The removal of sanctions on Iran may trigger at least $50 billion a year in foreign investment to finance a rebound in an economy hit by the oil slump, the country’s central bank governor said.
“Our country can absorb a great deal of foreign investment, considering its potential,” Valiollah Seif said in an interview with Bloomberg at his office in Tehran, days after the trade and financial curbs were lifted last weekend. “I think more than $50 billion per year isn’t far-fetched,” he said.
Iran has already reaped some benefits from the implementation of last year’s nuclear accord, negotiated with world powers including the U.S. and European Union that were the prime movers of the sanctions regime.
About $32 billion of oil revenues previously frozen in accounts overseas are now accessible, and will probably be used to buy commodities, Seif said. The coming months will see moves toward normalization of Iran’s currency regime and financial system, Seif said. He said the dual exchange rates should be unified within six months.
Sanctions coupled with loose monetary policy under former president Mahmoud Ahmadinejad have saddled Iran’s banks with one of the highest non-performing loan ratios in the region, behind Libya and Yemen, according to the International Monetary Fund. Seif said the problem is being addressed, with risky loans down to 12.6% of all credit, or about $30 billion, from 15% two years ago.
“One of the methods we’re assessing with regards to addressing this issue is setting up asset management companies which can buy some of these bad loans,” he said.
The bank chief said Iran will consider raising funds on international debt markets in the future via a euro-denominated bond issue, though that’s “not one of our first priorities” and would be contingent on how much foreign direct investment the country can attract.
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