The Financial Tribune in a report quoted a top official at Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) as saying that the mechanism was meant to support what she described as “the true private sector”.
'The fund will support private sector initiatives in the absence of a viable sovereign guarantee fund backing ventures worth up to €50 million instead of projects costing €100-200 million,' said Ferial Mostofi, the head of the ICCIMA Investment Commission.
According to the official, this will help foster production and employment, which have been chosen as the theme of the current Iranian year (started March 21) by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei.
Referring to the heavy presence of the state in the Iranian economy, Mostofi bemoaned the fact that state institutions tend to prioritize their own projects, leaving little resources for the private sector.
While not revealing the size of the fund, Mostofi said it will be 'significant' enough so as not to use up the amount in the course of a year.
'The aim is to increase and diversify the number of companies that can utilize the guarantees,' she said.
The proposal to establish a guarantee fund exclusively to meet the private sector's needs was made during negotiations between Iran Chamber of Commerce and the renowned international consulting firm Deloitte.
On a related front, The Financial Tribune quoted a Deloitte official as saying that an independent guarantee fund for Iran’s private enterprises could help the country with its efforts to attract foreign finance in the face of a credit crunch besetting the country's banking system.
Asad A. Jafaree, who was also a former consultant with the Central Bank of Iran, was quoted as saying after a meeting with the ICCIMA that Iranian banks and companies should look to alternative ways of financing and reform themselves from 'within', beyond what the regulating bodies recommend to become attractive for foreign investors.
'Iran is indeed attractive for multinationals and they are looking for ways to enter the country but there are some concerns holding them back,' The Financial Tribune quoted him as saying.