What is the reason for the government's insistence on 4200 Tomans currency - Steel News Encyclopia | Steel News Encyclopia

چهارشنبه, ۲۵ فروردین , ۱۴۰۰ 3 رمضان 1442 Wednesday, 14 April , 2021 ساعت ×
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What is the reason for the government’s insistence on 4200 Tomans currency

شناسه : 41241 ۰۹ اسفند ۱۳۹۹ - ۱۴:۴۹
The government currency has achieved the largest economic rents in recent years for some individuals and industries. The parliament has temporarily agreed to the currency but is seeking its gradual removal from the market
What is the reason for the government’s insistence on 4200 Tomans currency

The general budget bill proposed by the government was approved by the parliament, and a noisy part of next year’s budget, which the parliament insists on, is the issue of removing the 4,200 toman currency. In the short term, he has not given any reason for this to the parliament and the media. In this note, we will discuss this issue in more detail. Please be with Artan Press.


*** Expensive in the list of basic goods supplied with government currency

Evaluations of Artan Press site analysis show that out of twenty digits of goods that have received 4200 Tomans in the past years, they have experienced the highest price growth in the inflation reports of the Statistics Organization. Now the question arises that this subsidy is exactly in the pocket Who are they going to? Neither the importer of basic goods is satisfied with the process of currency distribution, nor is the final consumer satisfied with market rates. However, the government insists that the distribution of 4,200 tomans will curb rampant inflation.


*** Continuation of the distribution of 4200 Tomans currency by the government

The news of the existence and stabilization of the exchange rate of 4200 Tomans in next year’s budget has recently been raised by Hemmati in the media and has brought some margins. For many, the question is, why does the government insist on this pricing without principles? Will the costs of this currency for the people not be more than its benefits or are there factors in this pricing that will end in favor of the people? The reason that the government has to stabilize the exchange rate of 4200 Tomans is clear. The government can not stay on the currency of 17,500 tomans and the inflation it creates will probably be the basis for increasing government revenue and will affect the government’s performance in the last months of the year.


*** Wrong mechanism in the distribution of 4200 Tomans currency

In order to justify the effectiveness of the 4,200 Toman currency, it is necessary to refer to the basic goods that enter the country with this currency. Became a billionaire in society. Therefore, the government has stated in its statements that no decision has been made to change the currency of 4,200 drugs and basic goods in the amendment of the 1400 budget bill. In the short term, this means that some industries will continue to benefit from this exchange rate in the new year.


*** Non-profit of the society from the cheapness of 4200 Tomans currency

One of the disadvantages of this currency to the Iranian economy is that the benefits of this cheap currency have not gone to households and have not been included in pricing formulas. In Iran, goods are not sold based on cost, 4200 Tomans is taken and used in production, but not sold at a fair price. Unfortunately, the final consumer pays the full price of the goods at the free market price. Now, if the currency of 17,500 Tomans actually flows, the government and the central bank will actually take action, it will not have inflationary effects. With 25 years of experience in production and trade, I advise us not to rely on government promises.


*** Independence of some domestic goods from dictatorial dollar rates

Raw materials and production of some goods in the country that do not originate from foreign exchange (petrochemical products), are not subject to import duties and until the end of the production chain, exchange rate changes do not have much effect on them. This inflation is transmitted to the consumer with an increase slope of 20 to 30%. Meanwhile, if the customs duty is tripled, it will not have much effect on the price of goods, but what will increase the price is $ 24,000.


*** The fate of basic commodities and agricultural inputs

With the liberalization and increase of the exchange rate, the question arose as to whether the supply of basic goods and agricultural inputs should be provided through the official rate or the free market rate. Some believe that in the absence of a proper distribution structure, apart from the market mechanism, allocating 4,200 Tomans to these goods at the official rate will actually create rents, and this rent will not go to the real consumer and producer.

The second group argues that eliminating the currency of basic commodities, including medicine and agricultural inputs, will cause inflation and pressure on target groups. It seems that in the conditions of fluctuating currency prices and macroeconomic instability, sudden liberalization of the preferential currency price and its transfer to the free market is a risky task and causes a further increase in the price of goods with preferential currency and some inflation. will be.


