CBI Discloses List of Cheap Currency Recipients

EghtesadOnline: The Central Bank of Iran on Sunday published the full list of companies that have received foreign exchange for imports at the preferential rate of 42,000 rials.

News ID: ۷۸۳۱۳۵

02 July 2018

The move comes after public demand for transparency grew louder when news emerged that some importers who received cheap currency have sold their products at market rates or even failed to import altogether without any valid reason.

Most of the products are the ones that the government has deemed important enough to qualify for cheap currency amidst a bullish foreign exchange rates in the open market.  The list runs the gamut from legumes, meat and grains to home appliances, car parts and paper.

Last week, Information and Communications Technology Minister Mohammad Javad Azari Jahromi for the first time disclosed the list of handset and mobile devices' importers who had received their foreign exchange at the official rate, according to Financial Tribune.

In a later speech, President Hassan Rouhani also called on his ministers to publish the list of all the goods that have been imported by cheap currency by letting people know the final price of each item.

However, the value of allocated currencies in the list is over $2 billion and lacks information on big items such as cars and machineries.

Last week, the head of Iran Chamber of Commerce, Industries, Mines and Agriculture sent a letter to CBI Governor Valiollah Seif, demanding that the names of recipients of cheap currency be made available to the "private sector's parliament" that refers to the chamber of commerce.

In his missive, Gholamhossein Shafei said the list is requested by ICCIMA to instill transparency in the market and check the recent price volatility.

The measure has received different feedbacks, with some calling for the total elimination of a multi-tier rate system whereby some goods are imported at preferential rates and create the ground for rent seeking.

According to the new measures adopted by the government, goods that do not have to be registered in the online Integrated Forex Deals System (known as Nima) can sell their hard currency to importers of "non-essential" goods at "negotiated" exchange rates.

Initial news that the negotiated rate would probably face limits was dismissed on Sunday by media reports.

Based on a mechanism that will be devised in coordination with the Central Bank of Iran, Industries Ministry and Security and Exchange Organization, the foreign exchange generated by small exporters will be offered in the bourse at a rate determined by supply and demand.

In the first stage, only exporters and importers will be allowed to trade in forex bonds but later other traders could enter the scene.

According to the new multi-tier scheme, imports will receive their foreign currency at different rates, based on their priority where the least important class of imported goods, which the government has deemed "luxurious", will face an outright ban.

The recent volatility in the forex and gold coin markets has been traced both to bad forex and budgetary policies and uncertainty over the future of Iran's nuclear deal.

US President Donald Trump pulled out of the international nuclear deal with Iran on May 8 and said he would reimpose sanctions within 180 days, prompting several European companies to announce they would end business with Tehran before the Nov. 4 deadline.