Iran lowers aid to local importers

Business Materials 8 June 2016 13:34 (UTC +04:00)

Tehran, Iran, June 8

By Mehdi Sepahvand - Trend:

The Iranian government has been distributing the US dollar in the country at rates lower than those in the free market, to various sectors such as production and trade as means to help improving these areas.

But over the past year, the government has lowered the dollar handout to importers from $14.5 billion to $11.7 billion in a bid to discourage imports against domestic production, Deputy Minister of Industry, Mine, and Trade Valiollah Afkhami Rad said in a meeting at Tehran Chamber of Commerce, Trend correspondent reported from the event on June 8.

He noted that the approach was adopted as part of the country's grand policy of "resistance economy," which boils down to something like austerity measures.

Rad also pointed to the need to increase the price of the US dollar against the Iranian currency rial in order to improve the non-oil exports.

However, while raising the currency rate helps improve exports, Iranian importers claim that doing so will damage their work.

Amid such circumstances, the Iranian government is planning to fix currency rates, believing it will help both exports and imports.

In the first two months of the current Iranian year (started on March 20), Iran's imports and exports fell in value by 14 percent.

As for imports, it is not clear whether the lowering numbers are caused by a decline in the volume of imported goods or the lowering of governmental currency handouts.

One more consideration is that a great part of the imported goods are intermediate goods that are vital to domestic production. This is another challenge for the government if it tries to keep helping producers inside the country.