Iranian Rial

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Iran is in the midst of an intense presidential election campaign with six candidates pledging how they would address the country’s economic issues through their respective policies. While incumbent Hassan Rouhani and First Vice President Es’haq Jahangiri are focused on justifying a continuation of their government’s economic policies, the other four candidates are presenting economic remedies that need to be scrutinized, especially through the lens of whether they would actually be

feasible and also whether they present real solutions to the country’s complex economic issues. An article published by Al-Monitor has critiqued some of the campaign pledges of Rouhani’s main challengers—conservative cleric Ebrahim Raeisi and

Tehran Mayor Mohammad Baqer Qalibaf—and offered some expert remedies that need to be the focus of the next government if the real goal is to address the core socioeconomic issue, namely unemployment. Excerpts follow: Evidently, any pledge of economic reforms, especially when dealing with ideas that will create a burden on the government budget, will have to be scrutinized based on the question of which financial resources will finance the plans in question. Hence, the first question is what the economic plan is rather than individual promises and pledges. A quick review of the pledges so far shows that none of Rouhani’s challengers (Raeisi, Qalibaf, former minister of culture and Islamic guidance, Mostafa Mirsalim, and reformist ex-vice president, Mostafa Hashemtaba) have a real economic plan but rather economic promises that in some cases are based on a populist discourse such as the increase in the present monthly cash handouts of 455,000 rials ($14).

Shortcomings of Pledges

Raeisi, the custodian of the holy shrine of Imam Reza (PBUH), has pledged that he would increase cash handouts to the three lowest income deciles of society threefold. Given Iran’s population of 80 million, Raeisi is suggesting to pay 24 million Iranians an additional monthly handout of $28. This would constitute an annual burden of more than $8 billion on the government budget, without a clear reference to where this money would come from. If Raeisi would have said that he will discontinue payments to the top six deciles and increase the cash handouts of the lower income classes, it would have made fiscal sense. But such an approach would also badly hit the middle class.

He may argue that within the remits of the Subsidy Reform Plan, the government could increase fuel prices in order to finance his plan. However, this would lead to a massive fuel price hike, generating an inflationary impact. Furthermore, providing additional cash handouts to lower income classes is both inflationary and would also shift the lower income strata as socioeconomic facts are fluid, especially if the government tries to favor some social groups over others. Consequently, such a plan would not only be unfeasible but would actually disillusion segments of society.

 

Promises of Economic Miracle

Qalibaf has made two significant campaign pledges that need to be understood within the realities of the Iranian economy. On the one hand, Qalibaf has stated that he will increase Iranian gross domestic product 2.5-fold. If he is planning to achieve that in a four-year term, then Iran would have to experience a 26% annual economic growth four years in a row or, in other words, an economic miracle. Experts agree that the trajectory of economic growth in Iran will be an average annual growth

of 5-7% over the next few years, assuming the continuation of the Rouhani policies. Thus, Qalibaf’s pledge is nothing but an empty promise. Furthermore, the Tehran mayor has pledged to create 5 million jobs in his first term in office. Based on

economic analyses, the creation of one sustainable job requires an approximate investment of $50,000, which means that the creation of 5 million jobs would require an investment of $250 billion over the next four years. In a country where annual government infrastructure investment amounts to about $30 billion and annual foreign investment to about $10 billion, an economic revolution would be needed to achieve an investment of $250 billion in four years. Based on statistics, the Iranian economy has produced 2 million jobs in the past four years— well below what the economy needs to contain unemployment. There is no doubt that more jobs could be created, but that would require additional reforms.

 

Need for Reforms

Powerful conservative politician Ahmad Tavakkoli is among the outspoken critics of both Qalibaf and Raeisi. Apart from questioning their proposed resource allocations, he has reminded the conservative candidates that none of their promises would be within the realm of the powers of the presidency since parliament would in most cases have to approve the policy shifts. Thus, Tavakkoli suggests that it is better not to raise public expectations with promises that may not be realistic or may be rejected by lawmakers. Interestingly, even fellow conservative candidate Mirsalim has criticized Raeisi and Qalibaf, accusing them of using populist slogans in their campaign pledges. Having critiqued the feasibility of the mentioned

pledges, one key question is what needs to be done to create the needed jobs and sustain an economic momentum. The key fact remains that the main engine of job creation has been the private sector. Promoting the genuine private sector must thus be the essence of the next government’s economic policies.

