The Central Bank of Iran allocated $48 billion in hard currency for imports during the last fiscal year that ended on March 20, 2018, according to its governor, who put it down to new openings in banking ties with other countries.

“CBI allocated $48 billion for import of goods and services during the previous year, which indicates a significant rise compared with $39 billion of the year before,” Valiollah Seif was also quoted as saying by the official website of CBI.

The latest CBI report on correspondent banking relations published in mid-February to mark the 39th anniversary of the Islamic Revolution indicated that by Jan. 20, Iranian banks had established 818 correspondent banking relations with 284 foreign peers.

Iran has recently made efforts to accentuate the role of its banking sector in processing the country’s import orders.

The Ministry of Industries, Mining and Trade on Feb. 28 issued a directive upon the recommendation of CBI that no import orders could be registered with the US dollar. The move was aimed at shifting imports to the banking system, as banks have no access to dollar transactions as per decades-old sanctions and therefore, import orders were mostly processed through money exchange shops.

On Friday, CBI announced that imports from Turkey, China, South Korea and India, some of Iran’s main trade partners, would be banned unless the purchase orders are made through the banking system in the form of letters of credit or payment orders.

Seif, who was speaking in a new-year meeting with members of the board of trustees of CBI and bank executives on Saturday, also referred to the central bank’s newly-established Forex Deals Integrated System, locally known by the acronym Nima, stressing that it allows all importers and exporters to conduct their foreign exchange transactions in a safe environment while allowing CBI to manage the currency market.

The CBI governor pointed to the allocation of loans with the aim of realizing the main goal of the current year that has been named by Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei as the year of “Support for Iranian Products” as a major priority of the banking system.

“A total of 5.2 quadrillion rials ($92.85 billion at current exchange rate) in loans were allocated by the banking system in the first 11 months of the previous fiscal year to Feb. 19, signaling a 24% year-on-year increase. Working capital loans constituted a 62% share while 28% were allocated as investments in new projects in various economic sectors,” he said.

“What is more, a total of 1,445 counts of loans valued at 30.2 trillion rials ($539. 28 million) were allocated to knowledge-based firms during the previous year while 20.2 trillion rials ($360.71 million) were given to the auto manufacturing sector because these two sectors play an important and effective role in creating jobs in the country.”

However, after enumerating management of the currency market and implementing a more modern supervision system, he referred to the longstanding plan to instill major reforms in the banking system as the first priority of CBI in the current Iranian year.

“The banking reform plan that aims to eliminate some of the imbalances in the banking system will begin as of this year and we hope to take meaningful measures in cooperation with the government,” the CBI chief concluded.

Iran’s banking system needs reforms. The government and members of parliament plan to finally implement reforms in the current fiscal year, but no timeline has been set so far.

Source:

2018, CBI Import Allocations Rise on Growing Banking Ties, Monday, April 9, p.1,<https://financialtribune.com>