ROME (Dispatches) -- Italy and Iran on Thursday signed a framework credit agreement to fund investments worth up to 5 billion euros ($6.02 billion) in Iran, Italy’s Economy Ministry said.
The deal was signed between two Iranian institutions, Bank of Industry and Mine and Middle East Bank, and the investment arm of Italian state-owned holding Invitalia, the ministry said in a statement, confirming a Reuters report on Wednesday.
The money will be used for projects carried out jointly by Italian and Iranian companies in sectors including infrastructure, construction, oil and gas, electrical energy, and the chemical, petrochemical, and metallurgical industries.
Iran’s government will provide a sovereign guarantee, the statement added.
The accord will open lines of credit to two Iranian banks namely Khavar Mianeh (Middle East) Bank and Sanat va Madan Bank (Bank of Industry and Mine) by Invitalia Global Investment, an Italian state-owned holding, in order to finance investment projects by Italian companies.
According to a Farsi report by IRNA, it is also possible that other Iranian banks would join the agreement.
Iran described the agreement – which it said was the biggest with a European bank – as a yet another sign of Europe’s determination to expand economic bonds with the Islamic Republic.
Muhammad Khazaei, president of the Organization for Investment, Economic and Technical Assistance of Iran (OIETA), said the agreement with Invitalia had a special political and economic significance "particularly at the current juncture”.
"This is the biggest credit agreement ever signed between Iran and a European country which is a very important political and economic development at the current juncture,” Khazaei was quoted by Iran’s IRNA news agency as saying.
"It shows the determination of the European Union in working with Iran at the current juncture – what will be beneficial to all.”
Following the signing of agreements with India, China, South Korea, Denmark, Austria and Russia in recent months, Italy is the seventh country with which a finance agreement is sealed.
The credit agreement with Italy followed similar moves with several European banks over the past few months. The latest involved an agreement between four Iranian banks and the Eximbank of Russia to provide "unlimited funds” for development projects to be carried out by domestic and international contractors in the Islamic Republic.
In September, Austria’s Oberbank signed a major finance deal with over a dozen Iranian banks based on which it would provide €1 billion in credits to the country’s companies that invest in the Iranian economy.
Oberbank’s initiative – that was seen in Tehran as the first of its kind in many years – was followed on the same day by a similar agreement between Denmark’s Danske Bank and several Iranian banks.
Accordingly, Danske Bank would allocate a credit line of €500 million for investments by Danish businesses in Iran.
On a related front, France’s state investment bank Bpifrance (BPI) announced also in September that it planned to provide funds to French companies that invest in the Iranian economy from next year.
BPI France CEO Nicolas Dufourcq was quoted by media as telling reporters that his bank would grant up to €500 million ($598 million) in annual credits to companies that venture into the Iranian market.
Italy is Iran’s major trade partner in the European Union. Latest Eurostat data show that with more than €2.58 billion worth of purchases, Italy was the main export destination for Iranian products during the 10 months to Oct. 31, 2017.
The figure shows a 315% hike compared with the corresponding period of 2016.