 

Business Climate

Another core issue is the improvement of the business climate—a topic that very few of the candidates are talking about. All candidates refer to fighting corruption but fail to see that the current level of corruption is an extension of the failed policies of the past and that it can only be addressed if major legal, structural and political reforms are introduced—an issue that none of the candidates has paid attention to. One of the main sources of corruption is the continued two-tiered exchange rate system, which needs to be abolished. So far, only Jahangiri has pointed to the need for a new foreign exchange policy. Furthermore, one of the restricting factors for the private sector is the lack of financing solutions—a fact that will require serious reforms within the banking sector, including a greater degree of transparency in the financial services industry. In fact, the failure of Rouhani to address the shortcomings in the banking sector can be considered one of the main failures of the past four years. Evidently, there are many other reforms that will be needed to promote the true private sector, such as the need to review the labor code and regulations, and adopt export promotion measures to promote domestic industry and also create jobs.

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First Vice President Es’haq Jahangiri said making improvements in the business environment is a prerequisite to any development, while outlining the prospective government’s economic agenda.

“If we want to do serious work on development projects, in which the private sector is an integral part, the business environment must take steps toward betterment,” he said, stressing that there’s need to cut red tape and reduce bureaucracy.

Jahangiri, who is also one of the candidates running in the May 19 presidential election, said if elected president, his Cabinet will see changes compared with the one currently in office.

Iranians will be casting votes in less than a fortnight to elect their 12th president since the Islamic Revolution of 1979. The winner from among the six candidates will shoulder the responsibility of handling economic, political and foreign relations at a highly critical juncture in the country’s history.

Iranians expect the elected president not only to be able to safeguard the achievements arrived at over the past four years but also to further improvee people’s living conditions and the country’s international ties.

To make known where he stands on the abovementioned topics, Financial Tribune’s sister publication Donya-e-Eqtesad has interviewed Jahangiri.

   Heir to Turmoil

Jahangiri noted that international sanctions on the one hand and gross mismanagement inside the country on the other had put Iran in a peculiar position.  “We were experiencing difficulties in the international arena. The sanctions were imposing more and more limitations on our economy by the day, especially in the fields of banking, finance, oil and gas and transportation,” he said.

“To make matters worse, officials inside the country had no plans or strategies to battle the sanctions or neutralize its effects as much as it was possible. We were in turmoil.”

For instance, he says, the value of rial fell to a third over the previous government, inflation hiked to around 40% and economic growth plummeted to minus 6.8%.

“All in all, we were caught up in an unprecedented stagflation. Under such conditions, almost all economic variables were rendered unpredictable. We had an obscure picture of where we were or where we were going regarding the state of foreign exchange, inflation, investments and production. So naturally, back then, candidates’ campaigns revolved around a reform plan in both national and international affairs,” he said.

Jahangiri added that today these goals have been arrived at and no one sees Iran as a threat to global peace anymore and the economy is stable.

“Right now the private sector can predict the foreign exchange rates, banking interests and where the inflation is going. These are determining factors for undertaking economic activity. With all these available now, it is clear that the other candidates have nothing in particular to say, and therefore, seek recourse to exaggerated slogans and empty promises,” he said.

  Resistance Economy: Inclusiveness, Extroversion

Citing World Bank data, Jahangiri said Iran is now the world’s 18th biggest economy and as a result the volume and value of imported and exported goods and services are considerable.

“We need to make our economy resistant to potential negative influences from outside the borders. For this, the economy needs to be both inclusive and extrovert. Inclusive economy is defined as one where local capacities and capabilities are focused on and efficiently utilized. Among these [capacities] are geographical location, manpower, mineral resources and factories that must be fully taken advantage of,” he said.

Alongside inclusiveness, a resistant economy needs to be extrovert as well, meaning that a great economy like ours cannot and must not be confined within its borders. It has to link up with the world through dynamic interactions.”

Resistance Economy refers to a set of principles outlined by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei aimed at bolstering domestic production, curbing dependence on oil exports, improving productivity and encouraging Iranians to buy domestically-manufactured products.

The seasoned politician believes are three main factors contribute to an extrovert economy. First, he says, we need to expand our export of products and services. Fortunately, during the fiscal 2014-15 and 2015-16, exports exceeded imports. As such, Iran’s trade balance became positive for the first time in the history of the Islamic Revolution,” he said. “Second, we must fulfill our need for financial resources through foreign investments. For example, the Oil Ministry needs around $200 billion to carry out its basic oil, gas and petrochemical projects. It is obvious that this sum cannot be derived from domestic financial resources.”

