Russia has finalized preparations to provide Iran with a $1 billion loan and the funds are ready for transfer once Tehran provides the necessary bank account details, Iranian media reported on Tuesday. Iran's semi-official Fars News Agency said the payment process had been finalized but disagreements among government bodies over spending allocation have prevented the transfer.
Spending disputes delay transfer
Iran's Planning and Budget Organization wants the funds used for vehicle imports, while the Oil Ministry is seeking to purchase oil industry equipment and the Agriculture Ministry wants the money allocated to imports of essential goods, according to Fars. No final decision has yet been made on how the funds will be used, and the government has therefore not provided the account details required for the transfer, the outlet said.
$20 billion credit line
The loan represents the first installment of a planned $20 billion Russian credit line to Iran first reported in June, according to Fars. Tehran announced plans that month to establish a ruble trading board to strengthen banking cooperation with Moscow, and an Iranian lawmaker said at the time that Russia was expected to provide the $20 billion loan at an annual interest rate of 6%. The two countries have moved to deepen economic ties and expand the use of their national currencies in bilateral trade to reduce reliance on Western-controlled financial systems.
US sanctions pressure
Iran remains under extensive US sanctions targeting its oil exports, banking sector and access to the international financial system. Washington has intensified economic pressure on Tehran in recent months through secondary sanctions targeting foreign entities facilitating Iranian transactions, including a September Treasury Department action against Russia's VTB Bank over correspondent banking relationships with sanctioned Iranian financial institutions. The US has also targeted financial networks it accuses of helping Tehran move funds and evade sanctions.