Chairman of Iranian Pharmaceutical Importers Association Nasser Riahi says the allocation of subsidized foreign currency to import pharmaceuticals has ended.
“Since late January, importers have not received any subsidized foreign currency at the rate of 42,000 rials per US dollar; the government only pays subsidies for the import of rare, emergency medicines that cannot be produced domestically. Imports of pharmaceuticals with locally-produced counterparts, or foreign-made ones recommended by physicians, or medicines that local producers might fail to supply on time, have reduced sharply,” he said.
Riahi, who is also a senior member of Iran Chamber of Commerce, Industries, Mines and Agriculture, noted that a fraction of critical medications were imported and stored at customs terminals last year (March 2019-20) and will be cleared, with the permission of Health Ministry, in case the country faces any shortage.
“As we are nearing the end of the first quarter of the current Iranian year [June 20], the Central Bank of Iran has only allocated €90 million of the €500 million it had promised to provide importers with. In fact, importers have not even received half of the €90 million due to complications associated with credit transfer,” ISNA quoted him as saying.
The official further said hurdles in the way of imports will be cleared once the government removes pharmaceuticals from the list of subsidized imports and allows importers to meet their forex requirements from the export earnings of non-oil products (petrochemicals, steels and minerals) traded through the so-called secondary FX market, which has exchange rates much closer to the free market rates.
“The government can offset financial pressure on patients due to the sudden increase in the prices of drugs and support insurance companies by putting at their disposal the difference between the subsidized and secondary FX market price. It is easier for importers to access foreign currency provided through the secondary FX market,” he concluded.
Import Policy
Following the re-tanking of the national currency in early 2017, the government introduced stringent rules like banning the import of non-essential goods, especially those produced inside the country (known as Group IV goods).
It allocated subsidized currency at the rate of 42,000 rials to a dollar to 25 categories of goods (also known as Group I or essential goods) to help protect consumers against galloping inflation, rampant price gouging and hoarding, not to mention the high and rising cost of living.
Two other categories of imports were also defined: Group II, which mostly included raw materials, intermediate and capital goods, and Group III consisting of essential consumer goods.
Importers of products in Group II were to meet their forex requirements from the secondary forex market. Importers of goods in Group III could buy hard currency from exporters who were not required to offer their forex earnings on Nima.
In the last fiscal year (March 2019-20), the government removed five items, namely red meat, butter, pulses, tea and sugar, from the list of essential goods entitled to subsidized currency.
Since the beginning of the current fiscal year (March 20), rice has also been taken off from the list of subsidized imports.
Vegetable oil, oilseeds, corn, barley, soybean meal, raw materials for manufacturing tires, heavy-duty vehicle tires, paper pulp and different types of paper are still considered essential goods.
All supplements, over-the-counter drugs, licensed medicine and imported granules that have local counterparts as well as inactive ingredients added during the manufacturing process of pharmaceutical products have been removed from the list of subsidized imports.
Importers are allowed to procure their foreign currency requirements from the export earnings of non-oil products (petrochemicals, steel and minerals) traded through the so-called secondary FX market, known by its Persian acronym Nima.
The announcement has been made by Gholamhossein Mehralian, a Health Ministry official, in a letter to Mehdi Soleimanjahi, the secretary of Iranian Pharmaceutical Industries Syndicate, Fars News Agency reported earlier this month.
According to Gholamhossein Mehralian, a senior official with Food and Drug Administration of Iran, the government allocated $3.5 billion to pharmaceutical import in the year ending 2019 and $3 billion in the year ending March 2020.
“About $2.5 billion in subsidized currency have been earmarked for the current year. Given the decline in subsidies, pharmaceutical companies are petitioning for a price revision,” he said.
