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Systematic Misuse Of Subsidized Foreign Currency By Iranian Importers

Central Bank of Iran.

President Hassan Rouhani has given a 15-day deadline to his trade minister to publish the full list of car importers, who have received cheap foreign currency from the state.

According to published official records, Iranian entities and individuals seem to have systematically misused subsidized foreign currency provided by the government for importing essential goods.

Iran’s Central Bank on Sunday, July 1, published the names of 1500 companies and individuals who have received millions of dollars at the government rate of 42,000 rials and mostly offered their goods at free market rate which is almost double.

On the free market, one dollar is offered for 83,000 rials.

The published list includes some weird entries. For example a football club in Hormozgan province in southern Iran has received more than $2.5 million to import car tires.

Minister of Information and Communications Technology (MICT), Mohammad Javad Azari Jahromi had announced on Monday, June 25, that his government had provided several companies 220 million euros, ca. $250 million at the government rate to import cell phones, but less than one third of it was used for the purpose it was intended for.

However, the names of car importers who have received the highest amount of subsidized foreign currency have so far been spared from the public. Mohammad Shariatmadari, Iran’s trade minister, justified the move by saying publishing the names of car importers would be equal to a “war against the private sector”.

President Hassan Rouhani did not agree with his minister’s explanation and gave him 15 days on July 1 to investigate the violations by the companies and individuals who have imported cars and report it to the public and the judiciary.

The order was issued after reports were published that 6400 cars were imported through “illegal channels”. Naser Seraj, the head of Iran’s General Inspection Office claimed recently that due to a website hack, around 5000 luxury cars have been imported illegally into the country.

“Around 4000 of these cars have been released from customs and entered the market and the rest are still held at port of entry,”, Seraj added.

The decision of U.S. President Donald Trump to pull out of the landmark 2015 nuclear agreement with Iran in May, has led to an economic crisis in Iran. Since then, Iran’s national currency has been on an unprecedented free fall which resulted in widespread strikes and protests by Iranian merchants in several cities in recent days.

Since then, the prices of goods and services, including cars, have reached a record high. A member of Iranian parliament has also accused two major domestic car manufacturers, Saipa and Iran Khodro of creating artificial scarcity by storing around 90,000 cars.