TEHRAN (Iran News)  Within the framework of strengthening economic diplomacy, Mohammad Reza Farzin – Governor of the Central Bank of Iran – due to the official invitation of Elvira Nabiullina, Governor of the Central Bank of Russia, has left Tehran for Yekaterinburg. He is holding negotiations to advance the monetary agreement between Iran and Russia, as well as to strengthen and develop economic, monetary and banking relations with the BRICS group members.

During the Iranian President’s recent visit to Moscow, Farzin said: The monetary agreement between Iran and Russia has been implemented, and the currencies of the two countries have become the basis for settlement based on the agreed rate of the commercial foreign exchange market.

Another major executive plan of Iran and Russia is the connection of the Mir and Shetab card payment networks, the first phase of which has been launched, and the second and third phases are also on the agenda. “CBI “

The joint action document between the central banks of Iran and Russia has been implemented in three main headings: “The use of national currencies in trade between the two countries”, “The possibility of connecting banking and local messengers of the two countries to SEPAM and SPFS”, and “The possibility of connecting the card payment network of the two countries”.

Yekaterinburg, the capital of the Sverdlovsk region, is known as the industrial center of the Ural Federal District of Russia.

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The CBI put the GDP growth at 3.5 percent excluding oil, Tasnim News Agency reported.

According to CBI data, the GDP growth was positive in all four quarters of the previous year so that from the first quarter to the end of the fourth quarter of the said year, the economic growth rate of the country was 1.9 percent, 3.9 percent, 4.9 percent, and 5.3 percent, respectively.

As reported, based on the fixed prices in the Iranian year 1395 (ended on March 20, 2017), the country’s GDP stood at 15.15 quadrillion rials (about $30.7 billion) including the oil sector, and at 13.8 quadrillion rials (about $28.13 billion) excluding the oil sector in the past year.

Earlier this month, the World Bank (WB) in its latest report dubbed “Global Economic Prospects” estimated a 2.2 percent growth for Iran’s economy in 2023, a figure which is higher than the average growth forecast for the global economy and despite the fact that the country is still under sanctions imposed by the United States.

The bank has predicted that due to the contractionary monetary policy adopted by many countries this year, the average economic growth in the world is expected to decrease from 3.1 percent in 2022 to 2.1 percent in 2023.

Based on the WB report, Iran’s GDP grew by 4.7 percent in the last quarter of the previous year, while the average GDP growth for most of the advanced countries like the U.S., China, and many European countries was less than the said figure.

In terms of economic growth, Iran ranked 15th among the world’s 72 major economies in Q4 2022, which means that only 14 countries had higher economic growth than Iran in this period.

Iran’s 4.7 percent GDP growth in Q4 2022 was achieved, while the average economic growth of developed countries was only 1.2 percent in this period.

The U.S. economy grew by only 0.9 percent in the mentioned period, the Eurozone by 1.8 percent and Japan by 0.4 percent.

According to the WB data, Iran’s economy experienced a 2.9 percent growth in 2022; the average growth rate in West Asia and North African economies in 2022 was 5.9 percent.

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On Thursday once again Iranians showed the world their determination in defending their rights when the International Court of Justice issued a verdict in favor of the Islamic Republic of Iran in a legal fight with the U.S. and it was another victory for Tehran and another upset for Washington.

Judges at the International Court of Justice (ICJ) in The Hague ruled that the United States had violated international law by allowing American courts to confiscate nearly two billion dollars in assets from Iranian companies, and ordered Washington to pay compensation, the amount of which will be determined later.

On Thursday, the ICJ said Washington’s freezing of funds belonging to several Iranian individuals and companies, including $1.75 billion from the Central Bank of Iran (CBI), was “manifestly unreasonable.”

The court, however, said that it did not have jurisdiction to rule on the freezing of assets from the CBI.

In reaction, the Iranian Foreign Ministry said the verdict demonstrates the legitimacy of the Islamic Republic’s positions and the illegal behavior of the U.S.

“As per this important ruling, the court rightfully dismissed the unsubstantiated defenses of the United States and recognized Iran as the rightful party by emphasizing the former’s violation of its commitments. The US obligation to compensate for the losses will be the most cogent reason for the legitimacy of the request of the Islamic Republic of Iran,” the ministry said in a statement.

