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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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The decision to devalue the currency is on the table of experts

rocky
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  • Post n°1

The decision to devalue the currency is on the table of experts Empty The decision to devalue the currency is on the table of experts

Post by rocky Tue 19 Jan 2021, 8:11 am

The decision to devalue the currency is on the table of experts

Tuesday 19 January 2021 15
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 Baghdad: Hussein Thahab 

 
A specialized economic seminar dealt with the impact of devaluation on the reality of the Iraqi economy, where the decision to devalue the currency was accompanied by repercussions, including partial halt and confusion of economic and commercial dealings, and whether it is an economic reform, as confirmed by the competent authorities, or is it a means or a tool to save the financial situation from the state of confusion in which it lives. . Economic expert Dr. Shaban Saddam al-Amara said during the seminar organized by the Economic and Financial Development Platform and followed by "Al-Sabah":

He pointed out that “devaluation is one of the studied economic policies, and it is one of the spending transfer policies that countries usually resort to when they suffer from a persistent or permanent deficit in the balance of their payments, and the purpose is to reduce the prices of domestic goods in order to increase their exports (increase their ability to compete in the market) On the other hand, imported goods become more expensive, thus reducing imports, and the result is to address the deficit in the balance 

Payments ”.
 
Global Market
He said, “Iraq does not have a chronic or permanent deficit in its balance of payments. Rather, it is a temporary deficit that occurred due to the pandemic and its associated effects. Also, Iraq does not have important commodities to export except for oil, and this commodity is determined by its price in the global market, and there is no relation to the devaluation of the currency. By demand for them and their prices, and in return, Iraq imports most of its needs from the outside world, and here we must note the amount of damage to the Iraqi citizen as a result of this policy, meaning that the Iraqis will pay 22 percent higher amounts than the previous prices for their purchases, and this constitutes a significant decrease in their real incomes. He asked whether economic reform aims to reduce real incomes? The decline in real incomes also means the deterioration of the economic well-being of the members of society.
 
Currency display
On the other hand, he continued, “Some believe that this policy was designed to harmonize the official exchange rate with the parallel or market exchange rate, but this opinion is far from the truth, because the exchange rate despite the change in the currency’s value and its decline against the dollar will continue to decline, unless it interferes. The state is stable, because the foreign currency supply in Iraq is linked to oil exports, the resources of which belong to the state, and therefore the demand by importers cannot be covered, except with the intervention of the state through the central bank, because the exchange rate in Iraq will remain an administered exchange rate, as long as The Iraqi economy depends on oil for its exports as the only commodity.
 
Official price
Stressing that “there is no truth to the opinion that the reduction came to harmonize the official and parallel price, and this measure, and I do not say the policy, increased the confusion of the economic situation. Speculators increased their interest from them ». 
 
Coin value
Head of Economic Studies, Dr. Falah Thuwaini believes that "the task of issuing cash since the time of Ricardo, who demanded that the cover of the issued currency be 100 percent of gold at the time. His justification for this was to maintain the general level of prices, the value of the currency and its purchasing power."
And that «the value of the currency is linked to the capacity and flexibility of the productive apparatus, and even when countries face external pressures with a decrease, not to reduce the exchange rate of their currency, they will be affected temporarily and quickly return to normal or close to it, as is the case with Turkey. As for countries that reduce the exchange rate of their currency, The same is the case with Egypt and Iraq. Egypt has succeeded to some extent, and Iraq will not succeed if the state of its economy remains based on oil rents and leaves the basic manufacturing industries prey to the organized dumping internally and externally.
 
