Has the Iranian government ended the special dollar rate for essential imports?

Recent increases in commodity prices show the government has almost stopped providing dollars below market rates to pay for essential imports, an economist said. “I think there is nothing left of [dollars available at] the government rate, ”said Ehsan Soltani, quoted Monday by the Iranian Labor News Agency (ILNA). “They can still attribute it to certain pharmaceuticals, but the surge in prices is indicative of the removal of the rate of 42,000 rials [to the dollar]. “

According to Soltani, the 63% year-on-year inflation in June would have been 25-30% if the lower dollar rate had been used to import commodities. This, he said, “makes it clear that the allocation of foreign currency at the government rate has already ceased.”

Critics of the Rouhani administration blamed the gap between an official rate of 42,000 rials to the dollar – introduced to guarantee imports of basic and basic goods – and the market rate led to massive corruption while those favored by the government filled their pockets. Leading members of parliament in February included the elimination of the special rate in the finance law for the current calendar year (March 2021-2), which some say would increase the level of rials available for the government to distribute to the less well off.

The rate was announced in April 2018 by Vice President Es’hagh Jahangiri, a few months after the rial began to drop in anticipation of the United States’ exit from the 2015 Iran nuclear deal, the JCPOA (Joint Comprehensive Plan of Action). At that time, the market exchange rate was close to 60,000 rials to the dollar. Since then, in the face of draconian US sanctions that have reduced Iran’s foreign revenue from oil sales, the rial has fallen to 2.5 million against the dollar on the free market, recovering somewhat from 3 million at the end of September and early October after Joe’s victory. Biden in the November US presidential election.

Soltani told ILNA that the consequences of not having cut-rate dollars to pay for imports had the greatest consequences for low-income groups, and that the program’s discontinuation could not be justified by claims of profit. . The Iranian government’s lack of funds to allocate dollars to importers at the special rate has also created serious problems for importers: recent reports indicate that an unprecedented amount of commodities in recent months has remained in customs because importers cannot get enough dollars to pay foreign sellers.

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