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Iran Economy Update
Issue 67/2017 SUNDAY JUNE 25TH
FATF extends suspension of financial restrictions against Iran
In its final statement released on 23 June, the Financial Act Task Force (FATF)1 announced its decision to continue the suspension of countermeasures against the Iran, and confirmed that in the past year, Tehran has demonstrated its political commitment and taken relevant steps in line with the policies of the Action Plan.
Although according to the FATF statement, Iran still needs to complete full Action Plan to be removed permanently from the FATF blacklist, the extension of its temporary freeze is meaningful and a step forward for the Islamic Republic in improving its banking relations with the international community. Hamid Baeedinejad, Iran’s ambassador to the UK wrote in a Telegram application message that “With their decision [to suspend financial restrictions against Iran for another year], the European and major economic players guaranteed the possibility of developing their banking and financial relations with Iran, which was one of the main purposes of the JCPOA. This decision is made at a time when some hardline lobbying groups in the US had asked President Trump to step in but under the pressure of the European countries, the US ultimately accepted the statement supported by all the European countries.”
Last week, Gholamali Kaamyab, the CBI deputy for foreign exchange affairs said Iran’s efforts to reestablish banking correspondent relationships with foreign banks depends on the FATF’s decision on suspending countermeasures against Iran, Mehr news agency reported. “We expect to achieve the aimed goals in regards to the banking correspondent relationship establishment by the end of this year. This,
1 FATF is a Paris-based inter-governmental organization that sets standards for banks worldwide
though, depends on the position of Iran with the Financial Act Task Force, as it would be a big stride if Iran’s status turns from non-cooperative into a cooperative nation.”
Kaamyab said establishing banking correspondent relationship itself is the preliminary step for implementing the delayed policy of unifying the existing two-tier foreign exchange system in Iran. The CBI official explained that foreign exchange unification of the two-tier foreign exchange system (official and free market rates) is among the important policies the government seriously pursues, and that the CBI is eliminating barriers for its realization. “We were able to implement the foreign exchange unification policy two years ago but decided to postpone it to a later time when establishing banking correspondent relations with foreign banks is well-settled so as Treasury operations in forex can easily be carried out,” said Kaamyab.
Deputy Energy minister says 6 cities are under water deficit stress
The deputy Energy Minister encouraged Iranian people to consume water sparingly and warned that the six large cities of Isfahan, Bushehr, Bandar-Abbas, Shiraz, Kerman and Mashhad, as well as 289 small cities of Iran are on the verge of struggling with water deficit stress, Mehr news reported on Saturday2. Rahim Meidani said according to the prediction of the Meteorological Organization of Iran, the average temperature in the country will increase this summer between 0.5 to 1.5 degrees of centigrade which will lead to increase in water consumption, and warned that the volume of water resources will decrease should the people use water lavishly especially during the peak hours of between 16.30 to 21:00.
2 Water stress is a term used to show imbalance between people’s use of water in an area and the actual water available for consumption
2 After some years of delay, Iran starts gas supplies to Iraq
The deputy Petroleum minister for International
& Commercial Affairs said Iran’s export of natural gas to Iraq commenced as of Wednesday evening, Mehr news reported on Friday. Amir-Hossein Zamani-Nia said the exports started at the initial volume of 7 million cubic meters per day and will increase to 35 million cubic meters a day ultimately. The Iranian gas supplies to this neighboring country start after some years of delay as the two separate contracts for supplying gas to Baghdad and Basra were signed in 2013 and 2015, respectively. Poor security conditions in Iraq have been cited by Iranian officials as the reason for the delays.
Iran-Brazil to launch joint chamber soon The ICCIMA Chairman said the Iran-Brazil Joint Commerce Chamber will be inaugurated on 9 July and said its establishment eliminates the existing impediments in developing bilateral trade ties, Tasnim news reported on June 20.
Gholamreza Shafeie, made the comments during a meeting with the Ambassador of Brazil to Tehran. He cited agriculture as one of the sectors the two countries can develop cooperation, especially with regards to the water scarcity problem that has caused Tehran contemplating extraterrestrial cultivation. Food, oil and gas were the other fields Shafeie said the two countries can develop cooperation.
Iran holds int’l conference on combating dust An official from the Iranian Environment Protection Organization declared some details about the upcoming International Conference on Combating Sand and Dust Storms which is scheduled to be held on 3-5 July. Speaking at a press conference on Saturday, Yousef Rashidi said without entering into political issues, this conference aims at finding a global solution, and will merely focus on professional discussions.
The conference is held by the ministry of Foreign Affairs and the Environment Protection Organization. He said that the UN has ratified four resolutions in regards to combating dust and in article 7 of the last resolution, it appreciated Tehran’s efforts in holding this event. “Hence,
this conference is held in reference to Article 7 of the UN resolution,” said Rashidi. After the ministerial level session, a statement titled the
“Tehran Statement” will be released in which details of regional/international cooperation will be stated. He said the experts participating at the conference will visit the sources of dust in Kashan and Ahvaz to will get familiar with the measures Iran has taken to combat dust in such areas. Rashidi said so far 31 countries including France, Germany, China, Italy, Mexico, Serbia, Slovakia, Korea, Belgium, the US, Turkey, Iraq, Jordan, Qatar, Oman, Kuwait and Azerbaijan have declared their plan to attend the event.
Four foreign countries show interest in solar power plant projects in Fars Province
The planning deputy of the Fars Regional Electricity Company declared that in the past two years, companies from Germany, Turkey, China and the Republic of Czech have shown interest in installing solar power plants with the capacity of 480 MW in this province, and added that preparatory works are underway in this respect, Tasnim news agency reported on Sunday.
Hamzeh Roghanian said Fars Province is among the most appropriate locations in Iran for installing solar power plant and underscored that launching solar plants is among the priorities the Iranian power sector pursues. He did not provide more information about the solar projects foreign companies are willing to participate in this area.
Iran’s HEPCO seeks foreign participation for joint equipment manufacturing in Iran
Iran’s Industry, Mine & Trade minister said the Heavy Equipment Production Co (HEPCO) is negotiating with a number of foreign companies for joint investment in Iran, Fars news agency reported on Saturday. Mohammadreza Nematzadeh didn’t give the name of the foreign negotiation parties and only explained that negotiations are on jointly manufacturing heavy machineries in Iran as well as importing the equipment that their production in Iran is not economically viable.
