TEHRAN – Iranian banks disbursed 7.6 quadrillion rials (approximately $152 billion) in loans during the last Iranian year (ended late March), a senior official with the Central Bank of Iran (CBI) said, while criticizing the lack of a clear economic prioritization strategy to match the scale of financing with sustainable growth.

Speaking at the opening ceremony of the 17th Financial Industry Exhibition (Banking, Insurance, and Capital Market), Mohammad Shirijian, Deputy for Monetary Policy at the CBI, said the economy has not reaped the benefits of years of substantial rial- and foreign-currency financing due to an absence of sectoral prioritization.

“Despite a 70 percent increase in foreign-currency financing over three years – reaching $65.5 billion last year, up from $39 billion two years earlier – economic growth has not kept pace,” Shirijian noted.

Highlighting inefficiencies in the financial system, Shirijian stressed that the capital market must play a stronger role in funding long-term infrastructure projects, while banks – as providers of short-term liquidity – should focus on working capital for businesses. “Financial markets must develop targeted tools to support the real economy and curb diversion of funds to non-productive paths,” he said.

Despite the massive credit disbursement by banks, Shirijian criticized the lack of transparency in how and based on which models or priorities loans were allocated. He warned that poor-quality financing could create structural imbalances in the banking system, placing pressure on the Central Bank’s balance sheet.

More than 90 percent of financing in Iran is carried by the banking system. Shirijian said the CBI is taking steps to improve loan quality, including the introduction of special purpose bonds for infrastructure projects. “Financing must lead to job creation and improve household livelihoods,” he said, adding that compulsory lending mandates have strained banks and that public financing must be redirected toward development projects rather than covering unavoidable government expenses.

EF/MA