$12b Earmarked for Imports Since Forex Rate Unification in Iran

EghtesadOnline: The government earmarked a total of $12.28 billion to all import of goods and services at the unified rate of 42,000 rials during the first 45 days since it unified the US dollar's dual exchange rate, the latest data show.

News ID: ۷۴۵۴۱۱

30 May 2018

Of the total earmarked volume of $12.28 billion, banks paid out $6.42 billion to applicants. The reason behind the major discrepancy in the earmarked and paid amounts is that Nima is still working out the kinks and applicants have to wait to receive their required currencies. The normal waiting period for applicants is from two weeks to 20 days, but the process may take longer.

According to ISNA, which published the data obtained from CBI's website on Tuesday, the number indicates all the forex credits earmarked since April 9–the date on which the government officially enforced the unified dollar rate–until May 27.

This was extended to applicants by banks, and also through Nima, the Forex Deals Integrated System spearheaded by the Central Bank of Iran and officially launched by First Vice President Es'haq Jahangiri on April 23, according to Financial Tribune.

According to the report, data breakdown shows that about $2.09 billion were allocated to essential goods by CBI, of which about $1.31 billion have been paid.

In case of medicine, one of the most important essential goods that had its own share of controversy in the past few days, a total of $678 million was allocated since the 45 days of rate unification.

In a meeting between pharmaceutical importers and the central bank, it was agreed that medicines would continue to receive foreign currencies at the previous subsidized government rates of 38,000 rials and the gap with the 42,000 rials rate would be covered through a special budget.

However, Nasser Riahi, the head of Medicine Importers Association, announced on Monday that since the budget of 8 trillion rials ($190 million) proved to be insufficient, imported medicines are to directly receive foreign currencies at the government rate of 42,000 rials per dollar and 52,000 rials per euro.

However, medicine has exited the long list of essential goods, which also includes grain, paper and butter among other things that receive their subsidized currency directly from the central bank and don't have to line up at Nima.

Of the total amount of allocated government currency, about $9 billion were approved for a variety of imported goods, which will mostly be provided through Nima. From the earmarked volume, about $4.67 billion have been handed out to import applicants.

On Tuesday, government spokesman and the head of Management and Planning Organization, Mohammad Baqer Nobakht, put the total volume of greenback provided to essential goods and imports at the subsidized rate of 38,000 rials and the official rate of 42,000 rials respectively.

Within the same 45-day period, he said, more than $19 billion were registered to be allocated to applicants.

"While based on the central bank's reports, more than $14 billion worth of goods had been registered until last week, the latest report by the Ministry of Industries, Mining and Trade indicates that the number has risen to more than $19 billion during the past week," Nobakht was quoted as saying by IBENA.

Of the $19 billion, about $1.48 billion were for essential goods, about $2.19 billion were for consumer goods and $663 million pertained to registered intermediate goods.

Nobakht noted that until May 27, a total of $3.593 billion was allocated to capital goods while registration orders were taken for $484 million worth of other goods.

According to the government spokesman, since the start of rate unification scheme, about $8.254 billion in registration orders pertained to 71,903 items.

The government abruptly announced the rate unification policy to prevent a further slide of rial, Iran's national currency that kept registering new all-time lows for months. The rial reached a nadir of about 70,000 rials against the greenback, but has since gradually strengthened and was traded for about 64,000 rials in Tehran's black market on Tuesday.