*** Grammatical pricing, doomed to failure

In no way has grammatical pricing been the definitive answer for the market in any market. No market can be found that has progressed and calmed down by dictatorial pricing. Ordinary pricing of goods creates tension in the market. Grammatical economy is not responsible anywhere in the world and will not work in Iran. $ 4,200 was also a failed example of regulatory pricing in the field of currency. The country’s currency system needs a regular and transparent mechanism for distributing currency among the people and industries, and if the distribution is not uniform, we will see a decline in activity and a boom in some industries.


*** Self-made rent in the distribution of 4200 Tomans

The government does not dispute the weakness of its performance in distributing government currency and admits that the management and control of this currency was not done in a principled and correct manner. The dictatorial rate of USD 4,200 destroyed many of the country’s financial resources and turned it into rent. It was divided among some whose profits did not reach the consumer and the general public and caused some to have access to rents. Now the government’s motivation to continue this process must be examined.

The question that arises is what motivates the government to Insists on distributing 4200 Tomans? The answer must be heard from the government spokesman. He believes that the country is not in a period of economic equilibrium in the current situation, and with the elimination of 4,200 tomans, we will suffer huge currency shocks and the prices of some goods will no longer be controllable.


*** The reason for the government’s insistence on continuing the preferential exchange rate policy

The government has stated the reason for insisting on continuing the distribution of 4200 Tomans currency to prevent any unbridled inflation. The government predicts that if the exchange rate rises suddenly, we will see price growth in all commodity markets by the end of the year. The current situation is higher than the economic strength and resilience of households.


*** Wrong steps in exchange rate suppression policy

One of the main issues that has occurred in recent years is the suppression of the exchange rate. The suppression of the exchange rate for non-economic, purely political reasons led to unpleasant changes in commodities; Because currency is one of the main characteristics of pricing, both at the macro and micro levels, and its successive fluctuations create problems. That is why the government spokesman recently announced that the government insisted on continuing to allocate 4,200 tomans to support the people’s table, but unfortunately many, without knowing the reason, unilaterally attacked the government, even in some major media programs.


*** Temporary approval of the parliament with the government’s proposal

In the first six months of next year, the parliament has agreed with the government’s proposal to continue the global currency distribution policy, but has conveyed its views to the government in this regard. The parliament decided to use the preferred currency in order to interact with the government. However, according to the government, basic goods such as meat, poultry, eggs, dairy and oil should not exceed the approved price in line with the preferred exchange rate.


*** Government self-assessment in the distribution of 4200 Tomans

The government, however, has evaluated its performance in restraining and controlling the distribution of preferred currency and claims that despite all the problems, it has been able to steer the cycle of distribution of government currency in the country and will not solve problems and leaks. The government claims that despite problems caused by the impact of the Corona virus on trade and foreign exchange at the beginning of the year, the central bank and exporters have so far provided $ 32 billion in foreign exchange for the country’s imports.


*** Balance in currency distribution in Nima system

Another issue that the government has mentioned as a positive point in its currency distribution record is the issue of balanced currency distribution in the Nima system. The government claims that the supply of currency through exporters through the Nima system is going well and that an average of more than $ 80 million was traded daily in February. The daily supply of foreign exchange in the Nima system, on average, is usually more than double the daily foreign exchange transactions. Since the beginning of this year, $ 9.2 billion of preferred foreign exchange has been provided for basic goods, agricultural inputs, medicine and medical equipment.



With all these interpretations, our opinion as an analyst is that the government should not insist on distributing 4200 Tomans currency because the corruption bottlenecks of this currency are more than the issues that help solve the macroeconomic problems. It is recommended that the elimination of the preferred currency be resolved gradually at the official rate after the stability of the exchange rate and the improvement of economic conditions. In addition to the issue of rent elimination and the benefit of the target groups of the preferred currency, there should be sufficient supervision to prevent the misuse of the allocated preferred currency and to prevent rent-seeking in the true sense.



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