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All tagged bonds
◢ President Rouhani’s budget proposal for the upcoming Iranian year will see the government run a deficit amounting to about 10 percent of GDP or 60 percent of the state’s general budget, excluding oil revenues and withdrawals from the National Development Fund. Rather than increase tax collection to ease budget gaps, the Rouhani administration plans to tap Iran’s nascent debt markets to cover its public spending requirements.
◢ For over a year, European governments have been struggling to determine how they can create a financing facility for projects in Iran. But what if it is a mistake to focus on “external” finance? One underreported effect of Iran’s currency crisis has been the rapid expansion of liquidity in the market. In this environment, a local currency bond offered by a European-owned, Iranian-registered development bank would be highly appealing.
◢ To win foreign investment, Iran's needs to boost development expenditures. But expansionary fiscal policy will require a new source of revenue, as oil sales remain stagnant and tax rises remain politically risky.
◢ A sovereign debt sale, long discussed by Iranian officials, is the fundamental way Iran can find the revenues to self-fund growth. The Rouhani administration must focus on making its bond offering a reality.
