Iranian Travelers to Foreign Countries Received $312m in 3 Months

EghtesadOnline: A total of $312 million were allocated by the Central Bank of Iran to people traveling abroad in the roughly three months that has passed since the Iranian government decided to unify the country's dual foreign exchange rates.

News ID: ۷۸۳۲۸۵

18 July 2018

This was doled out to outbound travelers from April 9–the day the government unified foreign exchange rates and set the US dollar rate at 42,000 rials and started allocating travel currency–to July 14, IRNA cited the figure disclosed by CBI.

IRNA says foreign exchange allocated to car importers, which issue has become controversial, was equal to €121 million during the same period.

Either way, this figure may very well be the final volume of cheap travel currency allocated since the whole policy has been under fire from the start and may be subject to imminent change, according to Financial Tribune.

On Monday, Yonathan Betkolia, a member of Majlis Development Commission, claimed that months-long negotiations with the central bank have borne fruit and the monetary regulator will revise its foreign travel currency policy as early as next week.

A day earlier, Ali Asghar Mounesan, the head of Iran's Cultural Heritage, Handicrafts and Tourism Organization, criticized the government policy and said in the latest negotiations between his organization and the central bank, "it was agreed to reconsider and finalize the issue this week”.

Long queues of applicants were formed, despite the government's repeated reassurance that it will meet foreign travel currency needs. Even strict limitations such as the low amount of allocated currency and required documents failed to deter applicants.

Outbound travelers are currently eligible to receive up to €500 for travels to neighboring or allied countries. The list of neighboring states includes Armenia, Azerbaijan, Belarus, Estonia, Lithuania, Latvia, Georgia, Kazakhstan, Kyrgyzstan, Moldavia, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Turkey, Afghanistan, Bahrain, Qatar, Kuwait, Pakistan, Oman, the UAE and Cyprus.

Travels to all other countries are eligible to receive €1,000 with the exception of Iraq, for which travelers can receive 250,000 Iraqi dinars.

If the subsidized travel currency is eliminated altogether, a lot of Iranians will find it much difficult to travel abroad since the black market rate of the US dollar currently stands at 81,500 rials, almost twice the government-unified rate.

However, a large number of pundits and officials have called for the removal of cheap travel currency, since it has prepared the ground for speculative activities as some tour operators and airlines started taking advantage of the situation and in part because of the country's limited reserves.

"Giving currency to travelers is essentially wrong and only encourages people to make foreign travels," Asghar Samiei, the former head of the Association of Bureaux de Change Operators of Iran, told IRNA.

"When the foreign currency reserves of the country are limited, their expenditure must also be undertaken very carefully, not by creating a kind of rent for the middle-class or the wealthy compared to other strata of the society," he said.

In the same vein, Jabbar Kouchakinejad, the head of the cultural and tourism faction of the parliament, also believes that subsidized currency must only be allocated to patients seeking foreign treatment, students living abroad and traders.

"It is better that both officials and the people refrain from traveling abroad as we're facing an economic war," he said. "That's why abolishing the travel currency is one of the ways of reducing non-essential foreign travels."