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First Iranian English Economic Daily financialtribune.com twitter.com/fintribune Contacts, ads: @FTD_ADS_Bot Print subscription: +982142710123 Digital subscription: financialtribune.com/subscription-plans
Banks Set to Adopt XBRL for Financial Reporting
The Central Bank of Iran is to announce XBRL (eXtensible Business Reporting Language) standards for financial reporting by banks.
According to the CBI governor Ali Salehabadi, this standard will be tested in one of the banks in February and later other banks will be required to submit their financial reports accordingly, IBENA quoted him as saying.
XBRL is a language for the electronic communication of business and financial data which is revolutionizing the business reporting around the world.
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Mining Machinery Imports Fail to Meet Domestic Need
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Iran, Qatar Sign ‘World’s Biggest’ Saffron Contract
The world’s biggest contract for saffron trade was signed between Iran and Qatar on Sept 18, in the presence of Iran’s Ambassador in Doha Hamidreza Dehqani-Poudeh and Qatar’s Finance Minister Ali bin Ahmed Al Kuwari.
As per the contract, 200 tons of saffron worth $300 million will be processed and exported from Iran to the neighboring Qatar, with the first consignment scheduled for Oct. 1.
Kuwari said in the meeting that Qatar is ready to cooperate with Iran in processing saffron on par with global standards.
Experts believe this contract is one of a kind and can have positive impact on Iran’s domestic saffron market and help export processed saffron, creating value added for the precious Iranian spice.
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ICJ Hearing Case on Iran Assets Frozen by the US
financialtribune.com/node/115263
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Credit Instruments to Enter IME Trade
The Central Bank of Iran is giving the finishing touches to a plan to tap into the newly-developed credit instruments in trade of commodities at the Iran Mercantile Exchange.
In a meeting with CEOs of state banks, the CBI Governor Ali Salehabadi said the Productive Credit Certificate is one such instrument that would be traded at the IME next week.
Known by its Persian acronym Gam, the certificate is a market-base credit instrument that can be traded in the money and capital markets. Lenders will assist strong businesses by offering tradable credit certificates similar to LCs that can be given to suppliers of raw materials, machinery and equipment.
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MRC Delves Into Impervious Problem of Unpaid Forex Loans
The Majlis Research Center (MRC), the parliament’s think tank, says the National Development Fund of Iran must resist calls for partial payment by all those who have taken out forex loans.
In a report posted on its website, the MRC said collecting forex debt has long been a big challenge for the sovereign wealth fund.
The bad situation has become worse due to the sanctions-plagued economy and huge fluctuations in currency rates in the past decades. Over the past few months forex rates have jumped to historic levels.
NDFI is independent of the government and was set up in 2011 to curb dependency on oil and save a percentage of the earnings from oil and gas exports for future generations.
financialtribune.com/node/115239
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Iran's Trade With SCO Rises 31% YOY to Top $17b During 5 Months: IRICA
Iran and member states of the Shanghai Cooperation Organization traded 21.41 million tons of goods (excluding crude oil from Iran) worth $17.05 billion during the first five months of the current Iranian year (March 21-Aug. 22) to register a 31% increase compared with the similar period of last year, according to the Islamic Republic of Iran Customs Administration.
Iran’s exports (excluding crude oil) stood at 17.38 million tons worth $9.08 billion, which indicate a 10% rise in value compared with the similar period of last year, IRICA Spokesman Rouhollah Latifi was quoted as saying by IRNA.
“China was our biggest export destination among SCO member countries during the period, as the country imported $6.72 billion worth of Iranian products to register a 14% year-on-year rise.”
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Q1 GDP Growth at 3.8%: SCI
Iran’s GDP grows by 3.8% in the first quarter of the current fiscal year (started March 21) compared with the corresponding period of last year, the Statistical Center of Iran said in its latest report.
Without taking crude oil production into account, economic growth stood at 4.3%, the report added.
According to SCI, the agriculture sector contracted by 0.8% in Q1 as the “industries and mines” and “services” grew by 4.2% and 3.9% respectively.
The center earlier put fiscal 2021-22 growth at 4.3%, saying GDP saw a 3.5% rise without taking crude oil production into account and that the sectors of agriculture, industries and services experienced a -3.7%, 6% and 4.5% growth respectively.
