Economy, Business And Markets

CBI Says $1.2b Payment to Gov’t Not Uncommon

CBI Says $1.2b Payment to Gov’t Not UncommonCBI Says $1.2b Payment to Gov’t Not Uncommon

The recent $1.2 billion payment by the Central Bank of Iran, to the administration is “common procedure and has unjustly been blown out of proportion,” CBI Governor Valiollah Seif said on Tuesday.

Earlier in the year, ending March 21, the Rouhani administration received the hefty payment in rials from the CBI. In response to criticisms, it claimed it had the permission of the Special Solutions Committee (SSC). The amount is to later be compensated from oil revenue.  

Critics argue the sum is part of revenues from oil sales blocked overseas and was not transferred to the CBI’s account at the time the payment was made to the government.

Earlier, Seif confirmed the report and that the government received the rial amount without actually paying any dollars to the central bank, an act that critics believe would increase inflationary pressures.

The governor, however, reiterated in a press on Tuesday that the central bank has acted in accordance with a legally issued permit by the SSC.

He also explained that the amount “had been used to provide basic goods and therefore has not affected the monetary base.”

 Foreign Exchange Futures

The official also announced that the CBI has a long-term plan to set up a market for foreign exchange futures.

In order set up foreign exchange futures, “changes should be gradual and the cooperation of several institutions is required.” Otherwise, simulated transactions would start to surface, the governor warned, according to Bina news website.

 Bureau De Change

Since the new regulations designed by the CBI were issued to bureaux de change, “a positive stabilizing effect” can be seen in the market and transparency in transactions has improved, Seif said.

For the complete and effective implementation of the new regulations more time is needed; the CBI continues to closely follow all the steps of the procedure, he stated.

Other organizations which are cooperating on the implementation of the new regulations include the ministry of interior and the Supreme Council of National Security.

The main portion of the financial resources that enter the foreign exchange market are provided through non-oil exports; amounting to $40 billion annually.

With the newly introduced online system, official bureaux de change are required to carry out their businesses in accordance with the exchange rates that are communicated to them through Iran’s Association for Exchange.

Thus “unauthorized individuals would no longer be able to manipulate the market,” Seif said, stressing that none other than the bureaux are permitted in the foreign exchange business.