The Central Bank of Iran allocated $7.2 billion for importing essential goods in the first five mounts of the current fiscal year that started in March.
According to a CBI website report, pharmaceuticals and five essential goods with the main impact on livelihoods, namely corn, soybean meal, unprocessed oil, oilseeds and barley accounted for the largest portion of the forex disbursements reaching $5.6 billion.
It said $1.6 billion was paid to the Ministry of Health for drug import. Corn was next with $1.4 billion, followed by unprocessed oil $1.2 billion, oilseeds $900 million, barley $580 million and wheat $564 million.
Forex earmarked for importing essential goods was 100% over and above in the same period last year.
The policy of subsidizing such imports, seen by many economists as controversial and vulnerable to rent-seeking and misappropriation, will continue this year.
As per the government decision, the subsidized foreign currency allocation policy will not change until the first six months of the next fiscal year.
In the past two and a half years the government subsidized currency for importing basic goods selling the US dollar for 42,000 rials -- almost a fifth of its value in the open market.
While successive governments, as a matter of policy, have subsidized food imports, cheap currency in its current form was offered after the steep rise in forex rates in the spring of 2018 when the government set the dollar at a fixed rate of 42,000 rials.
It also cut the list of goods eligible for subsidized currency to a few essential goods like food, raw material and pharmaceuticals.
The subsidy policy plus lack of efficient oversight has led to wasting scarce forex resources from which avaricious traders, middlemen and the army of rent-seekers have profited to the detriment of the majority.
Economic experts have demanded deep reforms in the subsidy policy along with timely and responsible government oversight of how the billions is used for strategic food and medical import.
They stress that people buy food and other essential goods at open market rates despite the fact that the same items are often imported at highly subsidized rates.
