US administration, especially under Donald Trump’s watch.
Plan of Action
With a mandate to help promote non-oil exports by providing companies export guarantees and insurance, the state-owned credit agency has announced a plan to safeguard exports.
It says it wants to expand insurance cover for exporters from the previous $2 billion to $2.3 in the current calendar year. It also has plans to issue export credit guarantees worth $700 million with priority to Eurasia.
EGFI says its export insurance cover provides the best substitute for letters of credit issued by banks at a time when the economy is burdened with major banking hurdles due to the tough US penalties.
EGFI said earlier that it had covered export risks worth $2.6 billion during the last fiscal year that ended in March. This was a 20% growth compared with a year earlier.
Short term insurance cover amounted to $1.2 billion, representing 46% of the total cover to non-oil exporters last year -- up 42% annually.
Likewise, short-term and mid-term cover reached $834 million to post a 16% rise on a year-on-year basis.
Highlight: Afrouz Bahrami: Businesses of foreign partners could go bust due to the pandemic and apparently increase risks for Iranian exporters
Caption: Promoting trade with neighbors is seen as one effective way to mitigate economic losses imposed by sanctions.