Domestic Economy

Imports to Iran Cheaper After Sanctions Removal

The amount of money Iran used to spend for circumnavigating the import sanctions outstripped the country’s development budget
Foreign exchange rates have stabilized and made imports less costly.Foreign exchange rates have stabilized and made imports less costly.

Each ton of imports costs Iran $237 less on average since the landmark nuclear deal, known as the Joint Comprehensive Plan of Action, between Iran and world powers came into effect last January, the Statistical Center of Iran said.

The Islamic Republic of Iran Customs Administration's data show Iran imported close to 33.4 million tons of goods in the last Iranian year that ended on March 20, saving about 300 trillion rials (close to $8 billion).

"The figure is a considerable sum given the fact that the development budget for the fiscalMarch 2015-16, which was the last year of sanctions, stood at over $6.65 billion. This means the amount of money we used to spend for circumnavigating the import sanctions outstripped the country's development budget," Meysam Mousaei, economist and faculty member at Tehran University was quoted as saying by the Persian daily Iran.

Mousaei believes there are two main reasons for the drop in import expenses after the removal of sanctions.

"First, after the implementation of JCPOA, money transaction expenses have decreased due to the removal, though not completely, of banking sanctions imposed on the country. Therefore, foreign exchange interactions are cheaper now," he said.

"The second reason is that foreign exchange rates have stabilized and made imports less costly. During the sanctions period, import and export expenses swelled beyond what it would otherwise have been under normal circumstances. Yet, after the nuclear deal came into effect, foreign exchange rates did not rise on par with the inflation rate, providing grounds for more reasonably-priced imports."

Echoing Mousaei's remarks on problems related to financial transactions and forex interactions, economist Mehdi Taqavi said goods could not enter the country via legal procedures before the implementation of JCPOA.

"Therefore, middlemen and dealers entered Iran's foreign trade arena, whose meddling increased import and export expenses. But after the removal of sanctions, financial transactions are carried out through legal procedures, which does not allow intermediaries to take advantage," he said.

International sanctions imposed on the Iranian economy were lifted last year as part of the nuclear deal the government of President Hassan Rouhani signed with P5+1 (the coalition of six powers, namely the US, Britain, France, Russia and China plus Germany) in 2015. In exchange, Iran agreed to limit the scope of its nuclear activities.

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