Jahangiri said many countries are technologically advanced and can help us in this respect. “Four years ago, resolving the nuclear dispute was our priority, but this time round safeguarding the nuclear deal and making Iranians feel its positive effects in their lives is our main objective … Moreover, the private sector has to be given the space to play a more prominent role in the economy. Domestic policy, culture, art and the state of universities are other priorities.”

Jahangiri concluded by saying that he believes Iranians will continue the path they chose in 2013. He believes there have been shortcomings in the incumbent government and that people’s complaints are justified, but the same path has saved the country from the tempest it used to be in.  

Topics

Iran Elections 2017

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[screwball]

Just now, screwball said:

Jahangiri concluded by saying that he believes Iranians will continue the path they chose in 2013.

 

Hmmm.wonder what path that was..

[millionaire in training]

36 minutes ago, screwball said:

Yes believe Iran will go under the cover of Iraq...

Yep....I think so too.....

[screwball]

Behrooz Imeni

Finance Desk

During the first month of the new Iranian year to April 20, the lion's share of the banking system's business lending–at 70.7%–went to meet the working capital demands of enterprises.

In the latest report published on the Central Bank of Iran's official website, which contains data useful to monetary policymakers and analysts, the central bank has detailed the credits doled out by banks in this period.

Data released by CBI show the share of working capital loans has increased by 6% and 8.2% compared with the average of the previous fiscal year (ended March 20) and the corresponding period of last year, respectively.

Industries and mines propped up their sector by allotting 85.3% of their credits to working capital while they received a significant share of all loans offered by banking system to various business sectors.

The figure of industrial loans stood at 78.3 trillion rials ($2.01 billion), accounting for 35% of all the loans, although the services sector reins supreme with 94.5 trillion rials ($2.52 billion) or 42.2%.

This is while agriculture and housing sectors both bagged about 13.5 trillion rials ($360 million), which account for merely 6% of all the loans.

As cited in the report, the total amount of loans that banks allocated reached 224 trillion rials ($6 billion) during the month to April 20, marking an increase of 11.3 trillion rials ($300 million) or 5.3%, year-on-year.

The report further shows that the average value of each loan that went to the industrial and mining sector was considerably higher than the other sectors, standing at 10.5 billion rials ($280,000). The figure for trade loans, which had the second highest average value, was around 1.15 billion rials ($30,000) while loans allocated loans to agriculture sector were the lowest at 0.46 billion rials ($12,250) during the first month of the Iranian calendar.

In terms of the number of loans doled out during this period, banks extended 164,200 loans to different sectors, such that the services sector again had the biggest share with 84,849 loans.

Agriculture and housing sectors were next in line by receiving 28,929 and 22,394 loans, respectively.   

As noted by the bank, care should be taken that the growth in banks’ loan portfolios does not raise inflationary pressure, since demand for credit is particularly high.  

Thus, recapitalization of banks, improvement of their efficiency in allocating working capital loans to productive activities, reduction of bad debt and navigation of firms to the capital market are recommended.

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Just now, screwball said:

recapitalization of banks, improvement of their efficiency in allocating working capital loans to productive activities, reduction of bad debt and navigation of firms to the capital market are recommended.

Waiting...lol

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The Central Bank of Iran has played a significant and effective role in implementing Basel II and III standards in the banking system, a board member of Bank Maskan said.

“When the banks reach the required standards, they would be able to benefit from the international financial services and establish correspondent relations with foreign banks,” Alireza Bolgouri was also quoted as saying by IBENA.

Basel III (or the Third Basel Accord) is a global, voluntary regulatory framework on bank capital adequacy, stress testing and market liquidity risk. The third installment of the Basel Accords was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08 to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.

Bolgouri noted that CBI is supporting Iranian banks in implementing the regulations, therefore the banking system will soon be able to reach those standards and increase foreign investments and financing.

“The financial system of our country is bank based and banks shoulder most of the financing but they are also able to use the opportunities in global market,” he added.

This is while CBI Governor Valliolah Seif had earlier announced that the Iranian banking system has already adopted the risk-based Basel I capital adequacy accord and is making the move to adopt more advanced and up-to-date banking rules.   

Quick changes in global and regional markets, especially after the financial crisis, highlight the necessity, relevance and value of these accords. Enhanced regional and global cooperation is necessary to counter banking and financial crises in the face of the interconnected financial markets. It is also imperative to increase interactions and cooperation to ensure the smooth handling of regulations and the supervision of financial markets and institutions, and prevent regulatory arbitrage in this fast and open global economy.

