But the regime neither banned any categories of imports nor boosted tariff rates on the goods it doesn’t want imported. For a government that is resorting to police coercion to try to prevent the rial from eroding in value still further, this pure appeal to patriotism without any enforcement rang odd.
The authorities have divided imports into 10 categories based on how essential they are. The government will continue to provide importers with dollars at a subsidized rate to buy basic goods, Deputy Industry Minister Hamid Safdel was quoted as saying.
But it wasn’t explained why the government had broken imports into 10 categories. There are effectively just three prices for the dollar and thus only three categories are really needed—one category for essential goods like medicines and basic foodstuffs, which can buy dollars at the official rate of 12,260 rials; a second category for necessary imports, which can buy dollars at the new Foreign Exchange Center for about 28,000 rials; and all other imports, for which importers must find dollars on the open market.
Safdel was quoted as saying only importers of goods in the two lowest, non-essential categories, will have to go to the open market.
Goods in these two categories include cigarette papers, wallpaper, mobile phones, luggage, clothing and cars, the Iranian Students News Agency (ISNA) reported. It said about $10 billion to $12 billion was spent annually on importing such luxury and non-essential goods into Iran, roughly 20 percent of all Iranian imports last year.
Industry Minister Mehdi Ghazanfari urged Iranians Saturday to limit their purchases of imported goods and turn to domestic manufacturers to help the government cope with sanctions.
“If we move toward reducing the import of goods in these categories, which are not so necessary, we can save foreign exchange,” Ghazanfari said, according to the Mehr news agency. “If people do not use these goods, the need for currency for them would drop to zero.”
But Safdel said there were no plans to raise import tariffs on luxury items. Some analysts thought the authorities might be calculating that the rial’s weakness will be enough to slash purchases of those goods. With the rial having lost so much of its value, imports that do not enjoy subsidized foreign currency will now cost roughly triple what they went for a year ago.
Tehran’s effort to use the exchange rate to reduce luxury imports risks a surge in corruption and black market dealing. Traders now have the opportunity to make huge profits if they can illegally obtain dollars at subsidized rates and use them to import luxuries.
Mohammad Bayatian, a member of the Majlis Industry Committee, said last week the committee would investigate claims that 750 luxury cars were imported with dollars purchased illegally at the official rate of 12,260 rials, the Majlis Icana news agency said. That is the rate that is supposed to be used only for the most vital foodstuffs and medicines.
