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Tehran to gain more German cover

Middle East Economic Digest
July 21, 2000

Germany plans to raise export credit cover to DM 1,000 million ($485 million) and may offer more help to German firms taking part in big projects. Germany's improved terms for trade and project finance were announced on 10 July during President Khatami's visit there (see Seven Days).

A decision on insurance cover is likely to be made on 20 July at an inter-ministerial meeting which will be attended by Hermes, a private agency acting for the government in assigning export cover.

"The economy of Iran is growing and we want to dynamically expand our economic relations. We will expand Hermes export credit guarantees from 200 million marks to 1 billion marks," Chancellor Gerhard Schroeder said on 10 July.

"There is no established policy," a Hermes source said on 11 July. "But I shouldn't expect a negative decision to be made on 20 July."

Hermes has had limited cover for Iran, ranging from DM 50 million-200 million ($24 million-97 million), since the mid-1990s. Germany has traditionally been Iran's main supplier, but its exports plunged to about $1,000 million in 1999 - almost one-third the level achieved in the early 1990s.

The Hermes official says the agency has already upgraded Iran from category 6 to 5 on a scale of 1-7 used by EU members to set premiums on insurance.

German banks have recently become more active in raising finance for projects in Iran. Deutsche Bank has syndicated a $530 million Euroloan for the National Petrochemical Company (see Petrochemicals).


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