 

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Governor of the Central Bank of Iran Valiollah Seif has outlined four troublesome areas for the Iranian banking system and what is currently being done to effectively address them.

"In order to rectify the shortcomings of banking system, the lack of balance between incomes and expenses, imbalance in assets and arrears, implementation of banking standards and execution of regulations related to fighting money laundering must be given special attention," Valiollah Seif was quoted as saying by the website of Bank Parsian, at the headquarters of which Seif was speaking.

The official began by saying that banks must stop engaging in "destructive rate wars".              

Iranian banks are now doing better than they did a few years ago, but a lack of balance between their assets and arrears still persists, he added.

“For example, with the intervention of CBI in the market, it managed to decrease the interbank rates from 28-29% to around 20%,” the official said, adding that it would be better if “we assess the situation meticulously to institutionalize market balance”.

The high ratio of non-performing loans over total loans challenging the embattled banking sector was up next, with Seif saying CBI provides a roadmap and expects the banks to do the rest.

“Recovering NPLs in the banking system is the best activity the banks can play a part in,” he added.

Seif, who also heads the Money and Credit Council, stressed the importance of levying fees for services that are currently offered almost free of charge in spite of establishing electronic banking.

In reforming their balance sheets, the CBI chief advised banks to conform to international standards, saying an 8% capital adequacy ratio has been devised, but the next goals must be achieved gradually and with the collaboration of state-owned and private banks.

  Status of Banks

Seif said major international banks are still wary and reluctant to work with the Iranian banking system, even though sanctions have been removed as a result of the nuclear accord.

In order to instill trust and curb their risk, “correct planning” will be needed and banks that move toward reducing operating risks will reap the reward, he added.

Illegal credit institutions proliferating before President Hassan Rouhani’s government came to work and effectively held 25% of the total liquidity of the country were another topic referred to by the high-ranking official.

He said they intensified the dilemma of high interest rates, as they were outside the realm of CBI’s oversight, stressing that limiting their activities and closing a vast number of them “was definitely very effective in curbing interest rate fluctuations”.

In the event, where the near-field communication (NFC) technology for banks was officially unveiled, Seif also spoke of the New Model of Supervision Over Banks that aims to exert better oversight and rate Iranian banks based on the level of risk they pose.

“Banks with better discipline and safer structures will require less supervision,” he said.

Seif had announced last week that the oversight regime will “become operational by the end of the current month” on May 21.

 

may now? Interesting..

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March 21.....now may...time will tell

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One of the biggest hurdles of foreign investment is multiple forex rates since investors cannot be sure of the value of their investment when they intend to repatriate it out of the country, a member of Tehran Chamber of Commerce, Industries, Mines and Agriculture said.

“Achieving a high economic growth rate is not possible without attracting foreign investment which will not happen unless necessary infrastructure such as a unified forex rate is provided,” Seyyed Reza Haji-Aqamiri was also quoted as saying by IBENA.

The official noted that the government can control forex rates since most of the currencies come from oil sales collected by the government while the share of non-oil exports is not considerable, therefore the Central Bank of Iran and the government can always determine the forex rate.

“Governments always endeavor to control the forex rate to prevent the depreciation of their national currency. However, the forex rate should be in tandem with the supply and demand dynamic,” he added.

Haji-Aqamiri further said that if the forex rate is unified but not adequate, resources cover the demand for foreign currency and multiple rates will appear again.

Iran adopted single exchange rates in the past only to return to dual or multiple rates when economic conditions worsened due to sanctions or unstable circumstances. 

“Last December, when the US dollar changed hands for 42,000 rials in Tehran’s market, the government could have kept it in that range, but they had to bring down the rate as a result of market pressures,” he said.

Iran currently uses two exchange rates: the free market rate that stood at 37,600 rials to the US dollar on Saturday and another official exchange rate for a number of state transactions. The CBI has fixed the official rate at 32,446 rials.

In order to unify the two rates, the government began to gradually increase the official exchange rate for it to come closer to the unofficial market rate and tried to shorten the list of imports eligible to receive forex at the official rate.

All major economic officials, including CBI Governor Valiollah Seif and Economy Minister Ali Tayyebnia, had repeatedly promised that the forex rate will be unified by the end of the last fiscal year (ended March 20, 2017).

However, due to the currency market volatility in the final months of 2016, which saw the rial hitting record lows against the greenback (reaching 42,000 rials to the dollar in the free market in late December), those plans were put on hold indefinitely.

The business community and experts have demanded that the government unify the exchange rates and stop its forex market intervention for propping up the rial.

