By Mahnaz Abdi

‘Productive Financing’, CBI’s new plan for supporting production units

July 6, 2019 - 20:28

Like the other economic bodies of the country, Central Bank of Iran (CBI) has defined supporting production as its major plan in the current Iranian calendar year, which is named the Year of Pickup in Production, and in this regard CBI Governor Abdolnaser Hemmati has several times stressed that supporting production units to flourish production is the priority of the country’s banking system in current year.

In early May, the official outlined CBI plans for neutralizing or relieving the impact of U.S. sanctions on the country’s economy and mentioned providing liquidity and working capital to maintain and boost domestic production as one of those plans.

To find the best ways for supporting production, CBI is regularly holding meetings with the representatives of private sector and also with the economists.

During the recent meeting of Hemmati with the economists, removing barriers in the way of production was one of the major issues discussed, while reforming the structure of the country’s banking system, controlling liquidity, curbing inflation, improving the people's livelihood and preventing income imbalances through monetary and fiscal policies, and the impact of U.S. sanctions and enforcement of bank operations were the other issues raised in the meeting.

And now in an Instagram post, the CBI governor has announced the bank’s new plan for supporting production.

Hemmati has mentioned this plan as “Productive Financing Plan” which is to provide finance for the production activities.

In his post, the official wrote that based on this plan, the production chain’s demand for the working capital will be met with the less inflation effect and the less expansion of credit.

The CBI governor went on to say that high production costs over the past year has sharply increased the need for working capital which has made providing finance more difficult; therefore; taking such condition into account, CBI is to define some plans for removing this problem.

CBI’s plans take two major approaches, first is that they will lead to secure finance for production activities and provide the working capital needed for such activities; and the second one is that they will not be resulted in any deviation in the banking resources and and also in higher inflation.

In this regard, the central bank’s committees of liquidity and credit have investigated several plans, that one of them is “Productive Finance Plan”, which will be implemented after being discussed with monetary and banking experts.