Chapter

ISLAMIC REPUBLIC OF IRAN

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of December 31, 2003)
Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of the Islamic Republic of Iran is the Iranian rial.
Exchange rate structureUnitary.
Classification
Managed floating with no preannounced path for the exchange rateThe exchange rate of the rial is determined in the interbank foreign exchange market, but the authorities intervene when necessary in order to maintain orderly conditions in the foreign exchange market.
Exchange taxNo.
Exchange subsidyLCs opened prior to March 21, 2002, when the exchange rate was unified, are eligible for a subsidy covering the difference between the market exchange rate and the preunification official rate.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Use of foreign exchange among residentsThe use of foreign exchange for domestic transactions among residents is not permitted except for internationally linked transactions with prior approval of the Central Bank of Iran (CBI).
Payments arrangements
Bilateral payments arrangementsAll bilateral payments arrangements have been terminated, and the outstanding credit balances are in the process of being settled.
Clearing agreementsThe Islamic Republic of Iran is a member of the ACU. Bimonthly settlements of current transactions with the member countries of the ACU take place in convertible currencies.
Administration of controlA negative list of imports and exports is regulated and issued periodically by the Ministry of Commerce (MOC). Foreign exchange may be purchased for the payment of authorized goods and services.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)All banking, finance, and credit institutions have been instructed to freeze suspected accounts, based on an official list. These measures were taken in accordance with UN Security Council Resolution Nos. 1267, 1333, and 1373.
In accordance with UN sanctionsYes.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeAuthority to trade in gold for monetary purposes is reserved for the Bank of Markazi Jamhouri Islami Iran (BMJII). The exportation of Iranian gold coins for numismatic purposes requires prior BMJII approval.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers are allowed to export up to Rls 500,000 a person.
Foreign currencyTravelers are allowed to export up to $5,000 or the equivalent a trip.
On imports
Domestic currencyThe import of up to Rls 500,000 a person is permitted.
Foreign currencyNo limit applies to the amount of foreign exchange that foreign travelers may bring into the country, but a customs declaration is required for amounts exceeding the equivalent of $5,000.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyIranian nationals may open foreign currency-denominated (FCD) accounts both domestically and abroad.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedForeign exchange originating abroad and deposited in these accounts may be transferred abroad without limitations.
Approval requiredYes.
Domestic currency accountsYes.
Convertible into foreign currencyNonresidents may convert funds in rial accounts into foreign exchange to repatriate their income from contracts and permitted activities.
Approval requiredYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsAuthorized financial institutions may determine at their discretion the amount of advance payments for opening LCs.
Documentation requirements for release of foreign exchange for imports
Preshipment inspectionThis applies only for commodities subject to minimum standards.
Letters of creditImports through LCs and bills of exchange are permitted.
Import licenses used as exchange licensesYes.
OtherYes.
Import licenses and other nontariff measuresAll importers must obtain import licenses from the relevant ministries (mainly the MOC). Clearance through customs is authorized upon presentation of shipping documents endorsed by an authorized bank and a permit issued by the MOC. Certain goods, such as pharmaceuticals, must be accompanied by a special permit issued by the Ministry of Health, Treatment, and Medical Education. Telecommunication devices require a permit issued by the Ministry of the Post, Telegraph, and Telephone.
Negative listSome goods on the negative list may be imported under certain conditions with special permits. Imports from Israel are prohibited.
Import taxes and/or tariffsImports are subject to a minimum import tariff of 4%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirements
Letters of creditThe export of goods and services through LCs and/or trustee transactions and bills of exchange is permitted.
Export licenses
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersInvisible payments may be made in excess of limits established by the BMJII from externally financed FCD accounts.
Trade-related paymentsFreight charges may be transferred through LCs, bills of exchange, money orders (up to the equivalent of $10,000) or cash fund credits. Only Iranian insurance companies may issue insurance policies for the import of goods. Approval is granted for payments of unloading and storage costs and administrative charges on a case-by-case basis. The payment of commissions is not controlled.
Payments for travel
Quantitative limitsThe limit is $2,000 or the equivalent a person a trip.
Indicative limits/bona fide testAmounts in excess of the limit may be approved by the CBI.
Personal paymentsApplications for payment of registration fees for participation in research projects must be submitted to the relevant ministry for approval.
Quantitative limitsAllowances are provided on a monthly basis to students on scholarships abroad, approved by the Ministry of Higher Education. All other students abroad may purchase needed amounts of foreign exchange for tuition and boarding upon submission of justification. Individuals who seek medical treatment abroad may obtain a foreign exchange allowance of up to the equivalent of $30,000 on presentation of the diagnosis by an Iranian physician; allowances exceeding this limit may be provided with justification.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Quantitative limitsForeign workers are allowed to transfer all of their salaries without limitation upon confirmation by their employers.
Indicative limits/bona fide testYes.
Credit card use abroad
Quantitative limitsA limit of the equivalent of $10,000 applies.
Other payments
Prior approvalPayment of consulting or legal fees is permitted with the approval of the Bureau of Legal Services.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsSubject to prior approval, nonresidents may invest in instruments traded on the Tehran Stock Exchange.
Sale or issue locally by nonresidentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
On money market instrumentsThe regulations governing bonds or other debt securities apply.
On collective investment securitiesThe regulations governing bonds or other debt securities apply.
Controls on derivatives and other instrumentsn.a.
Controls on credit operationsControls apply to all credit operations and all transactions in securities, guarantees, and financial backup facilities.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentIf the investment took place in accordance with the Law on Attraction and Protection of Foreign Capital Investment, controls are administered by the Organization for Investment and Economic and Technical Assistance of the Ministry of Economic Affairs and Finance.
Controls on liquidation of direct investmentThe repatriation of capital is guaranteed, with the approval of the Organization for Investment and Economic and Technical Assistance of the Ministry of Economic Affairs and Finance and the BMJII.
Controls on real estate transactions
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital transactions
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
Settlement of debts abroad by immigrantsYes.
Transfer of assetsYes.
Transfer abroad by emigrantsYes.
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadYes.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)Yes.
Lending locally in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsYes.
Liquid asset requirementsYes.
Interest rate controlsYes.
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsYes.
Liquid asset requirementsYes.
Interest rate controlsYes.
Credit controlsYes.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limits
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 2003
No significant changes occurred in the exchange and trade system.

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