Iran expects at least US$50 billion a year in foreign investment after the lifting of western sanctions.
The money will allow Tehran to finance a rebound in an economy hit by shrinking oil prices, Bloomberg reports, citing central bank governor Valiollah Seif.
“Our country can absorb a great deal of foreign investment, considering its potential,” Seif said.
“I think more than US$50 billion per year isn’t far-fetched,” he said.
The end of Iran’s isolation has triggered a wave of interest in a US$400 billion economy that’s home to some of the world’s biggest fossil-fuel reserves and a relatively untapped resource for global business because of its decade-long isolation.
Still, some analysts warn that an opaque bureaucracy and lingering political stigmas will leave companies cautious about rushing in.
Iran has already reaped some benefits from the implementation of last year’s nuclear accord, negotiated with world powers including the US and European Union that were the prime movers of the sanctions regime.
About US$32 billion of oil proceeds previously frozen in accounts overseas ares now accessible and will probably be used to buy commodities, Seif said.
The prospect of ramped-up Iranian crude output has further depressed oil prices which are down by about three-quarters from mid-2014 levels.
That’s going to cap Iran’s economic growth in the Persian year that ends this March, Seif said.
He predicts an expansion of less than 3 percent in that period, but said growth could accelerate to between 5 and 6 percent in the following Iranian year through March 2017.
The coming months will see moves toward normalization of Iran’s currency regime and financial system, Seif said.
He said the dual exchange rates — one set by the central bank and a more competitive unofficial market rate — should be unified within six months.
Sanctions coupled with loose monetary policy under former President Mahmoud Ahmadinejad have saddled Iran’s banks with one of the highest non-performing loan ratios in the region, behind Libya and Yemen, according to the International Monetary Fund.
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