EKF is ready for guarantees covering Iran
From today, EKF is ready to provide guarantees covering Danish exports to Iran.
“Initially, EKF will be ready to cover letters of credit and other transactions guaranteed by a bank or the Iranian state.
At the same time we expect a gradual deployment of the facility, i.e. we will continue to open up for more transactions in pace with Iran’s gradual return to international financial cooperation. For example, a number of Iranian banks have not yet been given access to the so-called Swift system that handles international payments,” says Jørn Fredsgaard Sørensen, head of EKF’s Country, Bank and Sector Risk department.
During the last months, EKF has received many enquiries about Iran from Danish export companies and is already considering concrete orders. However, Danish companies are far from the only companies to eye Iran, and competition from companies from other countries is fierce.
A huge potential and a need for caution
EKF underlines that companies who are interested in Iran should reflect carefully and seek relevant advice.
”Iran is a very interesting market with a huge potential, but it is definitely not an easy market. For this reason, EKF has classified Iran in risk category 7, together with for instance Ethiopia and Pakistan. Risk category 7 contains the most risky countries in the world. Companies need to address that risk, and EKF can be one of the tools to handle the risk,” says Jørn Fredsgaard Sørensen.
In EKF’s opinion, the Iranian risk is more political than economic. The key economic indicators are fundamentally sound, but the political situation is uncertain, and sanctions may quickly be reimposed. Another challenge is that many Iranian companies do not have any history of payment or credit rating. The lack of payment experience mars the current picture. However, EKF expects the situation to improve quickly.