Freezing of 1000 Trillion Tomans in Iranian Banks

On Tuesday, December 20, the Tasnim news agency reported that according to the Central Bank, the government's debt to the banking system has increased by 20 percent. The agency discusses the impact of this debt on the freezing and inaccessibility of assets in Iranian banks, stating that the frozen assets consist of claims banks have against the government, blocked capital in sectors such as real estate, and private sector debts to banks. The report adds that the crisis of frozen assets in the country's banks has reached a point where even paying off the government's total debt will not resolve it. According to the macroeconomic tables of the Central Bank of the Islamic Republic, frozen assets in Iranian banks have now reached nearly 1000 trillion tomans, and according to the Central Bank Governor, about 45 percent of banking assets have become frozen. Meanwhile, the public sector's debt to banks was reported to be 203 trillion tomans at the end of October this year. According to Tasnim, the government's debt to banks (173 trillion tomans) has seen a 20 percent increase, while the debts of state companies and institutions to banks (30 trillion tomans) have increased by 2 percent. The 173 trillion tomans of government debt to banks constitutes only 17 percent of the total frozen assets in the banking system, meaning that even if the government settles all this debt, about 80 percent of banking assets will still face issues and remain inaccessible. The crisis of frozen assets in banks comes at a time when Valiollah Seif had previously emphasized in a meeting held in July that 'excessive expectations from the banking system have caused financial statements to deteriorate, banks' capital base to decline, and claims against the government to increase. As a result, 45 to 50 percent of the banking system's assets have become frozen.' According to reports from Young Journalists Club, the Central Bank Governor also stated that 'in the past, the government withdrew from banking resources without considering the circumstances, which has now turned into accumulated claims.' Reports indicate the negative impact of frozen bank assets on the flow of loans and government projects, and Valiollah Seif had emphasized about five months ago that if the government does not take effective action to organize its debts, the continuation and even intensification of the recession is not unexpected.