گزارش تحلیلی بیزینس مانیتور-صنعت زیرساخت درایران-سه ماهه دوم 2010
IRAN INFRASTRUCTURE REPORT Q2 2010
After an anaemic Q409 in Iran’s infrastructure sector, growth is set to accelerate in 2010 as a combination of increased government spending, easing inflation and even subsidy reform leads to a boost in construction for the near-term. However, the pick-up in real growth is not likely to be sustained for long and BMI believes that growth should start to slow after 2011.
President Mahmoud Ahmadinejad delivered the new March 2010-March 2011 budget to the Majilis (parliament) in January 2010, which allocates around US$110bn – or 30% of the US$368.4bn total – to construction spending. The budget includes the issuance of up to EUR9.5bn in bonds over the year to finance a number of infrastructure developments. On the back of this, BMI expects the construction sector to grow by 5% in real terms in 2010, up from a sluggish 1.82% in 2009. But BMI forecasts a yearon- year (y-o-y) drop-off in real growth after 2011, falling to 3.63% in 2014 bringing the total market value to US$47.02bn.
Infrastructure spending in Iran over the forecast period may receive a boost from funds diverted away from the government’s colossal consumer goods and services subsidy system. The controversial subsidies reform was approved in January 2010 and will see the subsidy programme replaced by direct cash payments, thereby saving the state approximately US$100bn per year. Around US$30bn was said to be intended for industry and infrastructure, although the investment has become uncertain after insistence from President Mahmoud Ahmadinejad that the savings serve as a carte blanche for the government.
That the reform may stoke chronic inflation in the country has become a popular criticism, however. Having fallen to a multi-year low in Q409, we expect consumer price inflation to head higher through 2010, fed by rising commodity prices and a steady recovery in the domestic economy. But, as long as the central bank continues to wind down its unorthodox lending facility to commercial banks, a return to the rates of nearly 30% y-o-y witnessed in late 2008 is very unlikely.
While 2009 opened with the launch of the Isfahan-Shiraz rail line there was extremely little activity in Iran’s transport sector in the final quarter. There was a striking exception in November 2009, when the engineering division of the Islamic Revolutionary Guard Corps (IRGC), Khatam-ol-Anbia, won the tender to build the strategically important US$2.5bn Chabahar-Sarakhs rail line. The decision to move ahead with the line confirms the country’s higher priority for trade facilitation rather than passenger transport, due to fears of a prolonged period of lower oil revenues combined with tougher sanctions, not to mention the IRGC’s growing influence in the country.
The legal-regulatory environment remains obscure and underdeveloped, this coupled with the limited access to foreign capital, means Islamic Republic being is placed last among the 10 countries in the Middle East Region in BMI’s Project Finance Ranking matrix.
President Mahmoud Ahmadinejad delivered the new March 2010-March 2011 budget to the Majilis (parliament) in January 2010, which allocates around US$110bn – or 30% of the US$368.4bn total – to construction spending. The budget includes the issuance of up to EUR9.5bn in bonds over the year to finance a number of infrastructure developments. On the back of this, BMI expects the construction sector to grow by 5% in real terms in 2010, up from a sluggish 1.82% in 2009. But BMI forecasts a yearon- year (y-o-y) drop-off in real growth after 2011, falling to 3.63% in 2014 bringing the total market value to US$47.02bn.
Infrastructure spending in Iran over the forecast period may receive a boost from funds diverted away from the government’s colossal consumer goods and services subsidy system. The controversial subsidies reform was approved in January 2010 and will see the subsidy programme replaced by direct cash payments, thereby saving the state approximately US$100bn per year. Around US$30bn was said to be intended for industry and infrastructure, although the investment has become uncertain after insistence from President Mahmoud Ahmadinejad that the savings serve as a carte blanche for the government.
That the reform may stoke chronic inflation in the country has become a popular criticism, however. Having fallen to a multi-year low in Q409, we expect consumer price inflation to head higher through 2010, fed by rising commodity prices and a steady recovery in the domestic economy. But, as long as the central bank continues to wind down its unorthodox lending facility to commercial banks, a return to the rates of nearly 30% y-o-y witnessed in late 2008 is very unlikely.
While 2009 opened with the launch of the Isfahan-Shiraz rail line there was extremely little activity in Iran’s transport sector in the final quarter. There was a striking exception in November 2009, when the engineering division of the Islamic Revolutionary Guard Corps (IRGC), Khatam-ol-Anbia, won the tender to build the strategically important US$2.5bn Chabahar-Sarakhs rail line. The decision to move ahead with the line confirms the country’s higher priority for trade facilitation rather than passenger transport, due to fears of a prolonged period of lower oil revenues combined with tougher sanctions, not to mention the IRGC’s growing influence in the country.
The legal-regulatory environment remains obscure and underdeveloped, this coupled with the limited access to foreign capital, means Islamic Republic being is placed last among the 10 countries in the Middle East Region in BMI’s Project Finance Ranking matrix.
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