The Money and Credit Council - a top decision-making body - approved a proposal by Central Bank of Iran to launch a mechanism to monitor currency allocation process for imports.
According to the CBI website, the mechanism will be launched to avert misuse on the part of importers who took foreign exchange for imports but nothing came to the country.
“In recent years abusers who went through the legal formalities to acquire currency didn’t import the goods for which they received currency” the CBI says.
Pointing to the oversight shortcomings of previous procedures, the CBI recalled that lack of an efficient and comrehensive system to keep an updated log of importers’ activities made it impossible for banks to have access to past performance of importing companies.
Additionally, the Industries Ministry and chambers of commerce - in charge of issuing commercial cards for businesses - were not informed about the performance of the traders or lack of it.
Engaging in import and export in Iran requires a commercial card that is issued by the Iran Chamber of Commerce, Industries and Mines after being approved by the Ministry of Industries, Mining, and Trade.
CBI Governor Abdolnaser Hemmati said earlier the measure is intended to plug loopholes and prevent abuse that plagued the allocation of subsidized currency whereby some traders took forex at subsidized rates (USD=42,000 rials) and sold it much higher rates in the black market due to the apparent absence of oversight.
Hemmati said on the instructions of President Hassan Rouhani, the initiative will be taken to eliminate loopholes in foreign trade procedures in line with previous measures undertaken by the CBI to regulate the monetary and financial operations.
The mechanism will be used as a benchmark to confirm validity and credibility of traders by banks and other relevant organizations to single out wrongdoers and deny them services unless they fulfill all their commitments.
The regulator also said that the mechanism allows evaluating the performance of agent banks whose customers have a high record of failures to import goods for which they receive foreign exchange. “Banks will be punished if their customers continue to breach the rules,” the CBI warned.
Gross Misappropriation
Head of the Majlis Economic Commission said recently in the first ten months of current year to Jan. 18, almost $3.5 billion in foreign exchange (nearly a quarter of the total forex allocated for imports) was allocated for importing essential goods. But the import was zero.
Mohammadreza Pour Ebrahimi said the Majlis will back the CBI plan that aims to monitor the forex allocation process in its entirety, noting that close to 21,000 merchants will be ranked and data about their business will be stored.
The CBI noted that because the system allows the Industries Ministry to observe the traders activities, businesses that fail to fulfill their currency allocation commitment will be banned from placing new orders in the import order registration system.
Importing goods requires traders to undergo the mandatory order registration process in a website operated by Industries Ministry. This means that they have to register details of the goods they want to import in the system plus submit documents such as the pro forma invoices, delineate the price and the volume of goods.
Through this process, traders officially apply for currency from agent banks after presenting all the documents.
Likewise, the system allows the Iranian National Tax Administration to access traders activities and monitor their commercial operations for tax collection.
In an analytic report published earlier by the Majlis Research Center, the influential think warned that the government policy to allocate subsidized currency for importing essential goods is tantamount to “wasting government resources without any benefit to the people” because the people “inevitably buy goods at prices much higher than what the government says or expects.”
The think tank referred to the allocation of $14 billion in next year’s proposed budget for import of basic goods.