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Iran's Trade With Africa Crosses $520 Million in 4 Months
Trade between Iran and African countries stood at 890,287 tons worth $526.35 million during the first four months of the current fiscal year (March 21-July 22).
South Africa with 255,471 tons worth $152.94 million, Nigeria with 129,437 tons worth $80.63 million and Mozambique with 82,462 tons worth $57.195 million were Iran’s main trade partners during the period.
Data released by the Islamic Republic of Iran Customs Administration show Iran exported 864,027 tons of goods worth $495.51 million to the African continent during the period.
Iran’s main export destinations in Africa were South Africa with 255,101 tons worth $149.57 million, Nigeria with 129,437 tons worth $80.63 million and Mozambique with 82,462 tons worth $57.2 million.
financialtribune.com/node/115183
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Iran Gov’t ETFs Get a Facelift
The Cabinet has approved proposals by the Securities and Exchange Organization (SEO) for reforming the governing structure of the two major exchange-traded funds of the government.
Majid Eshqi, the SEO chief, made the announcement Monday in a talk with state TV, expressing the hope that the changes would help lead to better functioning of the two major funds.
The government-affiliated ETFs were listed in capital market in mid-2020 and hold stocks in giant state-owned refineries and banks.
financialtribune.com/node/115190
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Determinants of Inflation in Iran and Policies to Curb It
High and volatile inflation in Iran has been an endemic economic and social issue that has contributed to rising poverty and social tensions.
Iran’s CPI inflation has fluctuated sharply over the past two decades around its annual average of 20% (Figure 1.a.), and has been much higher than that of Iran’s emerging market and regional peers (Figure 1.b.). With the Covid-19 pandemic hitting Iran’s economy on top of preexisting US trade and financial sanctions and exacerbating the supply constraints, its annual CPI inflation reached nearly 50% at the end of FY 2020-21 (Iranian year that ended on March 20, 2021) and averaged 40% during FY 2021-22 (Iranian year that ended on March 20, 2022).
Coupled with low economic growth and high unemployment, rising inflation has fueled widespread protests in the country amid a significant erosion in purchasing power. The new government that took office in August 2021 identified tackling inflation as a key economic priority, reads a working paper published by the International Monetary Fund. Excerpts follow:
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Cellphone Registry Disruption Troubles Buyers, Businesses
Some cellphone buyers could not register their devices via the system named Hamta, which caused problems for both buyers and sellers.
Recently, Hamta notifications faced wide-scale disruptions, which created financial and legal risks for cellphone buyers, ICT News Agency reported.
Operators of the cellphone registry system have admitted that the problem mainly concerns the SIM cards of Hamrahe Aval, the brand name used by the Mobile Communications Company of Iran, which is a subsidiary of the Telecommunications Company of Iran.
Apparently, TCI’s financial disputes with the Ministry of Industries, Mining and Trade and the Ministry of Information and Communications Technology have given rise to such a problem.
financialtribune.com/node/115161
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Tehran’s Real-Estate Market in Q4 of Fiscal 2021-22 Surveyed
The Statistical Center of Iran has published a new report on home and land prices, as well as rent levels in Tehran’s urban areas, during the fourth quarter of last fiscal year (Dec. 22, 2021-March 20).
According to the report published on SCI’s website, the average price of each square meter of land or land of a rundown residential property (residential units that are considered old to a degree that only the underlying land is useful for construction) in Tehran went up by 17.1% in Q4 compared with the corresponding period of the year before. Prices increased by 4.8% against the preceding quarter (Q3).
The minimum price of each square meter of land or land of a rundown property stood at 46.05 million rials ($151) and the maximum was 2.62 billion rials ($8,641), bringing the average to about 521.74 million rials ($1,720).
financialtribune.com/node/115163
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Iranian PMI Declines for Third Consecutive Month
The Purchasing Managers' Index for Iran’s economy has declined for the third consecutive month to break below the 50-mark threshold.
The latest survey of the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture — the sponsor and coordinator of PMI reports in Iran — shows the index (known by its Farsi acronym Shamekh) settled at 48.06 in the fifth month of the current Iranian year (July 23-Aug. 22), down from 50.10 registered in the previous month, indicating a 2.04-point or 4.07% decline.
PMI indicates the prevailing direction of economic trends in the manufacturing and service sectors. The headline PMI is a number from 0 to 100, such that over 50 indicates an economic expansion compared with the previous month. A PMI reading under 50 indicates contraction and a reading of 50 implies no change.
