Forex Subsidy Elimination Not to Affect Iran Travel Industry

The elimination of subsidized foreign currency offered to travelers is not expected to affect the country's outbound tourism market, officials and experts said.

The new regulations of the Central Bank of Iran put an end to foreign currency offered to travelers at subsidized rates (about 600 rials lower for each dollar compared to the open market rates) as of Sept. 11.

The subsidized currency, commonly referred to as travel currency, amounted to $300 for travelers and $200 for pilgrims, ISNA reported.

Some claimed the move will discourage Iranians for traveling abroad. However, tourism officials and experts believe the subsidy was so meager that its elimination will not reduce travelers' motivation.

Abdolreza Mohajerinejad, director of Tourism Development and Planning Office, said the benefits of the plan surpass its disadvantages.

"Removing the subsidy will help prevent misdemeanors concerning currency exchange," he said, assuring that it will not shock tourists.

In the past years, offering large sums of travel currency at significantly lower rates led to fraud wherein the subsidized money was used for doing business and creating a black market for currency trade.

Jalil Herischi, a member of the Travel Agents' Guild Association, also said the difference between subsidized and open market rates is so insignificant that it did not motivate people to travel in the first place.

"Most outbound tourists bought their currency in the open market and the supporters of the travel subsidy were those traveling to Iraq and other low-cost destinations," he said.

Herischi noted that $300 would not even be sufficient for cheap outbound travel and tourists already had to buy extra currency from the open market.

Reza Abazari, chairman of the board of directors of TAGA, said outbound tourism figures will not be impacted by the new regulations, but maintained that the government's inability to address economic issues must not influence travelers.

"Although $300 seems insignificant, there might have been people who needed and counted on it for their travels," he said.

According to the official, the primary requirement of the tourism industry is to facilitate money exchange and stabilize the forex rates.  

Abazari suggested that the income from the elimination of travel subsidy must be spent on sustainable development of tourism.