CBI Governor Abdolnasser Hemmati said Monday of this amount, $3 billion was allocated for importing essential goods and pharmaceuticals.
“This amount was for importing rice, vegetable oil, animal feedstock, medical equipment and pharmaceuticals,” the parliamentary news website ICANA quoted him as saying.
The government adopted the current subsidized currency plan for importing essential goods last spring in a move to curb the galloping prices for the basic goods triggered by the steep decline in value of the rial against the dollar, Financial Tribune reported.
A subsidized dollar costs 42,000 rials and is being limited to the extreme due to the government’s declining forex revenues linked directly to the new US sanctions on Iran’s oil export.
On Tuesday the greenback fetched a little less than 140,000 rials in the open market.
However, the forex subsidy policy has long been opposed by experts, economists, businesses and the people for its inefficiency and potential for rent-seeking and corruption.
The mounting criticism and the policy’s apparent inability to produce the desired results has led to proposals to substitute the tried and tested mechanism, which at the least has been a failure. That said, it still seems the subsidized foreign exchange mindset is here to stay.
As per the provisions of the current fiscal budget, the Majlis has made it mandatory for the government to revise its forex subsidy policy for importing essential goods. The government is obliged to allocate $14 billion from oil export revenue for this purpose.
Exporters Role
Apart from the subsidized currency for importing essential goods, the CBI has injected another $3 billion to the Nima (Integrated Forex Deals System).
Nima is the platform where exporters sell their currency earnings to companies importing non-essential goods. The forex rate in Nima is lower than open market rates and higher than subsidized rates.
Pointing to the CBI’s preoccupation with securing the foreign currency needs of the nation, Hemmati took stock of the role of non-oil exporters.
“[By repatriating the currency earnings], exporters can go a long way in helping the government overcome the negative impact of sanctions,” he said.
The CBI chief added that repatriating export earnings to the country has gained momentum over the past two months, due mainly to incentives in the currency repatriation procedure.
One inducement allows exporting companies to use part of their earnings to import goods either for their firms or by third parties.
Based on the new rules, a minimum of 60% of the forex earnings from export of petrochemicals must be sold via Nima. Up to 10% of the total export earnings of petrochemical companies should be sold in banknotes to the local bureaux exchanges.
Petrochemical exporters can use the remaining earnings to import goods, machinery and equipment for their companies.
Exporters of non-petrochemical goods are obliged to sell at least 50% of their earnings on Nima and 20% in cash to the money changers. The balance can be used for importing goods either by the exporting firm or third parties.
Hemmati said last week that non-oil exporters repatriated $18.7 billion of their export earnings to the country in fiscal year that ended in March.