It added that Tehran “considers it as one of its inherent duties to press for the rights of the Iranian nation, and will utilize all diplomatic, legal and judicial means and channels to demand the rights of the honorable Iranian people and the national interests of Iranians.”

The case before the ICJ was initially brought by Tehran against Washington in 2016 for breaching a 1955 friendship treaty, signed before the 1979 Islamic Revolution, by allowing American courts to freeze the assets of Iranian companies.

The U.S. Supreme Court in 2016 ruled that about USD 2 billion in frozen Iranian assets must be turned over to American families of people killed in the 1983 bombing of a U.S. Marine Corps barracks in the Lebanese capital of Beirut and other attacks blamed on Iran. Tehran has long rejected allegations of involvement in the 1983 Beirut bombing.

The money confiscated under the US court ruling belongs to the CBI. The assets were blocked under U.S. sanctions.

The U.S. formally withdrew from the 1955 treaty in 2018 after Iran filed two claims based on the accord.

Also known as the World Court, the ICJ is the United Nations’ top court dealing with disputes between countries. Although the ICJ’s rulings are binding, it has no power to enforce them.

This ruling is another victory for the Islamic Republic of Iran against world hegemony, mainly the U.S., and it is a sign of strong determination of the Iranians and especially the Islamic Republic of Iran in winning back what the hostile U.S. has stolen from the country.

The history has shown us that any nation who stands against the enemies with strong determination it is been a winner and the Islamic Republic of Iran on the eve of its 44th anniversary achieved another victory in a duel with the U.S. which is trying to push the Islamic Republic of Iran back in any field but it has always faced upsets in any fight either legal, political and military fight.

On Saturday Iran commemorated the 44th anniversary of the establishment of the Islamic Republic on the back of a historic referendum, in which Iranians voted overwhelmingly in favor of departure from monarchical rule weeks after the collapse of the U.S.-backed Pahlavi regime.

In a landmark two-day referendum held on March 30-31, 1979, more than 98.2 percent of eligible Iranians voted “yes” for the establishment of an Islamic Republic in the country.

The vote, which was held less than two months after the victory of the Islamic Revolution, is considered a turning point in the modern history of Iran.

The Islamic Republic was established in Iran in line with the popular motto of the 1979 Islamic Revolution that called for “Independence, Freedom and the Islamic Republic” for the country.

The victory in the legal case against the U.S. on the eve of the anniversary of the establishment of the Islamic Republic of Iran was the best and sweetest news which brought joy for the people and made them more determined in following the path of the founder of the Islamic establishment the Late Imam Khomeini (R) and its deserved successor Supreme Leader Ayatollah Syed Ali Khamenei and they are today more determined than ever in fight with the world hegemony especially with the U.S. and Zionists who seek toppling of the Islamic establishment.

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Rais attended the Glass Building of the Central Bank on Sunday morning and first met the Governor of the Central Bank, the deputy heads of information technology and its managers and in the meeting he was informed about the functioning of the monitoring systems and intelligent monitoring of financial transactions.

The President then attended the meeting of senior managers of the Central Bank and after listening to the report of the Governor of the Central Bank, he pointed out the “important position of the Central Bank in the management of monetary and financial resources and the reform of the banking system” and defined the 10 missions for its transformation and improvement.

Raisi called the central bank the think tank and monitoring body of the monetary and financial policies of the country and said, “The central bank should vigorously advance the path of reforming and upgrading the banking system and supervise the implementation of the country’s monetary and financial policies”.

In this meeting, the President described strengthening the value of the national currency, correcting the imbalance of banks, stopping the annual growth of liquidity, correcting the portfolio of foreign exchange reserves in accordance with the country’s investment and business needs, expanding the range of collateral and facilitating the collateralization process, activating the commercial account, strengthening the supervisory and supply systems and providing the capital turnover of production units as the central bank’s main missions.

Raisi declared “stopping the growth of liquidity and managing money creation” as an important mission of the Central Bank and added, “The growth of liquidity is not a concern if it is directed towards production by management, but if it moves towards brokery in the market, it will have devastating consequences”.

Referring to the praise of the Supreme Leader of the Revolution for the government’s action in properly strictness in controlling the growth of the balance sheet, the President obliged the Central Bank to control the growth of the banks’ money creation by imposing a ceiling on the growth of the banks’ debts (deposits) and to control the annual growth of the country’s liquidity until the end of year 1402 to reach below 25%”.

