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News & Views Iran blames smuggling for currency freefall TEHRAN, Nov 12 (AFP) - An Iranian finance ministry official on Thursday blamed illegal imports of goods for the dramatic fall in the value of the national currency, the rial. Deputy Finance Minister Morteza Qarah-Baqian said up to 1.6 billion dollars of goods were being smuggled into the country each year. "This helps create a currency black market and contributes to the instability in the exchange market," he said, quoted by newspapers. He called on the government to eliminate the underground economy, which he estimated represented between 15 percent to 30 percent of the total economy. "The currency black market must be eliminated from the national economy to prevent any instability in exchange rates," Qarah-Baqian said. The rial has fallen sharply against major foreign currencies in the past few weeks, with the unofficial exchange rate sinking from 6,200 rials to the dollar in mid-October to a little under 7,000 on Thursday. Gold prices have simultaneously shot up in Tehran as Iranians rushed to replace cash with coins and jewelry. Import restrictions imposed since 1995 have paved the way for an extensive black market, catering for demands for a variety of luxury goods ranging from electronic equipment to foreign foods, clothes and perfume. Importers purchase these by procuring hard currency on the black market, whose rates are more than double the official rate of 3,000 rials to the dollar. The government is facing an acute shortage of hard currency because of a plunge in the price of crude oil, which is the source of 80 percent of its hard currency earnings. Iran is currently facing revenue shortfalls of around 6.3 billion dollars with the government hard pressed to pay its workers and meet other expenses such as subsidies on a number of essential consumer goods. MP Soheila Jelodarzadeh said this week that many workers in state-run factories had not been paid for months. But Qarah-Baqian denied the economy was in crisis. " A crisis-ridden economy has certain characteristics, many of which do not exist in Iran," he said. Links * Iran News
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