 

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[screwball]

Just now, screwball said:

The business community and experts have demanded that the government unify the exchange rates and stop its forex market intervention for propping up the rial.

 

 

[screwball]

One has to ask about timing...of these articles

Edited May 14, 2017 by screwball

[screwball]

TEHRAN - Turboprop maker ATR has pledged to deliver 9 airplanes to Iran by the end of 2017, and is to deliver four of the accorded aircrafts by Friday.

“Iranian officials are now in France’s Toulouse to do the required preparations for receiving the four aircrafts,” IRNA quoted Iranian Deputy Transport Minister Asghar Fakhrieh Kashan as saying on Saturday.

Iran’s national flag-carrier Iran Air has signed a contract to buy 20 ATR 72-600 from the French-Italian aircraft manufacturer. Nine of the accorded planes will be delivered to Iran by the end of 2017 and the rest will arrive in 2018.

Representatives of ATR traveled to Iran in early February to negotiate terms of a deal for the sale of at least 20 aircrafts.

Iran Air finalized a deal on the purchase of the aircrafts with ATR in mid-February. 

On February 4, Fakhrieh Kashan said the value of the deal is about $400 million.

Transport Minister Abbas Akhoundi announced in mid-January that renovation of the fleet of Iran Air has begun, adding that according to the contracts with world major plane makers, Iran Air is to receive 200 new planes, of which 100 will be purchased from Airbus and 80 from Boeing.

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AIIB approves seven new members

The Asian Infrastructure Investment Bank (AIIB) said it had approved seven new members to join the bank, a day before China's biggest diplomatic event of the year kicks off.

Leaders from 29 countries attended China's new Silk Road forum in Beijing on Sunday and Monday, an event orchestrated to promote President Xi Jinping's vision of expanding links between Asia, Africa and Europe underpinned by billions of dollars in infrastructure investment, Reuters reported.

Delegations from around the world will attend including the United States and North Korea.

The new members are Bahrain, Bolivia, Chile, Cyprus, Greece, Romania and Samoa, bringing the bank's total membership to 77 countries.

The bank's president Jin Liqun held a joint press conference with Chilean President Michelle Bachelet to announce the new members.

"Better infrastructure across Asia will allow Chilean goods to access new markets, more investment in Chilean infrastructure in turn will further bind together the two great continents of Asia and Latin America," said Liqun.

"We think there are a lot of projects that can link Asia with or through Latin America," said Bachelet, adding that she had spoken with Liqun about the possibility of investing in a Trans-Pacific optic fiber cable to improve digital connectivity between Asia and Latin America.

"The cable could be considered a part of the 'One Belt, One Road Initiative' and transform the Pacific Ocean into a bridge between our regions," she added, using another name for China's 'Belt and Road Initiative' or new Silk Road plan.

Other investments could include tunnels and highways across the Andes Mountains and ports to link Latin America and South America to Asia, Bachelet added.

Thirteen prospective new AIIB members from around the world, including Canada, were approved in March.

"Expanded membership to Africa, Europe and South America, along with the addition of further members in Asia shows the level of global commitment towards the bank's mission and illustrates the momentum that has gathered since 20 countries signed initial memoranda on establishing the bank less than three years ago," said Liqun.

The multilateral institution, seen as a rival to the Western-dominated World Bank and Asian Development Bank, was initially opposed by the United States but attracted many US allies including Britain, Germany, Australia and South Korea as founding members.

[blueskyline]

http://www.presstv.ir/Detail/2017/05/13/521702/Iran-transit-China-Silk-Road-forum-Tayebnia......

Iran vows full throttle dedication to China's Silk Road

Sat May 13, 2017 8:40AM

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Leaders from 29 countries will gather in Beijing for a two-day summit starting May 14, 2017 to discus details of the Silk Road initiative.

Iran says it is fully on board to help revive Silk Road, an ancient trade route for a thousand years which China plans to expand between Asia, Africa and Europe. 

Leaders from 29 countries and ministers and top officials from many others will gather in Beijing for a two-day summit starting on Sunday to map out development of the "Belt and Road" initiative.

Delegates are about to discuss the plan which involves hundreds of billions of dollars over the coming decades, underpinned by building ports, railways and power links across Asia and on to Europe.

Iranian Minister of Economic Affairs and Finance Ali Tayebnia arrived in the Chinese capital on Saturday to represent the country at the forum, IRNA news agency reported.

Iranian Minister of Economic Affairs and Finance Ali Tayebnia 

“Iran will employ all its power, cooperation and effort for better implementation and completion of this initiative because it believes that the plan will play an important role in the global development and relations among countries,” he said.

