Financial Tribune:

Iran’s manufacturing sector is increasingly constrained not by demand or capacity, but by a deepening financing bottleneck that has turned production into a daily struggle for survival rather than growth.

A combination of runaway inflation, international sanctions and tight domestic banking policies has reshaped the country’s financial ecosystem, pushing firms away from long-term investment and toward short-term tactics merely to secure working capital.

In recent years, access to affordable finance has sharply deteriorated. Disconnection from the global banking system and unresolved FATF challenges have effectively eliminated trade finance tools such as letters of credit and international supplier credit.

As a result, producers are forced to block rial liquidity for several months just to secure foreign exchange for imports. This has raised financing costs, lengthened cash cycles and weakened competitiveness, especially compared with regional rivals that still benefit from trade finance.

Domestically, banks face their own constraints. High inflation has reduced the attractiveness of bank deposits, shrinking the resource base of lenders. At the same time, Central Bank restrictions and contractionary policies have limited banks’ ability to extend cash loans. 

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