EghtesadOnline: The Central Bank of Iran issued an ultimatum on Sunday to non-oil exporters to expedite repatriation of their overseas earnings. If they fail to comply their names will be made public through the media.
In a notice published on its website, the CBI said it will reveal the names of exporters of goods and services who refuse to repatriate their earnings over the past two years.
“The public should be informed about those who for personal gain impose hefty costs on the society by creating turmoil in the currency market,” the CBI said. It was an explicit warning to exporters who do not meet their forex commitments and have created a supply crunch in the currency market pushing up prices to levels never seen before.
The move is a follow-up to President Hassan Rouhani’s latest call to curb the strange price rises in currency market that has led to new instability and fear in the business and manufacturing community.
Rouhani said on Sunday morning that the importers/exporters commitments should be defined in the existing legal framework. He ordered the CBI to expose the names of defaulters to the public.
The CBI boss Abdolnasser Hemmati on Friday linked the chaos in the currency market partly to currency shortage due to the impact of the coronavirus on foreign trade.
The senior banker pointed to billions of dollars in export earnings that are still to be repatriated, expressing the hope that “this will have a positive impact on the forex market”.
If the past is anything to go by, economists and currency market observers normally take such optimistic evaluations by senior officials with a pinch of salt.
As per CBI rules exporters should return their foreign currency earnings to the country within four months after the date of export.
The CBI this time insisted that exporters must return their earnings by July 21, a deadline that has become a bone of contention between exporters and the regulator in recent weeks.
The issue was discussed earlier in the month during a regular meetings of private sector representatives and government officials, the so-called Dialogue Council.
It was reported that the council agreed to extend the deadline for repatriation of export income in the last fiscal year (March 2019-March 20) until late September.
The council decisions, however, have to be approved by the economic commission of the Cabinet.
Exporters normally claim that the CBI repatriation rules are stringent and that it has done little if anything to pave the way for export companies to bring back their earnings.
Many understandably take issue with the fact that they cannot transfer the money to Iran simply because there is no banking channel to do so. Tough economic penalties imposed by the US have literally cut off Iran’s banking ties to the international banking system.
Export earnings are supposed to be returned via one of the following ways: selling currency on the secondary foreign exchange market, known locally as Nima, cash transfers through hawalah, selling currency to exchange bureaus, and finally using the money to import goods and machinery or allow a third party to import.
Based on rules announced by the CBI, exporters are required to sell at least half of their export earnings in the secondary market at exchange rates below the (higher) rates in the open market. Petrochemical companies must bring back at least 60% of their earnings and sell it via Nima.
Law stipulates that 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 a third party.
Nima is a CBI-affiliated platform where exporters sell their overseas earnings and importers buy it for importing non-essential goods, machinery, equipment and raw materials.