Exporters’ Default Put Over $27 Billion
EghtesadOnline: Iranian export companies have refrained from returning $27.5 billion of their overseas revenues over the past two years, says an official with the Central Bank of Iran.
"A portion of the total is to be returned as part of plans announced by the CBI and Ministry of Trade, Industries and Mining. This will have a [positive] impact on forex rates," Samad Karimi, head of CBI's Export Department was quoted as saying by IBENA.
As per CBI regulations, exporters are obliged to sell at least half their earnings in the secondary market. Petrochemical exporters need to bring back at least 60% of their overseas earnings and sell it via Nima. Exporters also must sell at least 20% of their total proceeds in cash to authorized moneychangers.
The CBI and Ministry of Industries, Mining and Trade have decided to invalidate commercial cards of exporters who fail to repatriate their revenue as per law. Commercial cards, issued by chambers of commerce, are compulsory for export companies and trading at the secondary foreign exchange market. Without the cards both importers and exporters cannot function in Iran.
In a recent CBI ultimatum exporters were given a one-month deadline to meet their commitments, otherwise their names will be made public through the media.
The move is a follow-up to President Hassan Rouhani’s latest call to curb the unusual price rises in the forex market that has led to renewed instability and anxiety in the business and manufacturing community already harmed by Covid-19.
The dollar has hit record highs in Tehran over the past several weeks. This is while, forex trade in the secondary market, known as Nima, declined significantly (73%) in three months starting from the current fiscal year (March 20).
CBI boss Abdolnasser Hemmati linked the chaos in the currency market partly to currency shortage due to the impact of the coronavirus on foreign trade.
Spread of the Covid-19 pandemic and its vicious influence on businesses, might be a leading factor. However, according to Karimi, $2.5 billion of the total unreturned export revenue is for the past three months. The remaining unreturned $25 billion pertains to the period prior to the onset of the Covid-19 pandemic.
Meeting stringent forex repatriation commitments has been a matter of hot debate between the central bank and export firms.
The difference between exchange rates in the free market and secondary market tempts exporters to bypass Nima and sell their revenue in the free market.
Besides, according to Karimi, "the money earned from exports, mostly by private firms, can be used for smuggling, overseas investment or other purposes."
However, exporters complain that they are unable to fully repatriate their earnings due to restrictions on transfer of money. On the other, the CBI is disappointed with the amounts repatriated, claiming it is not enough and does little to ease the difficult economic conditions.