Third List of Exporters Flouting Forex Rules Sent to the Judiciary

EghtesadOnline: The Central Bank of Iran said Thursday that it had sent to the judiciary a third list of companies who defaulted and failed to meet their obligations to repatriate earnings from sales.

News ID: ۷۵۱۰۹۴

26 September 2020

In a press release on its website, the CBI said the new list comprises 1,033 exporters whose aggregate export repatriation commitment is €4.9 billion.

The list is the third of its kind, which includes names of companies whose failed commitments exceed more than €1 million, according to the CBI.

The bank had earlier sent the names of defaulters to the judicial authorities in two lists. Unfulfilled financial commitments by the exporters in the two lists was €6.8 billion.

The CBI said the exporters failed to return their earnings before the timeline expired as announced by the regulator. It had earlier said that companies in the non-oil sector had exported goods worth €56.1 billion over two years (April 2018 to June 2020), of which €33.6 was repatriated.

A July 21 deadline was announced for companies to repatriate earnings from foreign sales or face the law. The unreturned earnings mostly pertain to goods sold during the past two years. As per rules governing the return of forex in the last two years, exporters were required to sell at least half of their export earnings in the secondary foreign exchange market, known as Nima. Petrochemical companies were obliged to bring back at least 60% and sell it via Nima.

Nima is trade platform where exporters sell their overseas proceeds and companies buy to pay for their import needs.

Visible Impact

Problems related to the return of export earnings gained momentum after a deep supply crunch at Nima. The most visible and disturbing impact was that it rattled the already fragile currency market sending forex rates through the roof.

Past rules also stipulated that at least 20% of the total proceeds sold in the secondary market must be in cash, and the balance be used to import goods, machinery and equipment either by the exporting firm or a third party.

Exporters understandably take issue with the fact that they cannot transfer the money to Iran simply because there is no banking channel to do so.

Tough US penalties have literally cut off Tehran’s banking ties to the international banking network to the extent that the government too cannot transfer its oil export revenue home from most countries.