The Iraqi budget is confused between the dollar and the dinar

by **Rocky** Sat 27 Mar 2021, 8:46 am

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The Iraqi budget is confused between the dollar and the dinar

by Rocky Sat 27 Mar 2021, 8:46 am

The Iraqi budget is confused between the dollar and the dinar

The Central Bank defends the decision to raise the exchange rate and the Shiite blocs threaten the government and Economists: Increase reserves first

[You must be registered and logged in to see this link.]an Iraqi reporter

Saturday 27 March 2021 12:29

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Shiite blocs are pressing the government to return the exchange rate of the dinar to its previous state (AFP)

[rtl]The exchange rate of the Iraqi dinar against the US dollar has shifted from an economic file returning to the Central Bank under its law that provides for the independence of its work and its right to determine the value of the currency to a file obstructing the vote on the country's general budget, as well as the electoral propaganda, especially among the political blocs that failed to achieve any Completed during the current session of Parliament.[/rtl]

[rtl]The "central" defends[/rtl]

[rtl]Central Bank Governor, Mustafa Mukhaif, defended the policy of raising the dollar’s exchange rate against the dinar, saying that this “contributed to enhancing financial sustainability, as a result of the high volume of foreign reserves and the strengthening of public finances,” according to a bank statement.[/rtl]

[rtl]In a frightening opinion, the decision "increases the reliability of investors, decreases production costs, increases the competitiveness of domestic goods, and balances the balance of payments through a decrease in the volume of foreign imports," noting that the biggest challenge is "to reinvest the revenues generated from the process of lowering the exchange rate." Which must contribute to building a production base outside the oil sector, to act as a financial lever for the Iraqi economy and rid it of the problem of unilateral financial resource.[/rtl]

[rtl]According to the "Central", the exchange rate passes through stages. The first is buying the dollar from the Ministry of Finance for 1450 dinars to one dollar, and the "Central" selling to banks for 1460, and the public at 1470, however, some Iraqi Shiite political blocs, such as virtue and the state of law, demand the return of the exchange rate to 1300 dinars to one dollar is a condition for voting on the budget in the House of Representatives.[/rtl]

[rtl]Shiite pressure[/rtl]

[rtl]The Shiite blocs, especially those loyal to Iran, are pressing the government to restore the exchange rate of the dinar to its previous level, before it was lowered at the end of last year, taking advantage of the rise in food prices, to obstruct the approval of the budget and threaten the central and the government, as happened Thursday when armed men spread They called themselves the "quarter of God", whose first goal was to comply with the demand of the Shiite forces.[/rtl]

[rtl]The National Approach bloc, representing the Shiite Al-Fadhila Party, demanded that the exchange rate be restored to what it was, considering that there were "significant" economic effects resulting from its change, and pointing out that "there are no justifications" to keep the price in its current position after the increase in oil prices.[/rtl]

[rtl]The head of the bloc, Ammar Tohme, said in a statement that the estimates of the difference obtained from raising the exchange rate for a whole year as revenues "do not exceed eight trillion dinars, up to (5.5 billion dollars), at the highest rate."[/rtl]

[rtl]He explained, "The additional revenues obtained from the increase in the selling price of oil during the first two months of 2021 amount to four trillion dinars (2.7 billion dollars), which is equal to half of what is collected in a full year of raising the dollar exchange rate," stressing that the resource alone "completely ends the justification." The first they brought up to raise the price. "[/rtl]

[rtl]Meanwhile, the Shiite Fatah bloc threatened not to vote on the budget, if the exchange rate did not change to where it was. Its deputies, led by Hadi al-Amiri, launched a scathing attack on the government, threatening it with "dismissal if it did not back down from its position of refusing to reduce the price."[/rtl]

[rtl]External agendas[/rtl]

[rtl]For his part, a member of the Finance Committee, Ahmed Hama Rashid, says that the matter is within the jurisdiction of the Central Bank, according to its law in its paragraph 56, indicating, "The change is taking place through a consultation between the Central Bank, Finance and the World Bank, and he mentioned this in the (white paper) drawn up by the government," excluding "returning The price returns to its previous position again, "indicating that the political blocs calling for the adjustment" may "have external agendas behind them.[/rtl]

[rtl]read more
[/rtl]

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[rtl]The white paper is the reform paper that the Finance Ministry proposed several months ago, and it received internal and international political support, for its implementation to save the country from a possible economic collapse, in light of the accumulated debts and the decline in the price of oil at the time.[/rtl]

[rtl]Rashid added, "Although the change in the exchange rate has negative repercussions on (the citizen), as it weighs heavily on him, especially those with limited incomes, it will have a positive effect on the (government), and in the foreseeable future the effect will be positive if the decision is properly invested."[/rtl]

[rtl]Increase the reserve first[/rtl]

[rtl]From the viewpoint of the economic specialist, Safwan Qusay, it is "too early" to restore the exchange rate to what it was, except after "increasing the size of the central reserves," explaining, "We need to recover approximately $ 12 billion to proceed with supporting the value of the dinar."[/rtl]

[rtl]He added, "Determining the price is the jurisdiction of the Central Bank, and the decision is due to the small size of the bank’s reserves as a result of government loans, which forced it to do so to compensate for the cash," noting that the reserves "began to grow" after the price increase and the rise in oil prices.[/rtl]

[rtl]He continued, "There are benefits that Iraq will reap after increasing the exchange rate through the growth of some productive sectors to compensate for the importer," noting, "There are productive projects that have begun to think of moving to the interior, to be close to the consumer, and therefore we need time to show the positive results."[/rtl]

[rtl]Qusay called on the government to sell consumer goods at subsidized prices through marketing outlets in order not to harm all segments and subject the food items to price control to overcome this stage. And the "central" demanded that he implement the initiatives he had launched to "absorb unemployment and create small projects, as well as provide the ration card items, to reduce the negative effects."[/rtl]

[rtl]The economic specialist addressed Parliament, saying, "Listen to the central opinion and the reasons that led him to choose the current exchange rate, and if you are not convinced, then other methods can be taken, such as withholding confidence from the bank governor or any other measure."[/rtl]

[rtl]Reformulate the budget[/rtl]

[rtl]While the president of the Future Foundation for Economic Studies, Manar Al-Obeidi, believes that changing the exchange rate "will lead to reformulating the budget again," because it is based on the new price, and this will lead to a contraction in the Iraqi market.[/rtl]

[rtl]"Reducing the price will cause the consumer to lose confidence in buying, and it will lead to a kind of anxiety and market instability," Al-Obaidi said, pointing to those demanding that based on the increase in international oil prices, and what should be noted are "fluctuating prices" as a result of global events.[/rtl]

[rtl]The head of the Future Foundation believes that if the government wants to evaluate its financial policy and reduce the exchange rate, it will “work to reduce it periodically slightly,” until it reaches the target number, and not resort to increasing the price from 1180 to 1450 dinars per dollar, as happened a few months ago.[/rtl]

[rtl]Al-Obaidi concludes, "One of the benefits of increasing the price is reducing expenses. The government used to spend six trillion dinars per month on expenditures, which previously represented $ 5.5 billion, and today it is equivalent to nearly $ 4 billion, and this number means saving 25 percent of the Iraqi budget."[/rtl]

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Established in 2006 as a Community of Reality

Established in 2006 as a Community of Reality

The Iraqi budget is confused between the dollar and the dinar

The Iraqi budget is confused between the dollar and the dinar

The Central Bank defends the decision to raise the exchange rate and the Shiite blocs threaten the government and Economists: Increase reserves first

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