The Government Economic Coordination Council has expanded the purview that allows exporters to meet their forex repatriation commitment via "import in lieu of export".
According to Hamid Zadboum, head of Iran's Trade Promotion Organization, export companies can benefit from the new rules in meeting their financial commitments related to returning their foreign earnings.
The new decision allows exporters to use part of their foreign earnings from fiscal 2018-19 to import goods either for their own needs or for a third party.
In the past exporters were allowed to import goods only if they exported in 2019-20 and after, the TPO public relations website reported.
Covering exports undertaken in 2018-19, the new rules help enable more exporters to meet their foreign currency commitments.
The so-called “import in exchange for export” mechanism was approved last October as part of efforts to reform rules for bringing back non-oil export revenue that long had been a bone of contention between companies and the Central Bank of Iran.
As per rules, exporters can use part of their earnings to import goods, raw material and machinery either for their own needs or for a third party under “currency barter between exporters and importers”.
The decision came after heads of the Iran Chamber of Commerce, Industries, Mines and Agriculture, the Iran Chamber of Cooperatives and Iran Chamber of Guilds in a joint letter to President Hassan Rouhani called for improved measures that could facilitate the forex repatriate process.
The decision to ease the stringent regulations will help exporters in fulfilling their currency obligations. In a talk with ILNA, Ehsan Qamari, head of TPO's department for expanding commercial services, said exporters brought back $42.7 billion in two and a half years since April 2018. "This indicates that almost 70% of the forex repatriation commitments were met.”
Apart from the increase in returning export earnings, the new measure apparently seeks to help improve foreign trade that has taken a drubbing in recent months.
As per CBI rules announced in July 2020, non-oil exporters had to bring back 80% of their earnings in foreign exchange hawala and sell it via the secondary foreign exchange market, known as Nima. They also can sell a maximum of 20% in their currency to authorized exchange shops.
Nima is an online platform affiliated to the CBI where exporters sell their overseas currency income and companies buy for import. Rules also oblige exporters to return their earnings within four months starting from the date the export permit is issued by the customs authorities.
Exporters who fail to comply face penalties, including, but not limited to, suspension of commercial cards, closure of bank accounts, travel bans and impounding of goods.
Due to the economic blockade imposed by Donald Trump, the former US president, most export companies are unable to bring money home because international banks and financial institutions fearing Washington’s wrath refuse to handle Iranian financial transactions.
