“The central bank believes in compromise with exporters and will not refuse cooperation over repatriation of their proceeds,” Abdolnasser Hemmati was quoted as saying by the news service of the Iran Chamber of Commerce, Industries, Mines and Agriculture.
Hemmati was speaking at a meeting with members of the boards of directors of provincial chambers of commerce and a group of prominent exporters to discuss export issues.
“CBI will never resort to judicial action against real and credible exporters, and to the extent possible strive to settle problems through negotiations and flexibility,” he pledged.
Difficulties associated with the return of export earnings gained traction after a deep supply crunch at the secondary foreign exchange market, known as Nima. The first and most visible impact of the problem was that it rattled the already fragile currency market sending forex rates in the open market through the roof.
Nima is the Integrated Foreign Exchange Deals System where exporters sell their overseas proceeds and companies buy to pay for their import needs.
The CBI has often complained that export companies have not returned $27.5 billion of their overseas revenue in the past two years. It has set deadlines for the companies to play by the rules or face legal consequences.
Samad Karimi, head of CBI’s export department, said earlier the regulator is focused on 2,386 exporters with export value of more than €1 million each but who returned less than 70% (zero to 70%) of their earnings. The value of goods taken out by this group is an estimated €24 billion while only €6.4 billion was repatriated.
“In other words, the export companies failed to repatriate €17.7 billion of the earnings,” he was quoted as saying by the CBI’s website.
Economic and monetary policymakers give importance to this group of exporters simply because of their role in the currency market dynamic. Given the realities on the ground, the government prefers some form of “compromise” with them.
Meeting Outcome
On the outcome of the meeting, the ICCIMA Chief Gholamhossein Shafei said the CBI and private sector representatives agreed to make changes to rules that oblige exporters to return the full amount of their earnings.
As per revised CBI rules announced in June, export earnings for the current fiscal year (ending in March 2021) should be returned in full -- an issue that has become a bone of contention between the CBI and export companies.
Companies have often complained that customs officers “overestimate” the value of their goods and that they actually earn less. They have appealed to the CBI to modify their repatriation commitment to levels below the customs assessment.
As an incentive to law-abiding exporters, the government has allowed exporters, who return their earnings within three months from the date of export, to offer 90% of the total export value. It is worth noting that exporters were required to return 80% of their total export value in last fiscal year.
As for other decisions, Shafei pointed to “special measures” that apparently facilitate earnings repatriation for exporters of agricultural products. He did not elaborate.
The CBI also agreed to take a different approach toward exporters who earn rials when exporting to neighbors like Iraq and Afghanistan.
While trade with neighbors is traditionally conducted in rials, the CBI in the recent past insisted that earnings from export to neighbors must also “be returned in foreign currency”.
However, given the high volume of trade with neighbors and following intense wrangling with private sector representatives, the CBI in summer 2019 retreated and accepted rial repatriation from export to neighbors.