Russia allocates 6.5b-ruble credit line to Iran to expand banking ties

Russia allocated a credit line worth 6.5 billion rubles to Iran during the visit of Central Bank of Iran (CBI) Governor Mohammad-Reza Farzin to Moscow, the CBI portal published.
As reported by the Public Relations Department of the CBI, following the trip of Farzin to Russia with the aim of increasing monetary and banking cooperation with this country and also strengthening relations within the framework of the free trade agreement between Iran and the Eurasian Economic Union (EAEU), a meeting was held between the directors of Sberbank of Russia and Bank Melli Iran (BMI), based on that, a credit line worth 6.5 billion rubles was created for Iran to import basic goods from Russia.

In this meeting, which was attended by Farzin, directors from Sberbank of Russia and Bank Melli of Iran emphasized the opening of a 6.5 billion-ruble credit line between Iran and Russia.
This credit line is supposed to become operational by Sberbank and BMI to finance the import of basic goods needed by Iran.

The credit is based on the brokerage agreements and contracts concluded between the two banks in a minimal form and as the beginning of banking operations.
It should be noted that the opening of this credit is the first important step in the direction of the development of cooperation between Iran and Russia after the signing of the free trade agreement between Iran and EAEU.
Iran and the member states of Eurasian Economic Union (EAEU), Belarus, Kazakhstan, Kyrgyzstan, Russia, and Armenia, signed a free trade agreement (FTA) in a ceremony in St. Petersburg on Monday.
Iranian Minister of Industry, Mining and Trade Abbas Aliabadi signed this agreement, which is the result of more than two years of negotiations and expert work, on behalf of Iran.
On behalf of the EAEU, the deputy prime ministers of the member countries signed the agreement.

The signing ceremony was attended by Iranian Deputy Foreign Minister for Economic Diplomacy Mehdi Safari, EAEU Minister in Charge of Trade Andrey Slepnev, Iran’s Ambassador to Russia Kazem Jalali, and a number of EAEU officials.

After signing, this agreement needs to be approved by the parliaments of six countries (Iran and EAEU five member states) in order to become a law and become operational.
According to the information received by the IRNA reporter in St. Petersburg from the free trade agreement between Iran and the EAEU, the parties will completely eliminate tariffs for 87 percent of goods in their trade exchanges.
In the meantime, each of the parties prepares a negative list that includes goods that are considered sensitive goods for one of the parties and it is not possible to remove the tariff.

Iran’s first LC opened after years

Following the consultations and creation of monetary and banking platforms and technical negotiations of the Central Bank of Iran, the first LC of Iran’s banking network abroad was opened by Bank Sepah in Russia.
This action is unprecedented after Trump’s sanctions or the so-called “maximum pressure policy”.

As reported by the CBI Public Relations Department, the value of this LC, which has been used since Wednesday (December 27), is 17 million euros to begin with, and it is used for imports with the condition of long-term payment.
This mutual and pioneering cooperation will represent the beginning of a new chapter of Iran’s banking relations with other countries.
In fact, this credit opening has provided the possibility of easy and creditable purchases by Iranian traders from Russia, which will help in facilitating imports to the country.
As announced by the head of the Islamic Republic of Iran Customs Administration (IRICA), the value of trade between Iran and Russia rose 18 percent during the first eight months of the current Iranian calendar year (March 21-Novemebr 21), as compared to the same period of time in the past year.

Mohammad Rezvani-Far said that 3.748 million tons of products worth $1.756 billion were traded between the two neighbors in the mentioned eight-month period.
The weight of eight-month bilateral trade also rose 43 percent year on year, the official added.

He put the value of Iran’s export to Russia at $616.326 million in the first eight months of the present year, which was 32 percent higher than the figure of the same period of time in the past year.
The IRICA head also announced that Iran imported commodities valued at $1.14 billion from Russia in the eight-month period, with 12 percent growth, year on year.
Iran and Russia have been taking serious steps to boost their mutual trade over the past few years.

In late January, Iranian President Ebrahim Raisi said that the Islamic Republic and Russia have reached an agreement to boost the trade between the two countries up to $10 billion.
“We agreed to remove trade barriers and boost the economic exchanges between the two countries. Currently, the level of mutual trade is not acceptable, so the two countries agreed to increase trade to $10 billion a year,” Raisi said on January 21, upon arrival to Tehran after a two-day visit to Moscow.
As major players in the world and West Asia’s political and economic scene, Iran and Russia have been expanding political and economic ties for many years, however, the relations between the two countries have entered a whole new level over the past few months.

The imposition of sanctions on both countries has been a major factor in bringing the two sides closer together, making them a strong alliance against U.S. pressures. Over the past few months, senior officials from the two sides have been meeting and visiting each other to consolidate bilateral cooperation in various fields, including energy, oil, gas, and transit, as well as diplomatic and political relations.

As the most significant event among the mentioned exchanges, Russia’s President Vladimir Putin visited Tehran on July 19 to attend the 7th Summit of the Guarantor States of the Astana Process.
During his visit to Tehran Putin met with Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei and President Raisi and exchanged views on the recent development in the world and the relations between the two countries.
In these meetings, the two sides reached new agreements and stressed the need to take the necessary measures for broadening political and economic ties between the two countries to nullify the impacts of the U.S. sanctions.
Among other issues, Tehran and Moscow have been negotiating a free trade agreement to ensure acceleration in the economic relations between the two countries.