SWIFT suspension to cause 25% rise in prices: ex-Iranian minister(Exclusive)

Business Materials 22 November 2018 15:52 (UTC +04:00)

Tehran, Iran, Nov. 22


The lack of SWIFT will hurt all the economic sectors in Iran, therefore it is a serious issue, former minister of commerce, Hassan Abdei Jafari told Trend.

“Today, monetary transactions are carried out through SWIFT and the Western economy has set up this system to have secure banking transactions and for providing letters of credit (LCs),” he said, referring to the role of SWIFT in global trade.

“In the interconnected world economy, the focus is to use an international banking system. SWIFT is one of those systems and if it is banned to work with us, many of our major banks will not be able to transfer money,” he added.

“Of course, in the past, we were also subject to this limitation, and we had to use indirect ways to transfer money that was more costly. During that period, since we could not use the LCs, our importers faced problems, such as lack of commitment and low quality goods. This issue occurs in transactions with countries like Brazil,” he noted.

“Non-issuance of LCs has two major losses: first, we had to pay 90 percent of the money first, which had a high risk, and second, the high costs, especially when suppliers were aware of our limitations and tried to raise the prices,” Abdei Jafari said referring to importance of LCs during the Iran-Iraq war.

“Therefore, if we buy outside SWIFT or LC framework, according to estimations, the prices will rise 25 percent. It must be accepted that cutting off SWIFT is not a joke, and in some ways the private sector, buyers and sellers will all be harmed,” he said.

“However, by barter transactions, like receiving goods in exchange for oil, we can continue to trade, and it seems that the Europeans also want this system, which means a special account for the government’s oil exports will be opened and this account will be used to purchase goods,” Abdei Jafari noted.