{"id":27514,"date":"2015-05-27T19:38:45","date_gmt":"2015-05-27T17:38:45","guid":{"rendered":"http:\/\/www.w-t-w.org\/en\/?p=27514"},"modified":"2015-05-27T20:01:06","modified_gmt":"2015-05-27T18:01:06","slug":"27514","status":"publish","type":"post","link":"https:\/\/www.w-t-w.org\/en\/27514\/","title":{"rendered":"Iran Unfrozen?"},"content":{"rendered":"
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Bijan Khajehpour writes: Of the issues currently debated among Iranian decision-makers and economists is how the country will use its sizable hard currency holdings\u00a0once they\u00a0are released by international banks in\u00a0the process of sanctions relief.\u00a0There are different calculations regarding Iran\u2019s frozen assets in international accounts, but the most reasonable figure\u00a0is $120 billion.\u00a0Considering that the country\u2019s total trade volume in 2014 was about $160 billion, it is clear that Tehran will have to make a few strategic choices on how to utilize the released funds so that it does not undermine its overall economic development.<\/p>\n

So far, since the implementation of the Joint Plan of Action (initiated in January 2014), the Central Bank of Iran (CBI) has repatriated some $25 billion of released funds in the form of cash or gold back to the country.\u00a0According to Valiollah Seif, the CBI governor, these funds have been used to regulate the domestic currency markets and provide for a stable exchange rate.\u00a0However, experts agree that a quick repatriation of the remaining funds \u2014\u00a0an intuitive move to escape future sanctions \u2014 would increase liquidity and put pressure on the current value of the Iranian rial.\u00a0Any repatriation should be paced and rational to avoid negative consequences for the economy.<\/p>\n

Another meaningful strategic choice could be the provision of those funds for imports.\u00a0For example, in some specific cases (such as Iranian funds that have been blocked in UK banks), Tehran seems to have opted for dedicating\u00a0the funds to the importation of specific medical goods to respond to market requirements. This practice notwithstanding, the Iranian authorities need to be careful, as past experience has shown that importers tend toward\u00a0importing consumer goods, which would have limited impact on the needed job creation and capital formation.\u00a0The best example of this behavior pattern is the excessive importation of luxury cars during the Mahmoud\u00a0Ahmadinejad years,\u00a0flooding\u00a0Tehran\u2019s streets with little long-term benefit to the Iranian economy.<\/p>\n

Even a concentration on the importation of capital goods would potentially be misplaced, as the country already possesses a substantial industrial base that is underutilized.\u00a0 Iran Unfrozen<\/strong><\/a><\/p>\n<\/div>\n

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Bijan Khajehpour writes: Of the issues currently debated among Iranian decision-makers and economists is how the country will use its sizable hard currency holdings\u00a0once they\u00a0are released by international banks in\u00a0the process of sanctions relief.\u00a0There are different calculations regarding Iran\u2019s frozen … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-27514","post","type-post","status-publish","format-standard","hentry","category-finance"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t