$6.2 Billion in Subsidized Forex for Basic Goods

EghtesadOnline: Despite restrictions resulting from US sanctions, the Central Bank of Iran provided $6.214 billion in subsidized foreign currency to import essential goods over seven months ending Oct. 21.

News ID: ۷۵۱۳۷۶

31 October 2020

It is up to the related ministries, namely the Ministry of Industries, Mining and Trade, the Agriculture Ministry and Health Ministry to determine priorities concerning what commodities or companies are eligible to receive cheap currency, a statement by CBI’s Public Relations Department reads.

As per the decision of the economic headquarters of the government, a total of $8 billion at the rate of 42,000 rials per dollar will be allocated to the supply of essential goods over the current fiscal year (March 2020-21).

Of the total sum, $5.5 billion will be allocated for the import of corn, oilseeds, raw vegetable oil, soybean meals, barley and wheat, $1.5 billion for pharmaceuticals and $1 billion for medical equipment.

Latest statistics have it that the CBI supplied $1,624 million to import corn; $777 million to oilseeds; $260 million to barley; $778 million to raw vegetable oil; $638 million to soybean meal; $330 million to wheat; $40 million to fertilizers; $30 million to paper; $615 million to medical equipment and $137 million to import items classified as “others” over the seven-month period.

“The Central Bank of Iran has fully supplied forex for the import of essential goods as instructed by the economic headquarters of the government. Challenges faced by companies regarding CBI’s alleged failure to allocate forex are to blame on ‘priorities’ set by related ministries and the central bank has no role to play in this matter,” the statement concluded.

$6.4b Worth of Essential Goods Discharged From Ports

A total of 13.49 million tons of essential goods worth $6.43 billion have been discharged from customs since the beginning of the current fiscal year (March 20) to Oct. 18, IRIB News quoted Mehrdad Jamal Orounaqi, the deputy head of Islamic Republic of Iran Customs Administration, as saying.

“Imports of oilseeds stood at 1.06 million tons worth $540 million; edible oils 497,000 tons worth $404 million; soybean meal 632,000 tons worth $258 million; wheat 2.32 million tons worth $645 million; barley 1.07 million tons worth $261 million; corn 5.79 million tons worth $1.4 billion; rice 567,000 tons worth $521 million; raw sugar 850,000 tons worth $309 million; and imports of 8,000 tons of pharmaceuticals and medical equipment stood at $874 million over the period,” he added.

Over 70m Tons of Goods Unloaded at Ports Since March

According to Mohammad Rastad, the head of PMO, more than 70 million tons of goods have been unloaded at Iranian ports since March 20.

The current volume of goods at customs’ warehouses and premises hovers around 7.5 million tons, of which 3.5 million tons are essential goods and 4 million tons are other commodities, he added.

Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.

Amid high inflation and diminished purchasing power, the Iranian government has sought to ensure a steady supply of essential goods at subsidized prices.

Imam Khomeini Port in the southern Khuzestan Province is the main hub for the import of essential goods in Iran. Close to 90% of Iran's demand for livestock feed raw material as well as 79% of grains are imported through this southern port.

A total of 25.09 million tons of essential goods worth close to $15.5 billion were imported into Iran during the last fiscal year (March 2019-20) to register a 20.77% and 17.13% increase in weight and value respectively compared with the year before.

This amount of essential goods’ imports accounted for close to 71% and 35% of the volume and value of last year’s total imports respectively, according to IRICA Spokesman Rouhollah Latifi.

“The imported essential commodities included wheat, sugar, corn, rubber, barley, processed tea, rice, different kinds of seeds, red meat, soybeans, pulses, paper, fertilizers and industrial machinery,” he was quoted as saying by ISNA.

The government plans to continue subsidizing essential goods in the next fiscal year (March 2021-21).

According to Vice President Mohammad Baqer Nobakht, who doubles as the chairman of Iran’s Plan and Budget Organization, the government will channel earnings from oil exports to the import of essential goods at the subsidized rate of 42,000 rials per US dollar.