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Iran’s Pistachio Exports to EU Top €78 Million in H1
A total of €78.6 million worth of pistachio were exported from Iran to the European Union member states during the first half of 2022.
Data released by Eurostat's database show the volume of exports registered a 26% decline compared with the similar period of last year.
The export of in-shell pistachio stood at €31.6 million during the period, registering a 53% year-on-year decline, while that of shelled pistachio stood at €47 million to register a 23% YOY rise, IRNA reported.
Germany and Italy were the main destinations of Iranian pistachio among EU members.
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Wheat Imports More Than Double to 1.7m Tons This Year: GTC
A total of 1.7 million tons of wheat have been imported by Iran since the beginning of the current Iranian year on March 21, registering a 113% rise compared with the similar period of last year, the Government Trading Corporation of Iran announced on Monday.
GTC, affiliated with the Agriculture Ministry, is in charge of ensuring adequate supply of basic goods, including wheat, rice, cooking oil, sugar and meat, to the local market.
Iran has imported a total of 96.48 million tons of wheat worth more than $22.84 billion over the past 30 years, spokesperson of the Islamic Republic of Iran Customs Administration said recently.
financialtribune.com/node/115278
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Money Issuance Halved
Annual growth of money creation by banks fell 57% in the first five months (March 21-August 22) of the current fiscal year, the Economy Ministry reported.
The ministry said the decline in money issuance was driven largely by the visible weakening of loans given by banks and credit institutions.
Outstanding loans, including both performing and non-performing, registered 8.2% growth in the period. This was significantly lower compared to 19% annual growth in the corresponding period last year, the ministry’s news website Shada.ir reported.
The apparently positive development is “one outcome of the Central Bank of Iran’s policy to exercise tighter control over ban balance sheets”.
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Five Rail Projects Prioritized
The government’s five prioritized rail projects, namely Khash-Zahedan, Bostanabad-Tabriz, Mianeh-Ardabil, Hamedan-Sanandaj and Rasht-Caspian, have made an average progress of 75% and all are expected to come on stream within a year, according to a deputy minister of roads and urban development.
“With the track-laying of Khash-Zahedan coming to an end, this project has been completed and is ready to be launched. The route is a segment of Chabahar-Zahedan railroad and with its inauguration, this mega project moved one step closer to its launch,” Kheirollah Khademi was also quoted as saying by the news portal of the Ministry of Roads and Urban Development.
The official added that the 44-kilometer-long Bostanabad-Tabriz railroad, which is a short cut between the provincial capital of East Azarbaijan Province and Tehran, has so far made 95% progress and will be ready for inauguration within the next few months.
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Iran's Trade With EU Rises by 15% to €2.9 Billion in Seven Months
Iran and the European Union’s 27 member states traded €2.99 billion worth of goods in the first seven months of 2022, registering a 15.43% rise compared with last year's corresponding period.
New data released by Eurostat show Germany was the top trading partner of Iran in the EU region during the period, as the two countries exchanged over €1.05 billion worth of goods, 3.84% more than in the similar period of the year before.
Italy came next with €381.67 million worth of trade with Iran to register a 9.69% year-on-year rise.
The Netherlands with €241.36 million (down 9.18%) and Spain with €210.28 million (up 17.89%) were Iran's other major European trade partners.
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New Restrictions on Loans to Bank-Affiliated Companies
The Central Bank of Iran has announced new measures to prevent banks from giving loans to related persons, head of the CBI department for banking health assessment said.
"Rules include caps on bank lending to related persons. The value of every loan paid to subsidiaries or related persons must not exceed 3% of the bank’s base capital. Moreover, the collective amounts lent to related persons must not exceed 40% of the bank capital," Ali Akbar Miremadi was quoted as saying by IBENA.
Subsidiaries and affiliated companies are considered as a bank’s related entities. However, "henceforth shareholders of the bank, affiliated companies or any person that can impact the board's decision will be seen as related entities to whom bank lending is restricted."
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Iran Gov’t Guaranteed Wheat Purchases Exceed 7m Tons Worth $2.6 Billion
The Iranian government has purchased 7.15 million tons of wheat worth 827.86 trillion rials ($2.6 billion) domestically from the beginning of the harvest season on March 24 till Sept. 14, registering a 58% rise in tonnage compared with the similar period of last year, according to CEO of the Government Trading Corporation.
