Iran allows use of foreign loans for water projects

TEHRAN: Iran’s parliament on Saturday allowed the energy ministry to use up to $800 million of foreign loans to finance water projects.

The parliamentary vote was broadcast live on state radio. The bill must now get the approval of the Guardian Council, Iran’s conservative constitutional watchdog. Most foreign financing in Iran comes from European banks that spread their risks in syndicated loans.

HSBC, BNP Paribas, Deutsche Bank, Commerzbank, Standard Chartered and the Royal Bank of Scotland have all been involved in funding projects in Iran.

However, UBS said in January it was stopping business with Iran. Credit Suisse said it would not enter into new business with Iranian clients.

Iran has been reported to the UN Security Council for possible sanctions on its disputed nuclear programme. Tehran denies Western accusations it is seeking nuclear arms.

Financial analysts say sanctions on foreign financing could deliver a painful blow to Iran, whose frail domestic banks cannot support the booming manufacturing sector. reuters

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