Iran’s economic collapse is seeking liquidity on the loan portal

Iran, whose system faces US sanctions. USA Since August 2018, and an outbreak in its various cities with the Corona virus, it is seeking to provide the necessary liquidity so that its expenses decrease due to the decrease in the production and export of crude oil, to be used in construction facilities in the sectors oil and gas.

The website of the Iranian Oil Ministry website (Chana) stated that the Oil Ministry, with the approval of the country’s government, is going to borrow by issuing debt instruments (sukuk), with a total value of US $ 217 million, to finance oil and natural gas projects.

And the website reported that Yitzhak Jahangiri, the Iranian vice president, actually signed the borrowing decision under the annual state budget, which allows the ministries of oil, energy and industry to issue bonds worth 35 trillion riyals ($ 217 million at the free market price).

This comes with a sharp decline in the abundance of foreign exchange needed to implement projects in the local market, due to U.S. sanctions imposed on Tehran, and in an attempt by the government to inject liquidity into projects to increase oil productivity.

According to data from the Organization of the Petroleum Exporting Countries (OPEC), Iran’s oil production decreased by 48% during last March, compared to production before the sanctions, particularly in July 2018, to a two million barrels per day average compared to 3.85 million barrels.

Iran’s economic, financial and monetary conditions are currently declining sharply, meaning that the instruments that Tehran will offer will include high murabaha (interest) rates to attract potential investors to buy subprime debt instruments.

Global debt instrument markets are experiencing high risks and investors are turning to safe havens (the US dollar and gold) due to the global economic consequences of the outbreak of the Corona virus, which means that Tehran faces the challenge of covering the expected instruments.

And last month, Iran renewed the International Monetary Fund’s request for a $ 5 billion loan from the Fund’s Rapid Financing Tool, an emergency program that helps countries facing sudden shocks such as natural disasters.

But Jihad Azour, director of the Middle East and Central Asia Department of the International Monetary Fund, told Reuters on April 15 that the fund is still evaluating Iran’s request for $ 5 billion in emergency funds in a process that will take time. , due to reasons, including limited communication. With Tehran recently.

In the World Economic Outlook, published last month, the International Monetary Fund said that Iran’s economy is expected to record a 6% economic contraction this year for the third year with the spread of coronavirus infections in all provinces of the country. .

The Iranian economy registered a contraction in the last year 2019, with a rate of 7.6%, affected by the US sanctions imposed on the country since August 2018, and pressured to interrupt the most important sources of income, represented by production and export of crude oil.