Chinese government officials say more than 50 memorandums of understanding, plans, cooperation letters and cooperation projects in transportation, energy and communications will be signed during the meeting.

Officials walk outside the China National Convention Center, the venue for the upcoming Belt and Road Forum for International Cooperation, in Beijing. (Photo by AFP)

The Asian economic giant says its businesses signed projects worth $304.9 billion in Belt and Road countries between 2014 and 2016, but more is in the pipeline and investments of almost $1 trillion have already been announced.

The initiative is expected to funnel investments worth up to $502 billion into 62 host countries over the next five years. Analysts say most funds may flow into India, Russia, Indonesia, Iran, Egypt, the Philippines and Pakistan.

The web of trade would span over countries representing more than 40 percent of the world’s GDP, that are home to 4.4 billion people -- more than half of the world’s population -- giving it a potential to affect global trade patterns. 

The biggest beneficiaries of the plan could be midsize domestic construction and machinery companies and Asian infrastructure firms, with China likely to give certain countries preferential treatment, according to Bloomberg.

However, a crucial mechanism that Beijing is considering for the success of the Belt and Road Initiative is using local currencies instead of dollars, which has sent shockwaves across the West.

Western governments and media have gone into great lengths to project the initiative as part of China's grand scheme for influence in Asia.

Reuters quoted a Chinese expert as saying that politics was being put ahead of economic factors.

"I believe that the national strategy is the top priority; economic considerations are secondary," it quoted the unnamed economist at the China Center for International Economic Exchanges, a Beijing-based think-tank, as saying.

The Silk Road is an ancient network of trade routes dating back to 220 BCE, connecting China to the Mediterranean Sea. 

China's state-run Xinhua news agency said the new Silk Road would be a boon for developing countries that had been largely neglected by the West.

"As some Western countries move backwards by erecting 'walls,' China is contriving to build bridges, both literal and metaphorical. These bridges are China's important offering to the world, and a key route to improving global governance," it said in an English-language commentary on Saturday.

 

[jaman]

As some Western countries move backwards by erecting 'walls,' China is contriving to build bridges......

just like the Vatican they both have HUGE WALLS protecting their wealth but, ridicules others for doing the same

[Freedomwish]

12 hours ago, screwball said:

March 21.....now may...time will tell

 

Let's see what happens maybe after the Ramadan holiday.  Either way, I'll still be having my whiskey lol 

[screwball]

Iran has said their will be no fanfare when they do it, so we look around major events, Iraq could b one...Ramadan is interesting timeframe...one step at a time!

[Theseus]

22 minutes ago, screwball said:

Iran has said their will be no fanfare when they do it, so we look around major events, Iraq could b one...Ramadan is interesting timeframe...one step at a time!

If an RV wouold happen around Ramadan it would be at the end. Considering Ramadan begins in a little over a week.

[screwball]

 

he Central Bank of Iran will focus on managing banking interest rates and preventing a price war among other things for the four-year tenure of the next administration, the head of which will be introduced after the May 19 presidential election, the director of Monetary and Banking Research Institute said.

“The most important agendas of the central bank during the next four years include moving toward stable production and job creation, directing banking assets toward productive economic activities, maintaining a single-digit inflation rate and developing correspondent relations with credible foreign banks,” Ali Divandari was also quoted as saying by Banker.ir.

Bank interest rates are currently set at 15% following the decision made last June by private banks and the Monetary and Credit Council.

As announced last week by the director of the Association of Private Banks and Credit Institutions, Kourosh Parvizian, a further decrease in interest and deposit rates will be discussed when the banks convene their next joint meeting that could come as soon as next month.

Divandari noted that other major items on CBI’s agenda include continuing support for small- and medium-sized enterprises, reforming business models of banks, strengthening international banking collaborations, reducing the government’s debts to the banking system, boosting the interbank market and upgrading oversight infrastructures in the banking system.

“Banks help bankroll 91% of Iranian businesses while the capital market is responsible for the remaining 9%. This puts heavy pressure on the banking system while in most countries, capital and debt markets play an active role in financing,” he said, encouraging major companies to approach the debt market and issue bonds.

According to Divandari, CBI and banks have made considerable headway in promoting electronic banking in the past few years, which has significantly reduced the share of banknotes in daily transactions.

“This will play a part in reducing the operational costs of the banks,” he said, noting that the banking system is receiving miniscule fees while banking fees are a major source of income on the international scene.

