By Dalga Khatinoglu
While Iran's CBI says the amount of bad loans stand at 1000 trillion rials, spokesman of Judiciary System put the figure two times more than CBI's statistics.
Each USD is sold at 35,000 rials in the open market, while the official rate of dollar against rial is 26,500 rials, then the amount of bad loan based on free exchange markets is about $51 billion and based of official rate is $75.5 billion.
The amount of bad loans reached about $51 billion in Iran, while the loan-to-deposit ratio in the country's banks on average is in the critical stage.
Gholamhossein Mohseni Ejei, the Spokesperson for the Iranian Judiciary announced Feb.19 that only half of debtors requested extending the deadline to pay off their debts.
The figure indicates above 30 times increase compared to nine years ago when ex-President Mahmoud Ahmadinejad took power.
The Central Bank of Iran has not published any updated statistics, but according to mid-2013 data released by the CBI, the total amount of bank deposits were $205 billion (based on official exchange rate), while the total loans amounted at $194.3 billion. Then the loan-to-deposit ratio was about 1.058.
The bad loan amount during last ten years based on CBI's report:
The main increase in bad loans occurred between 2010, mid-2014, a period when Iran's national currency dropped in value by 3.5 times.
Iranian government succeeded in decreasing the inflation rate from 36 percent to about 17 percent during Hassan Rouhani's presidency, started in mid-2013.
Reasons
According to the report published by Fars News Agency in August 2014, citing an anonymous informed official, as well as Iranian official's frequently stated announcements, 67 percent, 21 percent and 11 percent of bad loans belong to those who owe above $400 million, $200 million and $30 million in debt to the banks respectively.
|
Range of issued bad loans |
amount - billion dollar |
number of individuals |
|
Above $200 million |
6 |
18 |
|
Above $40 million |
16.8 |
145 |
|
Above $20 million |
18.8 |
283 |
|
Above $4 million |
24.5 |
988 |
|
Below $4 million |
15.2 |
--- |
Sixty-two percent of bad loans belong to 988 individuals who have above $4 million in debt to the banks. Getting a loan above $4 million from a bank is impossible for ordinary people, but those who are involved in business, foreign trade, company shareholders, employers, etc. can receive loans of a huge amount.
One of the main reasons of existing bad loans is the worsening situation in the industrial sector, mostly affected by western sanctions aimed to curb Iran's sensitive nuclear activities.
During the 2012 and 2013 Iran's economy 5.8 percent and 2 percent contraction, while the country's GDP growth is expected to free itself from negative growth this year.
Seyed-Abrishami, Deputy Minister of Industries and Mines told ISNA in April that 5,400 industrial units in Iran have been inactivated, while 9,097 units (34 percent of total industrial units) in Iran are working under 50 percent capacity and 8, 269 units are working with above 70 percent capacity.
Under the circumstances, the paying back of issued loans for industrial sector activists is quite difficult, while the country needs immediately economic recovery after several years of stagnation.
Abrishami said that about 850 industrial units have had their assets ceased by banks due to bad loans, of which about 700 units became inactivated entirely.
Edited by CN
Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service.
Follow him on @dalgakhatinoglu