Inflation in the Iraqi economy and how to reduce its repercussions

Inflation in the Iraqi economy and how to reduce its repercussions

13/02/2013 (23:00 pm)

 d. Accustomed Naji al-Hamdani

Of the economic and social consequences of inflation, loss of confidence in the national currency. Sharp Valtsaad in prices weaken the purchasing power of the Iraqi dinar and investors and consumers heading toward security havens Instead, they resort to convert their savings into gold or National Real Estate or replaced in foreign currencies, leading to the emergence of the phenomenon of dollarization in the economy. The high rates of inflation to the deterioration of the purchasing power of consumers and increase cash incomes for speculators and realtors leading to the redistribution of income in favor of categories parasitic and exploitative and leads to deepening inequality and social community due to variation sharp in the distribution of wages and wealth. And thus contribute to inflation in the increasing richness of the rich and the poor even poorer.

It is the consequences of inflation worsening imbalance in the balance of payments as a result of increasing the volume of foreign imports and declining commodity exports. Leading to increased economic dependency abroad.

Inflation also leads to increase the budget deficit and public to resort to external borrowing to cover the deficit. And inflation creates an unwelcoming environment for domestic and foreign investment. Thus shrinking job opportunities and worsen unemployment.

Proposed treatment

To limit the repercussions of inflation and its impact on the economy and living life requires took a package of remedial actions to eliminate tumors Price and secretions, including:

1. - planned work in order to bridge the gap between supply and demand commodity cash Bjanabih and to balance that requires achieving an economic growth rate over the annual rate of increase for inflation. Inflationary recession experienced by the Iraqi economy leads to the continued rise in prices because of the employment of available economic resources in the production process.

2. - support the agricultural sector and given priority in the financial allocation to be a major base in the provision of food and reduce dependence on foreign imports and thus lower prices and foreign currency leakage.

3. - State continue to work ration card system and increase vocabulary commodity quality and quantity because it contributes to securing the basic needs of the citizens and protects the poor from the consequences of inflation. The abolition of ration card will unleash sharp upward prices.

4. - In the case of inflation resulting from the increase in the rise in prices is one of inflation in the Iraqi economy. For the CBI to execute fiscal and monetary policies to influence the volume of cash in circulation. The State should take some necessary actions as a reduction government spending Albzkhi and increase taxes on luxury goods and combat the smuggling of hard currency and maintain the raw materials and raw materials from theft and smuggling.

5. - and the Ministry of Finance can contribute to reducing the money supply offered through its sale of the size of the public debt to the public directly or through their financial institutions leading to the withdrawal of surplus cash in the market and reduces the amount of supply in circulation and thus contribute to the reduction of the high rate of inflation.

6. - can apply the principle of compulsory savings which can deduct part of the employees' salaries for a specific period and employ resources withheld in productive projects with financial returns and refund withheld to their owners with the relative benefits in the form of monthly or quarterly payments to reduce cash in circulation.

7. - the need to raise the ceiling of government spending on productive projects that lead to GDP growth, and in turn reduce spending on non-essential service projects that do not directly affect the lives of citizens.

8. - issuance of antitrust law, both in import or export and fight the monopoly of the market by some mafias and traders crises and encourage freedom of action to grant loans productivity and strengthen small businesses in order to increase domestic production.

9. - State could raise the legal reserve ratio in the government and private banks, leading to reduced liquidity at the individuals and banks and other financial institutions. Monetary policy on addressing the issue of inflation and lower inflation levels, especially arising from aggregate demand.

10. - in the case of continuing escalation of inflation the central bank's demands to lift interest rates on deposits of all kinds in order to encourage individuals, companies and institutions on the savings to deposit their money in banks, and so absorbed high levels of excess liquidity from circulation and keep the central bank.

11. - central bank can do offering securities for sale to commercial banks in order to pull the cash in the coffers of the banks to limit their ability to get credit.


The conclusion prove it

1 - The current inflation in Iraq and rising prices of some commodity groups is a logical consequence of the deterioration and disruption of productive forces are unable to provide the commodity quantities sufficient to meet the demands of the Iraqi market.

2 - Some aspects of emerging inflation in Iraq is imported inflation due to the high total cost of commodity imports from international markets experiencing inflation and economic stagnation, unemployment and the prohibitively high prices and debt.

3 - The fact treatment of the phenomenon of inflation in the Iraqi economy is to re-spin the wheel of economic development and operation of material production sectors to finance local markets its products and needs compensation for commodity import from abroad. Vchgal available production capacities and deactivated will provide a golden opportunity to run the armies of the workforce unemployed and active movement of the local markets. Without it can not deal with inflation and to get rid of the economic and social consequences.

فاندماج Iraqi economy the international capitalist economy make it vulnerable to infection with all diseases and infection of the capitalist system of inflation and stagnation and recession and the high cost of obscene and foreign debt and a rise in prices of raw materials and food and other goods from other consequences inherent in the international capitalist system. Therefore we do not find a real interest to our national economy from the open-door policy is planned on the outside and enter into agreements unequal achieve the interests of the stronger party which foreign countries at the expense of the national interests of Iraq.

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