  Escaping Gridlock

On the current stance of the banking system in the new climate after international sanctions were lifted following the implementation of the nuclear accord, Divandari said that in tandem with other economic sectors, the banking system “has exited a deadlock”.

He counted the single-digit inflation, reached after more than two and a half decades, taming forex market fluctuations, which was uneasy during the final months of 2016, reducing the ratio of non-performing loans over total loans, currently said to be around 10%, and mandating the banks to conform to International Financial Reporting Standards as goals achieved by the banking system and the central bank during the four-year tenure of President Hassan Rouhani.

“Improving the climate of doing business, strengthening safety of investment and increase Qarzol-Hasanah [interest-free] marriage loans” were touted by the official as further achievements.

On the other hand, First Vice President Es’haq Jahangiri has communicated the official assignments and prioritized projects for each government entity for the current fiscal year that began on March 21.

In his letter, Jahangiri, who is also the head of the Resistance Economy Headquarters, mandated CBI as the “agent entity” to implement a project titled Center for Controlling Credit Supervision.

Valiollah Seif, as the governor of CBI, has been obligated to prepare an “operational plan” for the project by the end of the current Iranian month on May 21 and submit the same to Jahangiri, and set in motion the measures required to complete the project on time. Furthermore, the CBI is ordered to provide regular reports on the progress of the project while the banking system has been specifically notified to cooperate with CBI that should coordinate with other entities to expedite the implementation of all joint efforts.

[screwball]

4 hours ago, Theseus said:

If an RV wouold happen around Ramadan it would be at the end. Considering Ramadan begins in a little over a week.

 

Its not an if but " when"

[screwball]

 

 

 

Economy, Business And Markets

Monday, May 15, 2017

EDBI Restoring Ties With Foreign Banks

 

The Export Development Bank of Iran – the country’s Eximbank– has opened 30 accounts in major foreign banks besides having established 120 correspondent relations with major international banks, the bank CEO said.

“Before implementation of the nuclear deal with world powers we did not have any kind of active accounts whatsoever. However, after the nuclear accord, we regained access to SWIFT (international interbank messaging network) and restored a significant number of international correspondent relations that enable Iran to rebuild its export capacity,” Ali Salehabadi was quoted as saying by IBENA.

The EDBI offers foreign exchange loans in euros to raw material importers at 6% in the form of working capital loans as well as other services like opening lines of credit and issuing guarantees.

“Our priority is not profitability but assisting export and import.”

Salehabadi had earlier announced that his bank has resumed ties with 20 European, 17 Asian and four African countries, of which Turkey, Belgium, Germany, Switzerland, Italy, Spain, Austria, India, South Korea, Japan and China are the notable.

He asked Iranian exporters to introduce credible banks they work with in other countries to EDBI for establishing contact with them and providing exporters credit lines through those banks.

The government has provided the bank enough resources to finance exporters of domestic goods at lower rates.

 EDBI was established as a policy bank, owned by the government, and provides financial and other banking services to exporters and investors. The bank also is the Iranian representative for the Islamic Development Bank.

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Interesting timing if it happens...

 

National

Tuesday, May 16, 2017

Report: US May Waive Iran Sanctions in Coming Days

 

The administration of US President Donald Trump may issue waivers of some Iran nuclear-related sanctions in the coming days as it adheres, for now, to its commitments under the Iran nuclear deal, while carrying out a comprehensive review of its Iran policy.

The notification of the waivers might be issued as early as May 17, a day before Donald Trump is due to depart for Saudi Arabia, Israel, Italy and Brussels on his first foreign trip as president, sources told Al-Monitor, while cautioning that the anticipated action and timing could change. That is also two days before Iran holds the presidential election.

Iranian President Hassan Rouhani has made reaching the Iran nuclear deal with six world powers a centerpiece of his reelection bid, but has come under criticism from political rivals that Iranians have not received the economic benefits from sanctions relief that the deal promised.

The Trump administration is conducting a National Security Council-led inter-agency review of its broader Iran policy. US officials said that until the review is completed, the administration will continue to adhere to terms of the Iran nuclear deal, known as the Joint Comprehensive Plan of Action.

"We are continuing to review the JCPOA," a State Department official, speaking not for attribution, told Al-Monitor. "While that review in underway, we continue to implement our commitments."

Waivers of one set of US sanctions on Iran, under the Iran Freedom Counterproliferation Act, are set to expire 120 days after they were last issued by the Obama administration, and would need to be reissued the week of May 15 for the United States not to be in breach of the JCPOA. Waivers of some other US nuclear-related sanctions on Iran are not set to expire until after 180 days, so would not need to be reissued until a few weeks later.

