Iran's Credit Outlook Upgraded in Credit Rating Agency Report

The public relations office of the Central Bank of Iran announced that the international rating agency 'Capital Intelligence' has upgraded Iran's overall credit outlook from 'positive' to 'stable' in its latest report. According to the Central Bank, this credit rating agency has changed Iran's credit rating for repaying long-term foreign and domestic obligations from 'B' to 'B+'. In another section of the Capital Intelligence (CI) report, Iran's rating for repaying short-term domestic and foreign obligations is set at 'B'. The reason for the change in Iran's credit rating is attributed to the improvement in the Islamic Republic's foreign relations and its positive impact on strengthening 'sovereign credit', which is linked to Iran's nuclear negotiations with world powers and the change in the foreign policy approach of the eleventh government. The report notes that while Iran's external risk has improved compared to the previous report, the internal political risk factors have not changed. Meanwhile, regional geopolitical risks have increased due to recent conflicts in Iraq, Syria, and Yemen. Capital Intelligence, based in Cyprus, has been assessing banks, credit institutions, government bonds, and the credit status of countries since 1985. Its activities mainly involve evaluating the credit status of countries and financial institutions in emerging economies, Central and Eastern Europe, the Middle East, East Asia, and parts of Africa. In another section of the CI report regarding Iran's economic and credit status, the approval of the 'JCPOA' by the Iranian Parliament and its implementation is viewed as a 'positive step' that, according to the report's author, 'paves the way for the gradual lifting of international sanctions in the short and medium term.' The report states: 'This agreement also paves the way for the release of Iran's financial assets, facilitates access to foreign financial resources, and significantly improves foreign trade and investment.' CI analysts expect that 'in the medium term, following the implementation of the agreement, Iran's economic growth will increase and country risk will decrease.' The report, summarized by the Central Bank, cites Capital Intelligence's expectation that Iran's economic growth will reach four percent in 2016. The agency estimates Iran's economic growth for the current year at 0.8 percent and states that with the lifting of sanctions and the practical effects of the removal of economic restrictions, Iran's economic growth will continue at this rate in the medium term. The agency also predicts an inflation rate of 11.5 percent for 2016. Capital Intelligence notes that Iran's national currency, the rial, has stabilized after two years of severe decline. The CI report assesses Iran's public debt as 'low' and foreign assets as 'significant'. It estimates Iran's foreign assets to cover imports for 15 months and more than ten times the amount of obligations due in 2016, although it emphasizes that 'there are doubts about the liquidity and availability of these assets.' The report also forecasts that the government's budget deficit this year will reach about 2.9 percent of Iran's GDP.