Economic overview: Iran newspapers talk post-sanctions era

Business Materials 15 January 2016 15:19 (UTC +04:00)
The reports regarding the imminent removal of sanctions and its impact on the country’s economy have triggered a wave of articles on the topic
Economic overview: Iran newspapers talk post-sanctions era

Baku, Azerbaijan, Jan. 14

By Farhad Daneshvar - Trend:

The reports regarding the imminent removal of sanctions and its impact on the country's economy have triggered a wave of articles on the topic in Iranian newspapers.

Apparently, the long awaited international talks on Tehran's controversial nuclear program are finally going to yield positive results and open a new chapter in Iran's economy.

Tehran Stock Exchange (TSE) has become bullish, and foreign currency prices against rial, Iran's national currency, have dropped after breaking reports on Jan. 13 regarding the implementation of the Joint Comprehensive Plan of Action (JCPOA aka nuclear deal).

At this point, high-ranking Iranian officials expect the sanctions against the country to be lifted within days.

Some reports in the Iranian press suggest that the possible removal of sanctions and the implementation of the JCPOA is the main reason for heating up in the Stock Exchange. However others believe that the index may have increased due to market activists being excited over the reports on possible removal of sanctions, which also predicted that the index may fall as there are various factors affecting the market such as oil prices, petrochemical products and also the unclear fate of Iran's budget plan for the upcoming fiscal year to start March 21.

In the meantime, Iranian banking system is operating with its "hands tied behind its back", as it still seeks to get re-connected to SWIFT, as well as use letters of credit transactions (LC) in full once the JCPOA is in action.

The liquidity level has dropped in the country and Iran's economy currently suffers from the lack of access to liquidity - an obstacle to improve the country's economy, which is expected to be resolved as about $30 billion of the country's frozen assets in the international banks will be released after the removal of sanctions.

TSE welcomes JCPOA

On Jan. 14, Taadol Daily put the topic on the front page, suggesting that various sectors of Iran's economy are planning to boost their activity after the removal of sanctions. Saying that the country's banking system has dragged behind international financial developments during the sanction years in terms of updating its software and hardware systems, Taadol suggested that Tehran needs to catch up with international banking developments.

While the country's civil aviation needs to renew its aging fleet, Iranian commerce sector is preparing a new proposal on pricing goods for the post-sanctions era. Meanwhile, the Oil Ministry has been preparing for the post-sanctions era over the past two years, proposing a new model of oil and gas contracts, as well as getting ready to pump its crude oil in the market, Taadol added.

Gostaresh-e Sanaat Daily published an article headlined "Tehran Exchange Market welcomed JCPOA", which said that after a long recession at the Tehran Stock Exchange (TSE), its main index rose by 675 points to hit 63,516 on Jan. 13 - the highest point reached on the index over the past three months.

Monopolization vs readiness for foreign investments

According to Jahan-e Sanaat, a group of experts have questioned the capacity of the country's economic regulations and infrastructures to welcome international companies, calling for reforming the country's economic structures to lure foreign investment.

Jahan-e Sanaat suggested that releasing blocked assets, possible exports of oil and its products, reconnecting to SWIFT and using LC, partnership with international companies as well as establishing the branches of foreign banks in Iran are expected in the post-sanctions era, and that all will contribute to the improvement of economy as well as climbing out from the current economic recession in the country.

However Iran needs to review its economic regulation and infrastructures for creating competition between companies, both domestic and foreign. Iran's heavily monopolized car-making industry was brought up as an example.

Farhad Daneshvar is Trend Agency's staff journalist, follow him on Twitter:@farhad_danesh