Productive projects
Economic expert Dr. Khaled Al-Shammari stressed that «the problem now is in the enormity of the budget and its current spending, which constitutes the greatest burden on growth and development, and if the government does not take into consideration the devaluation of the currency, it is possible to resort to the cash issuance at the rate of reduction, which is 21.8 percent of the current cash issue, which is up to sixty-five trillion dinars, meaning Up to fifteen trillion dinars, all of them invest in productive projects that are not for independent companies and institutions, which formed a burden on the budget and not a supplement to income, and with the participation of the private sector, local and foreign product, and the establishment of joint-stock companies for graduates with their specializations and attention to human development, all of which will contribute to raising the (Gross Domestic Product) GDP by no less than a percentage Reducing the currency within one year, because there are idle production capacities and good local consumer demand, and it will also employ employment and reduce unemployment, without accumulating rates of increase thereof and reduce pressure on the government to appoint to increase unemployment
 Disguised ”. 
 
The peculiarity of the economy
Dean of the College of Administration and Economics, Samir Fakhry, said in “my modest estimate there is no difference between monetary financing and non-monetary financing of the deficit due to the peculiarity of the Iraqi rentier economy. The private sector, if any, buys it, but whoever buys it in the Central Bank, here a monetization process took place and it does not differ, in the end the matter is from the case of direct cash issuance and in isolation from the growth of GDP. 
 
Disability coverage
She is asking how to explain the deficit in the general budget for the past year? In the trillions of cash issuance and independently of GDP growth, how can this be explained? Is it not by issuing through monetary and non-monetary financing through financing the issuance of debt securities, which the Central Bank returned to deduct through the purchase of debt, here a process took place through cash issuance. Academic d. Youssef Al-Asadi said: “The Iraqi economy is not subject to the logic of economic theory, especially the ideas of the monetary school, which emphasized the growth of gross domestic product, due to the increase in money supply, and in the long run to the rise in the general level of prices, but the rate of prices will rise, because more food commodities and needs Basic citizen 
Imported ”.
 
Real entry
Dr. Shaaban, the emirate, said: “As for the government's measures, all of them lead to deflation and stagnation in devaluing the currency. I explained how it leads to a decrease in real incomes, and then a decrease in the overall demand, that is, a contractionary policy. The state, in all its policy orientations, is contractionary. Therefore, the state, through its budget, must allocate available materials towards the investment budget and for real productive projects.
 
Financial dominance
Academic d. Jaafar Baqer Alloush stated that «the recent financial decisions have had negative effects on the Iraqi economy, as they will affect the monetary side and bear burdens, whose tools may not be able to address them, as in the past, monetary policy was chasing after financial dominance, and it had the tools of control and scientific trust, I Tighter at the hands of the Iraqi Central Bank in its previous policies, except for some reservation on the currency window, and ten years ago I mentioned in a seminar on monetary policy that we will witness one day a storm that is the first affected by the central bank and monetary policy ».
 
Collect the currency
"Here I would like to discuss facts in exchange for a proposal ... with everyone, the reality is with the decline in central bank sales and the decrease in the sterilization process for foreign trade, the central bank also loses the ability to collect local currency, and the currency of the public will be the actor in directing consumption and trade exchange," he said. Generates pressure on public finances through the weak ability of the Central Bank of Iraq to exchange the Iraqi dinar for dollars to the Ministry of Finance.
 
Import financing
He pointed out that «the monetary mass of the public is important and not to be underestimated in terms of creating unfamiliar balances for the financial decision-maker, and therefore the central bank will be forced to issue cash this time to sterilize the requirements of public spending which is expanding par excellence, and here we will be in front of a dangerous slope, as both finances are lost. Public as well as cash represented by the Central Bank is the ability to control conditions or control trends of exchanges, and here I suggest that the central bank sterilize in a different manner, enter a partner for the productive sectors, through an internal investment portfolio and participate in financing productive projects in coordination with the ministries of industry, agriculture and industrial sector. Production only, for example, to finance and cover their imports of raw materials and their participation with its financing capabilities, instead of financing imports of inferior goods, means transferring sterilization from foreign trade to production sectors, whether public or private.
 
Unemployment rates
Turn d. Abbas Fadel Al-Tamimi said: “Inflation, which is planned according to clear development and economic plans, is a natural case. Since 2003, the easiest of these results has been the already high unemployment and poverty rates, and the other repercussions they have on all Levels ».
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