According to a report released by the PBO, this is almost half the amount originally approved by lawmakers. Part of the realized resources is related to allocations pending from previous years.
Approved direct foreign finance in the previous fiscal was $10.6 billion which increased over $7.1 billion a year before.
The PBO points to data provided by CBI, in that the value of foreign resource mobilization jumped from $2.34 billion in 2016-17 to $32.6 billion in the last fiscal year.
It ascribes the jump largely to the outcome of the nuclear deal - officially known as Joint Comprehensive Plan of Action (JCPOA) - between Iran and six powers that paved the way for negotiations with foreign banks and export credit insurances in Russia, China, South Korea, Italy, and Denmark, among others.
The opening led to the mobilization of $32.6 billion foreign finance in the previous fiscal. Of this amount, $27 billion was secured within lending agreements between foreign banks and domestic agent banks and the balance was borrowed from Exim Bank of China.
As per the provisions of Article 4 and Article 20 of the Sixth Five-year Economic Development Plan with regard to securing foreign funds, executive bodies are allowed to attract on average $35 billion annually through direct and participatory foreign investment to implement the technically, financially, and environmentally viable projects.
To meet specific objectives in line with attracting foreign finance, the sixth plan proposes robust economic diplomacy, improving international trade and economic ties and boosting direct foreign investment with an eye to importing technical knowhow.
As per the regulations, the Ministry of Economic Affairs and Finance, the PBO and Central Bank of Iran are the main bodies in charge of attracting foreign funds.
The Iran Foreign Investments Company - a state-owned body affiliated to Economy Ministry - is tasked with encouraging and supporting foreign finance, foreign loans, coordinating plans for establishing economic ties between Iran and the outside world plus international monetary and banking institutions.
The PBO says data about the realized foreign investment is difficult to obtain and criticized the lack of reliable and transparent statistics in the past that makes it difficult to monitor trends and draw the right conclusions.
It proposes developing clear, accurate, and timely performance reporting mechanisms as a major step toward better planning and decision-making about foreign resources.
Nevertheless, it points to the data about “approved” foreign finance as an index that indicates foreign finance attraction capacity, admitting that approved amounts do not necessarily mean realization.
According to the PBO, higher foreign resource mobilization is in fact related to the better credit rating of the country after the JCPOA, which elevated Iran’s ranking from 7th in 2016-17 to 6th in 2017-18.
After the JCPOA and reopening of international monetary channels, Iranian lenders reimbursed their debts to foreign export insurers that resulted in the support of export insurance institutions that are members of the Organization for Economic Cooperation and Development and ultimately helped improve Iran’s credit rating.
However, the PBO reckons the lengthy bureaucratic procedures to obtain permission plus the foreign finance applicants’ failure to pay the advance amounts and other expenses as constraints afflicting the country’s capacity to tap fully into foreign funding.
To improve the country’s capacity in attracting foreign finances, the PBO proposes more stability in monetary and financial rules governing interest rates, customs tariffs and foreign exchange rates along with mobilizing efforts to remove constraints on capital transfer and capital returns.