Expressing his satisfaction with the state of the Central Bank’s monitoring and supervisory systems, the President said, “Thank God, we are in good condition in the field of collecting and monitoring data and information, and this information can help financial transparency in the country”.

Raisi described the timely action to prevent violations of rules as one of the important examples of using the information collected by these systems and stated, “All those who are active in the economic system of the country should come to the realization with the timely monitoring and action of the central bank, there is no basis for any violation in this system”.

He stressed that the central bank should act decisively and without compromise in relation to banking violations, and stated, “The quick and decisive action of the central bank violations committee against the violators is a great service to the country and the banking system, because it will prevent the offense from becoming a crime”.

The President described the central bank as the eye of the banking and monetary system of the country and said, “Today, the salvation of the country lies in production and the implementation of the Supreme Leader of the Revolution’s emphasis regarding supporting production saves Iran’s economy”.

Dr Raisi further called “resolving the problem of working capital of production units” as an important action of the central bank, and added, “Part of the reason for the closure of production units is the problem of working capital, which if solved, will lead to an increase in production and employment”.

The President also urged the Governor of the Central Bank to use his efforts so that the principles of Islamic banking are implemented carefully and with full supervision in banking contracts.

The President emphasized “special attention to the sovereignty of the Rial” and said, “We must avoid dollarization of the economy because the influence of the dollar on the economy has had harmful consequences in the country”.

Raisi also emphasized the necessity of reforming the country’s currency basket and using different currencies, especially in exchanges with neighboring countries and bilateral monetary agreements, and said, “This measure can help the stable supply of goods and increase exchanges and protect the country against the shocks of the dollar”.

Ayatollah Raisi obliged the Central Bank to provide the possibility of various types of collateral to obtain loans, including the collateralization of valid financial deeds and the difference in the value of gold and machinery collateral.

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From the total foreign debt, $6.619 billion was mid-term and long-term debts while $2.447 billion was short-term debts, the data indicated, IRIB reported.

Iran’s external debt stood at $9.031 billion at the end of the sixth Iranian calendar month of Shahrivar (September 22, 2021), down 1.2 percent from $9.142 billion at the end of the previous year.

Some $6.574 billion of the total foreign debt in the mentioned period was mid-term and long-term debts while $2.457 billion was short-term debts.

External debt is the portion of a country’s debt that is borrowed from foreign lenders including commercial banks, governments, or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made.

Foreign debt as a percentage of Gross Domestic Product (GDP) is the ratio between the debt a country owes to non-resident creditors and its nominal GDP.

Back in January 2021, Deputy Minister of Finance and Economic Affairs Mohammad-Ali Dehqan Dehnavi had said the country’s foreign debts were very insignificant.

“Currently, the volume of Iran’s foreign debt is extremely small due to the existing restrictions,” said.

The official noted that using foreign debts could be a positive opportunity, meaning that the government can borrow from abroad and invest inside the country.

According to Dehnavi, most of the government’s debts are internal.

Having external debts is important globally, but it is not currently important for Iran since the country has almost no foreign debts.

Iran’s external debt has been falling in recent years following a downward trend.

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The MOU was signed on Saturday, in a ceremony attended by CBI Governor Ali Saleh-Abadi, Industry, Mining and Trade Minister Reza Fatemi Amin, and Finance and Economic Affairs Minister Ehsan Khandouzi.

Under the framework of the mentioned MOU, CBI and the Industry Ministry will cooperate with the acting banks to provide facilities to production units in various sectors including metals, construction, automobiles, home appliances, machinery, foodstuff, as well as chemical and petrochemical industries.

Unlike traditional methods of providing direct facilities by financial institutions, supply chain financing is a form of financial transaction wherein a third party facilitates an exchange by financing the supplier on the customer’s behalf.

Also, it refers to the techniques and practices used by banks and other financial institutions to manage the capital invested into the supply chain and reduce the risk for the parties involved

In this method, the production units can also receive other credit instruments such as bonds and negotiable instruments instead of cash facilities, which in addition to reducing the need for liquidity, bank resources are also directed to productive activities.

Based on the MOU, the plan is going to be implemented in a pilot phase and then will become fully operational after being finalized.

