IRAN: B2 rating reflects weak economy
By Arkady Ostrovsky in London
Financial Times
July 22, 1999
In its first annual report on Iran, Moody's, the rating agency, said
Iran'sjunk bond B2 credit rating reflected its weak economy and a lack
ofconsistency in its reform process.
Moody's said the country's weak economic structure, which depends heavily
onoil exports, is prone to balance of payment crises because of the volatilityin
oil prices.
Iran has twice rescheduled its bilateral debt to other governments in
thepast decade as a result of a decline in oil prices and the lack of externalfinancing.
Iran exports about 2.5m barrels of crude oil a day out of production
of 3.6mof barrels a day. However, oil output has been restricted by Opec's
3.4m b/dlimit.
"Non-oil exports have performed poorly - the low quality of its
output,narrowness of the range of products and the ban on Iranian imports
imposed bythe US have been mainly responsible," Moody's says.
The report says Iran's hopes of raising economic growth to 6 per cent
a yearare too optimistic. It could reach 4 per cent if it managed to attractforeign
funds.
The inflow of foreign funds, however, depends on Iran's improving externaleconomic
relations and domestic political changes.
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