Iran’s EGFI Expands Operations to Support Regional Trade

Iran’s EGFI Expands Operations to Support Regional Trade

“EGFI is set to play a more accentuated role in alleviating problems facing Iranian traders,” the EGFI chief, Seyyed Kamal Seyyed Ali, was quoted as saying by the official news website of Tehran Chamber of Commerce, Industries, Mines and Agriculture.
First and foremost, the official explained, EGFI will help exporters receive their foreign currency incomes that, coupled with its endeavors to increasingly issue guarantees required by exporters, will mean that the fund will effectively replace banks in trade transactions.
The Export Guarantee Fund of Iran was established in 1973, as the first export credit agency of Middle East and North Africa region. Then, after a period of inactivity, it was reestablished in 1994 as a legally and financially independent entity, 100% state-owned and affiliated to Ministry of Industries, Mining and Trade, with the purpose of supporting and promoting Iran’s non-oil exports by providing Iranian exporters with export credit policies to cover the major political and commercial risks involved in export operations, as well as credit guarantees to help them meet their financial requirements.
The second wave of US sanctions on Iran’s oil and gas sector, described by Washington as “harshest ever”, took effect on Nov. 5 after US President Donald Trump unilaterally withdrew from Iran’s nuclear deal with world power.
Some 700 persons and entities were blacklisted, 300 of whom were new additions with the rest having Obama-era sanctions reinstated. Some 50 Iranian banks and financial institutions were mentioned on the list published by the Office of Foreign Assets Control of the US Treasury Department.
The first round of sanctions prohibiting Iran’s purchase of US dollars and precious metals, part of a larger move that attempts to cut the country off from the international financial system came in on Aug. 7.
Lower Service Fees
Secondly, Seyyed Ali said, EGFI will increasingly focus on reducing export risks in target markets.
In this vein, it has managed to reduce service fees in cooperation with the incumbent administration.
According to the official, fees for exporters working with neighboring Iraq have most notably been set at 1% with the same rate considered for exporters to Afghanistan.
“The average insurance premium paid by exporters stands at 0.67%,” he said.
Official data disclosed recently by the Islamic Republic of Iran Customs Administration showed that during the first seven months of the current Iranian year that ended on Oct. 22, Iraq for the first time overtook China as Iran’s top non-oil destination.
Iran’s non-oil exports to the neighboring country surged by 55% to reach $5.73 billion. The volume accounted for 21% of the total volume of Iran’s non-oil exports during the period. Iran mainly exports liquefied gas, hydrocarbons, mineral products, fresh or frozen tomatoes and evaporative coolers to Iraq.
Exports to Afghanistan hovered around $1.87 billion, registering a 24% rise year-on-year.
A depreciated rial, which has lost significant value in recent months due to returning US sanctions, has given a significant boost to Iran’s exports, especially to regional partners.