According to Iran’s budget bill for the 2017-18 fiscal year, the government is allowed to attract up to $55 billion in foreign finance, of which projects using $30 billion have already been specified, a deputy roads and urban development minister said.
“The foreign finances are to be used for the implementation of projects of ministries and other organizations in the country,” Asghar Fakhrieh-Kashan was also quoted as saying by ILNA.
He noted that no limit has been set for the amount of finance a ministry or an entity can receive, as the allocated credits will be based on the projects approved by the government.
Countries that have shown interest in Iran’s investment potentials include South Korea, China, Japan, Denmark, Germany, Austria, Italy, Norway, Russia and Brazil.
After the implementation of Iran’s nuclear accord with world powers, the nation has negotiated to attract $50 billion worth of foreign finance, which are expected to flow into the country soon.
Fakhrieh-Kashan noted that the $55 billion ceiling for foreign finances consists of $50 billion of direct foreign finance plus $5 billion in loans, either from another government or foreign financial institutions.
“Of the foreign loans worth $5 billion, €1.2 billion ($1.44 billion) from Russian resources will be used to electrify the 495-km Garmsar-Inche Burun railroad,” he added, noting that a portion of these finances will be allocated to Iran’s Energy Ministry for the implementation of their projects while the destination of the rest of the credits is not determined yet.
Fakhrieh-Kashan said the ministry is trying to finalize a $500 million loan from Azerbaijan to finance the Rasht-Astara railroad project.
He emphasized that any ministry that can propose a better project will be prioritized to get a share of foreign finances.
Asked which body is responsible to distribute the finances, the official said, “The Fifth Five-Year Development Plan [2011-16] has elaborated that a committee, headed by a representative from the Ministry of Economic Affairs and Finance, should be formed to supervise the allocation of foreign finances, but after disagreements arose, the responsibility fell to the Central Bank of Iran and currently there is good cooperation between other organs and CBI.”
According to Fakhrieh-Kashan, negotiations have been held with Denmark for €1 billion of foreign finance, but no project has been defined yet to benefit from the credit.
“Iran’s Bank of Industry and Mine has signed an agreement with a Danish bank for the allocation of foreign finances and any ministry and organization that can acquire the approval of the Planning and Budget Organization is eligible to use the credits,” he said.
The deputy minister said another finance deal worth €3 billion ($3.6 billion) will be signed with Italy.
“We are also negotiating with a German company to a credit line worth €3billion ($3.6 billion), €1.7 billion ($2 billion) of which will be used in the projects of the Ministry of Roads and Urban Development,” he added.
He also announced the signing of finance deals with Japan and Austria in the foreseeable future.
Fakhrieh-Kashan noted that the deals with Japan and Austria will be worth $10 billion and €1 billion ($1.2 billion), respectively.
This wave of much-needed foreign finance has received extensive media coverage, some of which were critical of the administration, claiming that the government of President Hassan Rouhani is using oil income as collateral for the deals.
The misleading reports in the media made the Central Bank of Iran set the record straight and announced that the government is their sole guarantor and that oil revenues are not involved.
“Foreign finance deals negotiated in recent months involve loans that will be allocated based on guarantees by the government and permits issued by the Economic Council. Nothing but the guarantee of the government has been considered as their collateral,” reads a statement published on the official website of CBI.