By Mahnaz Abdi

CBI’s new directive on re-injection of export income requires amendment

May 24, 2019

Central Bank of Iran (CBI) unveiled a directive package on Monday which provides the country’s exporters with guidelines about how they should re-inject their foreign currency incomes into the country’s economy.

Based on the new directive, for the petrochemical sector, the exporters should present at least 60 percent of their foreign currency incomes into the domestic Forex Management Integrated System (locally known as NIMA), and a maximum 10 percent could be injected into the financial system in the form of hard currency and the rest could be used for importing necessary goods.

As for other exporters, at least 50 percent of the total earnings should be presented at the NIMA system and a maximum 20 percent could be distributed in form of hard currency and the rest can be used for imports.

Now, this new directive has aroused some debates in the country’s private sector and the traders and businessmen want it to be amended.

In an interview conducted by ISNA and published on Friday, Mohammad Lahouti, the chairman of Iran Export Confederation, said the new directive removes some concerns of the private sector, but for having positive results it requires to be amended.

He said, “During several meetings with the CBI over the past weeks, Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has announced all the things to be done in management of the foreign currency market and the results were mentioned in a letter sent to the CBI.”

“In the new directive, CBI has considered some of our demands but some others are ignored”, Lahouti lamented.

According to Lahouti, what has happened during the two-month period from February 20 to April 20 shows that removing some limitations for the exporters has led to supply some import requirement of the country as about $2.6 billion of imports has been done through re-injection of foreign currency earned from the exports which is an acceptable figure considering the current condition and some part of the country’s plants requirement for the raw materials has been supplied through that imports.

“Once a method brings fruitful results it should not be easily ignored”, the chairman of Iran Export Confederation stressed and complained that despite the previous instructions, the new directive says that at least 50 percent of the total export earnings should be presented at the NIMA system and 30 percent will be allocated to the imports; while preserving the previous condition could prepare the ground for more activity of the exporters.

mentioning the other weaknesses of the new directive, Lahouti said it has not specified the NIMA condition for the exports of less than €1 million (which was exempted from re-injection to NIMA in the previous instructions), rial-based exports to countries such as Iraq and Afghanistan, and also not accepting the re-injection deadline to be extended to six-nine months from the current four-month.

 New directive positive while requires amendment

Mohammadreza Hariri, an economic expert who is the vice-chairman of Iran-China Joint Chamber of Commerce, evaluates the new directive as positive and says that CBI does not insist on the previous policies and instructions and it amends them if necessary.

“The new directive is positive while there are some criticisms that should be considered”, he said in an interview conducted by ILNA and published on Friday.

He mentioned the unspecified NIMA condition for the exports of less than €1 million as one of the criticisms to the new directive and the deadline for re-injection of exports earnings from some commodities such as carpet and handicrafts as the other weakness of the new instruction.

The economic expert also commented that establishment of an integrated forex market can complete the new directive.

Establishment of this market has been approved by the Money and Credit Council (MCC), the highest banking policy-making body of CBI, on January 8 as the CBI aims to explore the real volume of demand and supply in the foreign currency market through a new mechanism, which is to organize the transactions in the foreign currency exchange market between the exchange shops.

On Wednesday, Mohammadreza Pour-Ebrahimi, the chairman of the Economic Committee of Majlis, announced that this market will be launched by the end of current Iranian calendar month of Khordad (June 21) and launching it, the other exchange rates like the Sana rate will be omitted gradually.

And Hariri mentioned establishment of such market a positive approach while completing the new directive of the CBI.

While the new CBI directive has not been fully to the satisfaction of private sector, its positive approaches toward promotion of exports and imports and making balance in this due encourage the officials from both state-run and private sectors to move forward for more negotiations and discussions in setting the instructions.

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