“The value of this year’s purchases exceeds that of the years 2017-21, which stood at an aggregate of 812.03 trillion rials $2.55 billion,” Saeed Rad was also quoted as saying by ILNA.
This year, guaranteed purchases started from the provinces of Sistan-Baluchestan, Kerman and Khuzestan — all in southern Iran.
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Online Gold Trade to Be Legalized: Gov’t
The Ministry of Industry, Mine and Trade in collaboration with the relevant unions will soon start issuing license for gold trade on the internet.
According to Alireza Shahmirzaei, a deputy minister, the aim is to replace unauthorized trade, as is taking place in social media platforms, with authorized websites that will be licensed soon, Tasnim news agency quoted Shahmirzaei as saying.
On concerns over legalizing online trading of the yellow metal, the official said, “The concerns must be studied in detail. Yes, they opponents do say that they are worried about people’s money, but their real intention could be something else.”
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Regulator Restricts Big Share Dividends
The Securities and Exchange Organization (SEO) has imposed new restrictions to discourage giant listed companies from offering large-scale share offers.
SEO has approved a decision based on which big holding companies cannot pay dividends over and above 20%of their income from share sales, the Securities and Exchange News Agency reported.
it said the big companies must transfer the rest of the income to their “reserve accounts” for future needs, namely for raising capital.
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Tehran Hosts First Digital Mining Conference, Expo
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Construction PMI Bounces Back Above Threshold
Latest data released by the Iran Chamber of Cooperatives on Purchasing Managers’ Index for the construction sector shows the index has bounced back above the threshold (50-mark).
The index settled at 51.11 in the fifth month of the current fiscal year (July 23-Aug. 22) up from 46.7 in the preceding month (June 22-July 22), indicating a 9.44% increase.
PMI is an indicator of the health of economic sectors and provides information about business conditions to decision-makers, analysts and purchasing managers.
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E3 Statement Undermines Good Faith Efforts to Revive JCPOA
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Concern Over CBI’s Crypto-Rial Agenda
While the Central Bank of Iran plans to pilot its long-awaited central bank digital currency (CBDC) project, the Crypto-Rial, by November, experts has expressed strong reservations about the practicality of the move and its anticipated positive impact on the economy.
According to Ali Salehabadi, the CBI boss, the bank has in place infrastructure and rules for the Crypto-Rial. The cryptocurrency is planned as a new type of national currency, like banknotes and coins, but fully digital.
Based on what is known about the CBI crypto agenda, the digital currency is not designed to compete with global cryptocurrencies. Unlike bitcoin and other cryptos, CBDCs are centralized, not anonymous and in accord with anti-money laundering requirements.
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Savers Are Less Inclined to Park Money in Banks
Data released by the Central Bank of Iran show term deposits increased at a much slower pace than sight deposits, another sign that savers are less inclined to park their money for longer periods in banks.
Total sight deposits reached 10,935 trillion rials ($36.4 billion) by the end of the fourth calendar month to July 22. This was 61.4% higher on the same period last year. Sight deposits increased by 21.5% compared to the end of last fiscal year in March.
Term deposits lagged rising 32.5% to reach 40,681.4 trillion rials ($135.6b) by July 22. The rise was a fifth of sight deposits in the four months.
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Iran's CB Rules to Increase Lending Transparency
The Central Bank of Iran announced new rules on Sunday based on which banks and credit institutions are required to provide borrowers with access to lending contracts and changes thereto via electronic platforms.
Lenders have until next May to develop electronic platforms to launch e-platforms and develop existing ones.
According to a press statement seen on the CBI website, the platforms must enable borrowers’ full access to loan contract data.
financialtribune.com/node/115153
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M1 Growth Surging
Data released by the Central Bank of Iran show higher growth in assets in the financial system that can be readily changed into cash, compared with growth of less liquid assets.
Value of money, or M1, stood at 11,820 trillion rials ($39.4 billion), up 57.6% by end of fourth calendar month to July 22. It rose 19.8% in four months since the beginning of fiscal year in late March.
This is while quasi-money, or M2, which reflects less liquid assets, grew at a slower rate. M2 was 40,681.4 trillion rials ($135.6b), increasing 32.5% annually. It climbed 5.8% in the first four months – a slower pace compared with M2.
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