EghtesadOnline: The Ministry of Industries has conditioned the granting of permission for export of minerals to exporting companies’ commitments to repatriate overseas earnings.
In a directive to guilds, deputy minister for mining Industries, Jafar Sargheini announced that granting export permit as of December 22 will be contingent upon exporters’ submitting documents showing they would meet their forex repatriation commitments.
The directive specifically addresses CEOs of giant metal companies such as National Iranian Copper Industry Company, Iranian Aluminium Company and Almahdi Aluminum Company, Financial Tribune reported.
Documents signifying repatriations of export earnings into Integrated Forex Deals System (locally known as Nima) should be presented to and verified by the Central Bank of Iran, according to the directive published on IBENA website.
Nima is a secondary market developed by the CBI as a venue where companies sell their export earnings. On this platform importers declare their currency needs, exporters declare their currency proceeds and banks and authorized moneychangers act as dealers. This apparently allows the CBI to exercise oversight and control currency demand and supply.
Currency at Nima is traded at rates lower than the open market. Each USD at Nima was worth 110,000 rials on Sunday as quoted by the CBI website. The greenback fetched 126,000 rials at Tehran’s open market.
The directive makes it mandatory for repatriation of foreign currencies earned in the first half of current fiscal year (March 21- Sep.22).
If exporters default, their names will be deleted from the list of “authorized exporters”.
The ministry will hold members of export unions accountable for potential losses incurred due to non-compliance with the directive after its enforcement in December 22. Losses may result from transfer of cargo, demurrage and return of goods from customs.
Currency repatriation rules for export earnings became more stringent after the United Sates re-imposed economic sanctions in the spring of 2018, triggering a severe shortage of foreign currency as oil exports declined to unprecedented lows.
Companies must sell at least half of their export earnings in the secondary market. Petrochemical companies must bring back at least 60% of their earnings and sell it via Nima.
As per law, at least 20% of the total proceeds sold in the secondary market must be in cash. The balance can be used to import goods, machinery and equipment either by the exporting firm or any other third party.