Speaking in the signing ceremony, Saleh-Abadi said the implementation of this plan will reduce the non-current receivables of banks and it will also make it easier to manage liquidity and monitor the appropriate allocation of banking resources.

Fatemi-Amin for his part said at the ceremony that with the supply chain financing, banks will pay facilities based on electronic invoices under the framework of the country’s comprehensive trade system.

“This makes receiving facilities transparent and companies cannot get multiple loans for one purpose,” he added.

The official noted that this method is a very effective work in a financing process that increases access to financial resources and prevents the diversion of resources, in other words, by implementing this plan, manufacturing companies and banks will both benefit.

Further in the ceremony, Finance Minister Ehsan Khandouzi underlined some of his ministry’s programs for developing the country’s productive sectors, saying: “Our main goal is to be able to shorten all the avenues that lead the financing of production sectors to support manufacturing and exporting enterprises so that traders and producers are less concerned about financing.”

Measures such as the supply chain financing scheme not only help and facilitate the financing process but also make the relationship between producers and the banking network more regular, he said.

According to Khandouzi, completing the financing chain, expanding the scope of the chain activities in industrial sectors, and completing the supporting banking network are three steps that should be monitored and followed in the pilot phase of the project and fully deployed next year.

Photo: representatives of acting banks sign MOU documents on Saturday as CBI Governor Ali Saleh-Abadi (2nd R), Industry Minister Reza Fatemi Amin (1st L) and Finance Minister Ehsan Khandouzi (2nd L) look upon.

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The CBI has supplied $9.5 billion for importing basic goods as well as medicine in the first six months of the current Iranian calendar year (March 21-September 22), another official with the bank has previously announced.

As reported by IRIB, Shiva Raveshi said the government allocated $8 billion for the supply of basic goods and medicine in the current fiscal year’s budget bill, all of which has been supplied in the first half of the year and $1.5 billion has also been supplied for the imports of Covid-19 vaccine.

“The $9.5 billion that has been provided this year is almost equal to the total currency provided for the imports of basic goods in the previous calendar year (ended on March 20); this shows that this year we performed better in terms of meeting the real needs of the country,” she said.

Raveshi pointed to the achievements of the bank despite the difficulties created by the U.S. sanctions, saying: “In the conditions of sanctions and reduction of oil revenues, we were able to meet the basic needs of the country and even the necessary materials for the production units, which is considered a success for the country and shows that the capacity of the country’s non-oil exports is increasing.”

Meanwhile, back in September, Mehrdad Jamal Orounaqi, the deputy head of the Islamic Republic of Iran Customs Administration (IRICA) for technical affairs, had said that the clearance of basic commodities from the customs has been expedited.

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The decision was made during a meeting between the CBI Governor Ali Saleh-Abadi, the Finance and Economic Affairs Minister Ehsan Khandouzi, and the SEO Head Majid Eshqi.

Speaking at the meeting, Saleh-Abadi said that the formation of a joint committee will help develop joint cooperation in money and capital markets and stabilize them while creating new capacities for growth because money and stock markets are not competitors but complementary.

He also pointed to the need to establish a financial stability council and said: “By establishing this council, coordination between various components of the financial market, especially the money and stock markets in the country can be improved; The current situation is a very good time to establish this council and to promote such cooperation.”

Stating that the capital market is a specialized market, Saleh-Abadi stressed that the capital market should continue its growth path away from politicization and in a predictable environment based on specialized approaches.

Further in the meeting, Khandouzi stated that having dialogue among economic policy-making institutions is very promising, saying: “This can lead to good results and, if it continues, will have a very clear meaning for traders and the market.”

He also welcomed the establishment of a joint committee with the CBI and noted that the cooperation with the central bank in such joint committees, will help to clarify the key variables that traders will look at to make decisions in the market.

“If the Joint Committee meets regularly on a weekly basis, small issues can be resolved quickly and serve as a basis for dialogue, increased understanding and cooperation with other productive sectors of the economy, as well as other ministries,” Khandouzi stressed.

Eshqi for his turn underlined stability as the most important component in the capital market and said: “The most important factor that raises concerns in the capital market is instability, even though the macro variables of the capital market are desirable. Nevertheless, I hope that with the efforts made by the CBI, the common language between the two markets will improve.”

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