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  Iran clears way to seek $1.5 bln in foreign loans

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Author Topic:   Iran clears way to seek $1.5 bln in foreign loans
posted February 12, 2001 09:57     Click Here to See the Profile for Vatandoost   Click Here to Email Vatandoost     Edit/Delete Message   Reply w/Quote
TEHRAN, Feb 11 (Reuters) - A top Iranian state body ruled on Sunday in favour of the reformist parliament in a row with a hardline institution, clearing the way to seek $1.5 billion in foreign loans per year, state
media reported.

The parliament recently approved a request by President Mohammad Khatami's government to seek the loans for development projects within the budget for the next Iranian year which begins in March.

But the Guardian Council, a conservative constitutional and Islamic watchdog, blocked the measure, saying paying loan interest amounted to usury banned under Islam.

In a boost to Khatami and his allies in parliament, the Expediency Council, which has the final say on policy-making disputes, restored the measure.

Khatami and his allies had campaigned hard to revive the bill, which also includes a proposal to seek $1.5 billion in "buy-back" foreign investment.

Iran has turned to buy-back as a way to skirt constitutional bans on foreign investment in key sectors. Under the formula, the foreign company recoups its investment and gets a profit by receiving a share of the project's production.

In 1998, Iran offered oil and gas projects worth $8 billion to foreign investors, its largest opening to foreigners in two decades.

Iran needs foreign capital to revive its stagnant economy and create hundreds of thousands of jobs a year for its booming young population.

"If we want to attract foreign investment, we must fine-tune our religious obligations to suit social necessities. We will never be able to run the country with local investment alone," Iraj Nadimi, a reformist member of
parliament, told Reuters.

"We are not in a good financial position. We have lots of problems that we are yet to solve," said Nadimi, a member of parliament's economic committee.

"We have done our best and can not even create one million jobs next year, while our needs are several million jobs."

The Expediency Council sided with the Guardian Council in another dispute, restoring the budget of the conservative-run state broadcasting organisation.

The parliament, critical of what it called the media's "biased reporting", had slashed its budget by half.

But the Expediency Council backed the government and parliament on several other points of contention with the Guardian Council.

It endorsed proposals for financial assistance to religious minorities and nascent political parties, part of progressive rulings passed by the new
reform-minded assembly to promote democracy and social justice in the Islamic state.

The budget dispute, part of a growing factional row, had raised uncertainty about next year's finances less than two months before the start of the new year.

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