The Central Bank of Iran in collaboration with the Trade Promotion Organization has agreed to further ease procedures for exporters who failed to repatriate their overseas income in the past three years.
The new decision, announced by the CBI, covers mainly unreturned rial income of goods sold to neighboring countries plus small export firms.
Exporters in 2018-19 and 2019-20 can use one or more of the facilitative measures announced in 2021 to help increase money repatriation and meet their delayed financial commitments.
TPO measures announced last April seek to ease currency repatriation for export firms. One important mechanism is the so-called “import in exchange for export” option.
Under the mechanism 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 “forex barter between exporters and importers”.
At that time the TPO said the option was only for exports undertaken after the announcement of the new rules (in April) and not before that.
The decision to extend those rules to pending export repatriation bills in previous years is expected to help exporters meet their commitments without further delay.
In the new measure the TPO has exempted companies whose export income repatriation commitments are insignificant (less than €5,000 as of Jan. 19).
Rial Earnings
Companies exporting to Iraq and Afghanistan now have until mid-March to submit export documents to the TPO hereby free themselves from liability.
Exporters to some neighboring countries, namely Iraq and Afghanistan, have always complained that their clients pay their bills in rial not foreign currency (not even the afghani or dinar) and therefore they should be exempt from currency repatriation rules.
However, CBI repatriation rules also cover export in national currency irrespective of the destination.
Struggling to find alternative sources of income to substitute the plunge in oil revenues, the government is trying to promote non-oil export.
Apart from the increase in returning export earnings, the new measures seek to help improve foreign trade that has taken a drubbing in recent years.
Rules related to the repatriation of forex income were tightened after the United Sates announced new economic sanctions in 2018 unleashing a severe shortage of foreign currency as oil and other key exports were hurt and foreign banks, fearing US ire, refused to deal with Iran.
The government obliged exporters to sell their forex earnings to a secondary market at rates set below the open market prices that are always higher.
In this system, locally known by the Persian acronym Nima, importers declare their currency needs, exporters declare their currency income and banks and authorized moneychangers act as dealers.
Non-oil exporters mist bring back a segment of their earnings in foreign exchange hawala and sell it via Nima. They also can sell their currency to authorized exchange shops.
The TPO said earlier that a limited number of big export companies account for most of the unreturned income. In a press release the TPO said 363 companies account for an estimated 65% of the total unreturned money.
Despite the huge default, this group of exporters account for barely 1% of the total exporters.
As of last November, non-oil exporters returned €63.4 billion after enforcement of government rules that made repatriation of forex income mandatory in 2018.
