Iran: Car Manufacturers Double Output In January, Despite US Pressures

Published February 18th, 2020 - 08:19 GMT
Iran: Car Manufacturers Double Output In January, Despite US Pressures
Hemmati said GAM was a manifestation of CBI programs to help Iranian economy grow without relying on oil revenues. (Shutterstock)
Highlights
Experts say the new scheme would prevent any inflation that could be caused by government’s massive injection of liquidity in the market.

In a meeting on Sunday with his deputies in the Ministry of Industry, Mine and Trade (MIMT), Rahmani said that despite US pressures, car output in Iran had grown after a lengthy period of recession to reach 4,000 vehicles a day.

That means a double increase to Iran’s average daily output compared to the recent months.

The MIMT issued a report last month showing that the total number of cars produced in Iran between late March and late December 2019 had topped 524,200, a decline of 25.6 percent compared to the similar nine-month period in 2018.

Rahmani cited data published by the Central Bank of Iran showing that manufacturing growth had reached 2.3% in January this year from minus 12.5% in March 2018.

“Last year the enemies touted the successive closure of the factories (in Iran), but fortunately, the plot failed due to efforts by all industrialists,” said the minister.

Iran has been under a series of unprecedented economic sanctions by the United States since November 2018, months after Washington withdrew from a major international agreement on Iran’s nuclear program.

The bans have seriously affected the government’s spending and investment in various sectors of the economy, including in the manufacturing where Iran relies on many small and large enterprises for much of its daily needs.

The government has adopted measures to protect industries from the impacts of the American sanctions, including by imposing tariffs on exports of raw material as well as providing credit facilities for small and medium-sized enterprises to help them survive the difficult economic situation.

Last Tuesday, Governor of the Central Bank of Iran (CBI) Abdolnasser Hemmati announced that the monetary body has kicked off a new scheme for strengthening small and medium-sized enterprises (SMEs) and other manufacturers with an initial credit worth of $3.7 billion.

 Hemmati said an initial fund of 500 trillion rials (just over 3.7 billion) had been earmarked for the scheme through resources of four major Iranian banks, namely Melli, Saderat, Tejarat and Mellat.

“These credits would gradually be given to active manufacturing units in the country,” said the chief banker, adding that SMEs were a main focus of the credit facility as the government seeks to help them survive the current economic situation of the country.

Officials have said that letters of credit issued under GAM can also be sold in the market with a discount, enabling the manufacturers to access the cash they need for their activities.

Experts say the new scheme would prevent any inflation that could be caused by government’s massive injection of liquidity in the market.

The launch of the credit facility comes despite tight finances at the CBI and amid government efforts to diversify the economy away from oil as Iran’s direct sale of crude, once a staple of government funds, remains under American sanctions.

Hemmati said GAM was a manifestation of CBI programs to help Iranian economy grow without relying on oil revenues.

Late in November, Deputy Managing Director of Iran’s Small Industries and Industrial Parks Organization (ISIPO) Asqar Masaheb announced that Iranian SMEs had exported 1.50 billion worth of products in the first seven months of the current local calendar year (March 21- October 22, 2019), which showed about 50% increase in comparison with figures from the last year.

Masaheb’s announcement came two days after Iranian Vice-President for Science and Technology Sorena Sattari censured the country’s dependence on oil revenues, and urged for more technology-oriented economic activities.

In October, Hemmati had announced that the country has further reduced its reliance on oil revenues to bring the share of the income earned though crude sales in the budget to less than 30 percent.


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