The preferred currency of basic goods is not removed

According to Iran EconomistMinistry of Economic Affairs and Finance, in response to the report of “Jehan Sanat” newspaper on the 18th of September of this year with the title “People’s lives under the government’s razor”, clarified: the 13th government from the beginning to curb inflation and stabilize the exchange rate, as well as create incentives for production and Uncertainty in this sector adopted macro policies, each of which had different effects on the economy.

The government’s new currency decision is also intended to curb inflation and production growth, and for this reason, the previous approval of the feed rate was amended in recent weeks, because it is true that the increase in the feed rate increases the revenues of Note 14 of the Budget Law of 1402. And according to calculations, every 1 thousand tomans increase in the gas feed rate improves the government’s annual income by about 40 hamats, but the previous resolution had problems both in the way it was announced and in determining the pricing method.

These deficiencies had deprived the capital market activists of their confidence, and the result was the impossibility of financing projects and companies and even the government in the capital market, and it was in contradiction with the goal of production growth, which was reflected in the slogan of the year. On the other hand, although in the previous method, the base price of petrochemical products in the commodity exchange was determined based on the rate of 28,500, but in many products, we were faced with a competition percentage of more than 30% to even 120%. In reality, the goods were sold at an exchange rate of 40 to 60 thousand tomans.

Therefore, by setting the rate of 28,500 for the price of feed, fuel and products, the government had given up a part of its income, and the goal of price control in the commodity exchange was not achieved in many cases, and this gap became the profit of speculators. In the framework of the previous approvals, the large producers of petrochemical products were forced to sell goods in the exchange based on the preferential exchange rate of 28,500, but in many cases, the market price was not proportional to the price of the commodity exchange, and the buyers could practically export the products purchased from the commodity exchange unofficially. do This would reduce the export of large producers who have a higher commitment to return foreign exchange and with a stronger implementation guarantee, and would actually transfer foreign currency income to smaller companies of the next layers, which have a weak commitment to return foreign currency to the country’s economic cycle.

In addition to this, it would intensify the rent-seeking behavior at the cost of depriving the government of a definite income and aggravating the budget deficit. Based on this, the amendment of the aforementioned resolution aims to improve predictability for investment in the field of industry and petrochemicals, as well as reducing speculation in The agenda of the government was placed. In addition to improving the predictability of the capital market, the issue of reducing the deficit in Note 14 of the budget was also pursued so that cash and non-cash subsidies are financed from non-inflationary sources.

In addition to the mentioned goals, the issue of increasing the guarantee of the return of foreign currency from exports to the country through the transfer of non-oil exports to large companies was also considered by the government. For this reason, since the experience of the fuel and feed pricing method based on the self-adjusting formula of 2014 had a good experience, but it had a strong effect of international shocks, which in the new government decree in order to avoid the effect of foreign shocks, in the new formula, a ceiling for The gas price was determined in non-real terms and based on the average price of Iran’s export gas to reduce the impact of external shocks.

But since the increase in the exchange rate is the basis for calculating the base price of products in the commodity exchange, it may cause an increase in the market price of some products; In order to control these price effects, for some products that are more important in the consumer’s basket and cannot be exported, the base price calculation base exchange rate does not change. Of course, it should be noted that there has been no change in the rate of 28,500 tomans allocated by the Central Bank for the export of the country’s oil as well as the import of basic goods, and the government continues to provide its oil with a preferred currency to the Central Bank, and the Central Bank with a preferred currency. The basic goods that people’s livelihood depends on are made.

Therefore, the policy of stabilizing the exchange rate due to the protective approach related to basic goods is still considered by the president’s government and the central bank, and no changes have been made in it.