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Foreign finance, end user credit able to help Iran’s economy: expert

Business Materials 12 November 2017 01:08 (UTC +04:00)

Tehran, Iran, November 12

By Mehdi Sepahvand – Trend:

Under such circumstances when Iran faces a downturn in the production sector, access to foreign financial resources and end user credit are able to bring the country out of recession, a banking expert believes.

“Production, generally speaking, is costly. So, you will need access to financial resources that come at lower costs,” Bahaoddin Hosseini Hashemi, the Former president of Sarmayeh Bank told Trend November 11.

“This is because, want it or not, production is bound to imports, of either machinery or raw material. So here if banks can use international resources with low cost, they would be able to help the production sector.”

Also, production in Iran could be helped by indirect credit, which means credit to the end user, Hashemi said. “So if banks could provide end users with credit for durable or otherwise products, or if leasing companies could do that for people who have steady income but lack liquidity at present, this would boost people’s power to purchase and finally help production grow.”

“This is especially noteworthy because in Iran a great part of the problems that afflict the production sector are in the trade and marketing areas. When there is downturn, the chances to sell for cash severely diminish, driving companies to borrowing money which itself poses costs and risks.”

Recently the government ordered lowering of deposit interest rates. But Hashemi believes has not really helped production in Iran since loan interests were not diminished in like manner.

Iran was freed from international sanctions early in 2016 with the hope to be connected to the world banking system. However, major world banks have preserved their fear of punishment by the United States if they conduct banking relations with Iran.

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