Finance Minister: The former dollar exchange rate distorted and damaged the economy

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Finance Minister Ali Abdul Amir Allawi

Economy News – BaghdadThe Minister of Finance, Ali Allawi, announced that the dollar exchange rate of 1182 dinars per dollar distorted and damaged the Iraqi economy, indicating that next year’s budget will impose new taxes.

Allawi said in a statement about the 2021 budget seen by “Al-Eqtisad News”, that the 2021 budget adopted an exchange rate of 1450 dinars per dollar, because the previously approved exchange rate of 1182 dinars per dollar is distorted and does not reflect the actual reality, stressing that the previous exchange rate hurt the Iraqi economy As a result, the goods are being paid from neighboring countries, which has a negative impact on the local product.

He pointed out that the appropriate level of the exchange rate is a confusing question, but the Ministry of Finance believes that for multiple reasons, and after studying and analyzing, the exchange rate at the present time is 1450 dinars per dollar, despite our belief that the floating and controlled exchange rate is better, but the best solution at the present time is the price. Above, as it serves the various economic sectors, as the economic competitiveness of Iraq has been seriously affected by the overestimation of the exchange rate, which affected the flow of foreign investments outside the oil sector, stressing that the exchange rate adjustment has a beneficial effect on the deficit and will put Iraq in a position that allows it to re-balance To economize on the background of the most competitive price.

He noted that the government of Mustafa Al-Kazemi, managed the financial crisis with very limited resources without any support from the international community, explaining that the failure to issue the Federal Budget Law for the year 2020 created additional burdens when preparing the budget for next year, and the reason for not knowing the real numbers required in spending, pointing to The rise in salaries and pensions has become a source of concern, as it now accounts for 120% of oil revenues.

Allawi stressed that we have started a process of serious treatment of the deficiencies in the customs and tax administrations, and these reforms will take some impact to show results, but it is expected to maximize these revenues in the year 2021, indicating that the spending was the main issue as the need to rationalize the salary and pension bill, as these rates increased. Year after year, at an alarming rate, it is far from critical levels.

The Minister of Finance pointed out that government support programs and subsidies have hit the economy, as subsidies have reached very high levels, and it has become difficult to change or reduce them, and the most subsidy is given to the electricity sector as the real economic costs of the electricity sector were estimated at 24 trillion dinars, as about 10% of the GDP The total, indicating that the subsidies to the agricultural sector cost the state, last year, 2.5 trillion dinars, as the Ministry of Agriculture purchases wheat, rice and barley at prices much higher than international prices.

He indicated that the direct support for the ration card is still close to 2.5 trillion dinars, while the next year’s budget included maintaining and even increasing support for the poor and vulnerable segments of the country, as the Ministry of Finance is working with the World Bank and the Ministry of Planning to expand the scope of the Community Development Fund to more than one billion dollars.

He pointed out that the 2021 budget allocated an amount of 500 million dinars to increase the capital of state-owned banks, and these funds will be allocated to enhance the capital base and operational efficiency.

Allawi focused on the financial deficit in the budget next year, as he confirmed that it will reach 95 trillion dinars after approving the budget for all arrears and legal obligations to work and pensions, but after adjusting the dollar exchange rate, the deficit will reach 60 trillion dinars.

Allawi pointed to the addition of new sales taxes in addition to the total salary being subject to tax, as we will achieve an additional revenue of 5.2 trillion dinars, indicating that new traffic fees have been imposed on vehicles in violation of traffic registration and it is expected that they will collect revenues of up to one trillion dinars, explaining that the sale of oil Crude to refineries and oil companies at world prices.


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