"The Trump administration has made clear that at least until this review is completed, we will adhere to the JCPOA and will ensure that Iran is held strictly accountable to its requirements," the State Department official said.

"Once we have finalized our conclusions, we will meet the challenges Iran poses with clarity and conviction."

US officials have declined to offer a timeline for when the inter-agency review of US policy on Iran and the JCPOA will be completed.

Secretary of State Rex Tillerson certified in an April 18 letter to Congress that Iran was adhering to the nuclear deal, which went into effect in January 2016, after years of negotiations.

***Foot-Stomping

But addressing reporters a day later, Tillerson harshly denounced Iran's alleged support for terrorism and its backing for the Bashar al-Assad government in Syria and resistance groups in the region.

The Trump administration intends to pursue a comprehensive policy toward Iran that addresses those "malign behaviors", he said.

"A comprehensive Iran policy requires that we address all of the threats posed by Iran, and it is clear there are many," Tillerson said April 19.

The JCPOA "completely ignored all of the other serious threats that Iran poses", Tillerson asserted.

But asked whether the United States should then break out of the deal, Tillerson said he did not think that would be constructive.

"We just don't see that that's a prudent way to be dealing with Iran, certainly not in the context of all of their other disruptive activities," he replied.

Trump himself took another swipe at the deal the next day.

"It was a terrible agreement; it shouldn't have been signed; it shouldn't have been negotiated the way it was negotiated," Trump, meeting at the White House with Italian Prime Minister Paolo Gentiloni, said on April 20.

And though his administration had just two days earlier formally certified Iran's compliance with the deal, Trump claimed Iran was not living up to the deal's "spirit".

"They are not living up to the spirit of the agreement, I can tell you that. And we are analyzing it very carefully, and we will have something to say about it in the not-too-distant future," he said.

It was anticipated that any US sanctions waiver issued by the Trump administration this month would likely be accompanied by a similarly harsh "foot-stomping" such as those from Trump and Tillerson that followed the certification of Iranian compliance with the deal last month.

US officials are at least keeping in mind the May 19 Iranian elections, although it is unclear how much that vote might restrain the officials' comments on Iran.

Notably, Iran's Rouhani has recently hinted in the final days of the campaign that if he wins a second term, he might be willing to pursue negotiations with the United States on issues beyond the Iran nuclear deal, to try to get non-nuclear sanctions on Iran removed.

"I will engage myself in lifting all the non-nuclear sanctions during the coming four years and bring back the grandeur of Iran and the Iranian people," Rouhani, speaking at the third and final presidential debate, said.

The Trump administration is aware of the Iranian political calendar, a former US-Iran nuclear negotiator, Richard Nephew, said. But it is still likely to accompany any nod to Iran's compliance with the deal with harsh rhetoric about Iran's regional behavior.

"I think they [US officials] are sensitive to the fact that this is not a random week in May; that this is sensitive time for the Iranians politically," Nephew, now with Columbia University, said.

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He wants sanctions lifted on his currency....that's what I get from this

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Iranian banks managed to present their balance sheets for the last Iranian year (ended March 20, 2017) in line with the International Financial Reporting Standards, said the secretary-general of the Private Banks and Credit Institutions Association.

“Iran Audit Organization’s discrepancies with international standards posed a hurdle to implementing IFRS and Iranian banks needed to fully comply with the standards to resume their relations with international banks,” Mohammad Reza Jamshidi was also quoted as saying by IBENA.

Jamshidi cited the long duration of nuclear sanctions imposed on the banking system as the major reason for banks’ weak performance vis-à-vis the international banking system.

“Iranian banks did not prepare themselves for the post-sanctions era so they witnessed a great deal of setbacks but fortunately after the removal of sanctions, part of the problem was solved and the rest is unraveling,” he added.

The Central Bank of Iran has seriously pursued the complete implementation of IFRS and other international banking requirements such as Basel Accords.

IFRS are a single set of accounting standards, developed and maintained by the International Accounting Standards Board for application on a globally consistent basis by developed, emerging and developing economies.

These standards help provide investors and other users of financial statements with the ability to compare the financial performance of publicly listed companies on a like-for-like basis with their international peers.

After the lifting of sanctions imposed on Iran’s banking system, the necessity of conforming to IFRS was crucial to ease and speed up the process of absorbing foreign resources. IFRS standards are now mandated for use by more than 120 countries, including the European Union and by more than two-thirds of G20 states.

 

here we go again..