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proper execution and fulfillment ?

Governmental or private companies are responsible for implementing buy-back deals. Hence, in the framework of contracts signed, they must settle the price of imported raw materials, intermediate goods, machinery and required services, through the export of finished goods or services. In this connection, as indicated by Note 22 of the Law ot the Second Five-Year Plan, the concerned managing banks and insurance companies are bound to issue the necessary guarantees in favor of the supplier, in lieu of sufficient collateral (including the Iranian company's assets, imported and manufactured goods, shares and other means offered by the said company.) The concerned managing bank will also obtain acceptable assurances from the foreign party for the export of the manufactured goods. in any case, in buy-back transactions, the export of manufactured goods should be guaranteed by the concerned foreign companies, according to the conditions stated in the contract.

How is the collateral needed for issuing bank guarantees evaluated ?

All related securities are to be calculated at the floating rate of the relevant foreign exchange.

How effective is the guarantee issued by the concerned managing bank, regarding the payment of the supplier's installments through the export of goods and services ?

Banks, in any event, are bound to meet their undertakings to the supplier. In case the producer or the exporter does not meet the obligations stipulated, the bank shall act with a view to paying the installments due to the supplier, through taking possession of the collateral it is holding. With regard to government owned companies or those affiliated to the government, municipalities and other public agencies, whose foreign exchange obligations have been guaranteed by the bank without demanding the needed securities, the installments due shall be directly withdrawn from their bank accounts. Thus, there is no need on the part of the supplier to worry about a default on the part of the producer or exporter.

What are the characteristics of a buy-back contracts ?

Contracts in need of a bank guarantee must have the economic, technical and technological confirmation of the relevant ministry. Regarding the financial legal and banking arrangements status with due consideration given to the domestic and international financial situation and the Central Bank of Iran's policies - agreements should be confirmed by the managing bank. The managing bank or banks are those that are designated by the central Bank to handle the affairs of buy-back transactions. The managing bank may act alone or in conjunction with other authorized banks or establishments which provide credit. The contract

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