October 08, 2021
The government was due to end its import subsidies on food, medicines and a few other imports as of September 22, but the new minister of health, Bahram Eyenollahi, says they will continue through Now Ruz.
The budget law that took effect last Now Ruz said that the government would put an end to the sale of foreign currency at the rate of 42,000 rials per dollar at mid-year, which fell on September 22 this year.
But just eight days before that, Eyenollahi said they would continue for six more months. He did not say what authority the government had to override an action by the Majlis.
There is now almost universal agreement within the regime that the special rate for some imports disorients the economy and also leads to much corruption as many organizations paying 42,000 rials for dollar which now sells on the open market for 275,000 rials or 6-1/2 times as much have been found using the money to import ordinary consumer goods. In other cases, goods like medicines that have been imported legitimately have been found selling on the market as if they had been imported with payments of 275,000 rials per dollar, an obvious case of price gouging.
The subsidized exchange rate has been almost universally condemned by economists. But it is obviously wanted both by those who wish to help the poor with cheaper food and medicines and by those who want the outlandish profits they can garner with access to cheap dollars.
Eyenollahi said the public would be protected from expensive medicines when the 42,000 rate is dropped next March as the government will pay the difference between the subsidized cost of medical imports and the unsubsidized cost to medical insurance companies. He gave no details and did not say how that would benefit those without insurance.
In the past year, the Rohani Administration has dropped several categories of imports from the eligibility for the subsidized foreign exchange, including rice. That helped to drive up the price of rice, but this has not been the cause of any of the protests that raged this past summer in cities and towns all over Iran.