Approval of New Currency Policy for Supplying Essential Goods

The Supreme Economic Coordination Council in Iran, in a meeting attended by the heads of the three branches of government, approved the Central Bank's new currency policies, emphasizing the supply of essential goods at official rates. The Islamic Republic News Agency (IRNA) reported on this meeting held on Saturday, August 4, presided over by President Hassan Rouhani, summarizing the main decisions of the Supreme Economic Coordination Council into three sections: supplying essential goods, providing facilities for exporters and importers, and dealing with 'corrupt and disruptive economic actors.' According to the report, 'the new policies are based on the principle that essential goods needed by the public will be supplied at the official exchange rate announced by the Central Bank, and executive bodies will closely monitor all stages of import to distribution of these goods.' In this context, Mehr News Agency reported that the government intends to exclude intermediary food items and machinery for the food industry from the first group of currency. According to this report, Kaveh Zargaran, Secretary-General of the Iranian Food Industries Association, stated on Friday: 'The government has gradually come to the conclusion that the 4200 Toman exchange rate should be exclusively allocated to essential goods, which is a bigger mistake than the previous one. Certainly, providing government currency for a few items like corn, barley, oilseeds, etc., will not prevent price increases, and as soon as intermediary food items and consumer machinery are removed from the first group list, we will witness an increase in the market, and at least 100% inflation in food products.' The Central Bank's new currency policies were approved amid Iran experiencing its largest currency crisis in four decades since the victory of the 1979 Revolution and the establishment of the Islamic Republic, with the dollar rate in the free market exceeding 11,000 Toman. Economic instability, coupled with political and social dissatisfaction, has led to widespread protests across various parts of Iran, with demonstrators chanting slogans against the leader and officials of the Islamic Republic. In this situation, as U.S. sanctions are also on the way, Ali Rabiei, Minister of Cooperation, Labor, and Social Welfare, predicted that if the government does not take action, another million people will join the ranks of the unemployed in Iran. The Iranian government has recently changed the Central Bank governor, and the Supreme Economic Coordination Council has also concluded that it needs to revise previous policies. According to Iranian media reports, it was decided in the Saturday meeting of the Supreme Economic Coordination Council that 'facilities will be provided for actors in the export and import sectors and those who need currency for their essential activities, so they can easily obtain the currency they need in the market.' This meeting was also accompanied by a proposal from the head of the judiciary to 'accelerate the response to corrupt and disruptive economic actors,' which stated that 'dealing with those whose activities have harmed the peace and economic stability of the country at this time and have caused problems for the economy by using large rents... should be carried out more quickly.' Iranian judiciary officials had previously warned that economic disruptors could face the death penalty. Ali Khamenei, the leader of the Islamic Republic, has also called for action against economic offenders 'at any level.' In recent months, some of these illegal economic activities have become public. For example, several companies received government currency for importing mobile phones, but their imports were significantly lower than the currency received. At the end of June, the head of the General Inspection Organization announced that a car ordering website had been hacked and 'about five thousand high-end and expensive cars were illegally imported into the country.' However, later reports emerged denying the hacking of this site. Iranian officials have attributed the currency and gold crisis to 'foreign intelligence services.' Meanwhile, it is unclear what major differences the new currency policies have compared to previous policies. Eshaq Jahangiri, the First Vice President of Iran, stated on Saturday that the general principles of these policies were approved in the Supreme Economic Coordination Council meeting, and the details will be discussed and approved in the government meeting on Sunday. He also announced that the head of the Central Bank will reveal these details in an interview with the media on Tuesday, August 7. A part of the initial round of U.S. sanctions against Iran is set to be implemented on Saturday, August 4, and until all unilateral sanctions by Washington against the Islamic Republic return on November 4 of this year, the U.S. is determined to bring Iran's oil exports to zero.