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Why Iranian government’s debt problem isn’t going away

Despite the Iranian government’s decision to repay billions of dollars owed to local banks, in the broader picture, it will remain saddled with problematic debt until it turns to bonds rather than loans for financing.
Valiollah Seif, Governor of Central Bank of Iran, waits to start a meeting with Britain's Foreign Secretary Philip Hammond (unseen) in Tehran, Iran August 23, 2015.  REUTERS/Darren Staples - RTX1PBAT

The administration of Iran’s President Hassan Rouhani made three decisions on Jan. 30 that officials say will financially shore up commercial banks until the end of the Iranian fiscal year on March 20. However, the moves are widely seen as not enough to enable banks to lend money to businesses.

In their first decision, Cabinet members agreed that the Management and Planning Organization will allocate 146 trillion rials ($4.5 billion) in funds from the surplus account of the Central Bank of Iran (CBI) to the Keshavarzi, Melli, Refah, Sepah, Mellat, Saderat, Tejarat and Industry & Mine banks, as part of repayment of government debt to the banking system.

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