British report: Iraq is facing a scarcity of its currency that will force it to issue new editions

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[size=52]British report: Iraq is facing a scarcity of its currency that will force it to issue new editions[/size]

[size=45]Translated by: Hamed Ahmed[/size]
[size=45]The British Middle East Eye website quoted Iraqi officials as saying that Iraq is facing a gap in public finances that is getting deeper day by day, due to a crackdown on corruption and dollar smuggling that the US Federal Reserve has been implementing since the theft of the century.[/size]
[size=45]A report by the website, translated by (Al-Mada), stated that “the crisis, which is expected to get worse during the next few weeks, is the outcome of a sharp decline that occurred in the amount of dollars that are sold daily at the Central Bank auction.” The report added, "The Iraqi government relies on the auction to convert dollars, which it earns from oil sales revenues, into dinars."[/size]
[size=45]And he pointed out, “The daily sale rate of the dollar currency in the auction held by the Central Bank for private banks and companies was last year around 200 million dollars per day.”[/size]
[size=45]The report pointed out that “this figure decreased sharply during the last two months of last year and reached by the end of December only 56 million dollars.”[/size]
[size=45]He noted, "The government is now facing a scarcity in the liquidity of the dinar currency, which has left it struggling to pay public sector salary dues and meet other monthly obligations." A senior official in the Central Bank of Iraq, who did not give his name, said, “The problem we are facing now in Iraq is the scarcity of the Iraqi dinar, not the dollar.”[/size]
[size=45]And the report indicated that “officials in Baghdad said that neighboring countries, which depend a lot on the official hard currency exchange market in Iraq to obtain dollars, are also facing a liquidity crisis, with Iran, Turkey and Syria affected by this matter.”[/size]
[size=45]He explained, "The crisis has cast a shadow over the broader side of the economy, with the rise in the dollar exchange rate in informal markets since late November, from 148 dinars to 163 dinars." This affected the rise in the prices of foodstuffs consumed by the citizen.”[/size]
[size=45]The report emphasized, “Iraqi officials denied the existence of any direct relationship between the current crisis and the so-called theft of the century, but they acknowledged that the US Federal Reserve imposed two months ago more stringent auditing procedures on private banks that buy dollars through auction, just weeks after The Ministry of Finance revealed the theft on October 10.”[/size]
[size=45]And he stressed, “Prime Minister Muhammad Shia al-Sudani had mentioned at the time that most of the stolen money was believed to have been smuggled out of the country.”[/size]
[size=45]And he goes on, “The head of the Integrity Commission, Haider Hanoun, had indicated in November that Iraq had enlisted the help of friendly governments, international organizations and the United Nations to recover the stolen money.”[/size]
[size=45]One of Al-Sudani's advisors said, without revealing his name, that "the Federal Reserve has begun auditing foreign financial transfers as of November in an attempt to track stolen funds."[/size]
[size=45]The advisor added, "This caused delays in launching transfers and led to a decrease in the quantities of dollars sold at auction."[/size]
[size=45]The advisor pointed out that “the Federal Reserve also resorted to scrutinizing the source of funds deposited with private banks participating in the auction, which motivated many of them to withdraw and increase the unofficial exchange rate for the dollar.”[/size]
[size=45]And the report continues, “The Iraqi government needs at least eight trillion dinars per month (approximately $5.5 billion) to pay dues for public sector employees’ salaries, retirees, social welfare benefits, and other expenses.”[/size]
[size=45]And he added, “This amount is largely secured through the currency auction,” noting that “most of this money comes from the proceeds from the sale of oil, which has been paid since 2003 in dollars and kept in an account deposited with the Federal Reserve Bank in New York.”[/size]
[size=45]And the report went, that “the US Treasury, for its part, transfers 10 billion dollars annually to the Central Bank of Iraq from its oil sales, in order to enhance its hard currency budget.”[/size]
[size=45]Officials say that "this amount is transferred to Iraq in cash in four installments," adding that "all dollars are new and their sequence numbers are registered with the US Federal Bank for easy tracking of the place of their disbursement."[/size]
[size=45]The officials explained, “The Central Bank of Iraq then sells these dollars through an auction selling hard currency and other channels in order to obtain an Iraqi dinar and deposit it with the Ministry of Finance.”[/size]
[size=45]The report talked about, “The decrease in dollar sales caused a scarcity in the liquidity of the dinar at the Central Bank of Iraq.”[/size]
[size=45]He pointed out, "The auction, even at the peak of its sales, often does not raise the sufficient rate that meets the government's daily needs, amounting to $275 million."[/size]
[size=45]The report stressed that “this shortage is often covered by currency shares deposited with the central bank, through internal loans between the bank and the government, by printing more currency, or through other financial activities.” And he stressed, “The data of the dollar currency auction over the past four years shows that the amount of dollars sold has remained stable at its rate, which is approximately 200 million dollars per day.”[/size]
[size=45]He explained, "The auction remained at this rate even during the years 2019 and 2020, which witnessed a drop in oil prices, an outbreak of the Corona epidemic, and an economic recession."[/size]
[size=45]And the report indicated that “the amount of dollars sold in the daily auction fell to the lowest rate, during the first three months of 2021.”[/size]
[size=45]And it is reported that “the rate reached, in some days, only 3 million dollars sold,” adding that “the daily auction sale rate jumped in the second week of April to nearly 190 million dollars until the end of the year.” The report spoke of “the currency auctions not falling below an average of $200 million per day in the year 2022, during the first ten months of the year.”[/size]
[size=45]Iraqi officials expected "the situation to further deteriorate over the next few weeks, after the Central Bank launched a new electronic platform for the currency auction at the beginning of this month." And the report went, “This platform connects all banks with the central bank, which requires them to disclose information about their customers who request bank transfers, their benefits and bank accounts, as well as other details.”[/size]
[size=45]And one of Al-Sudani’s advisors said, “The new platform has complicated matters more, because the actual owners of money do not want to reveal their identities or the source of their money, and for this we do not expect that currency sales will improve anytime soon.”[/size]
[size=45]The advisor added, "The pressures are increasing and the situation will get worse if the government does not take decisive measures to contain the crisis. The problem is that the available options are very limited and it takes time."[/size]
[size=45]For his part, a senior official at the Central Bank said, "The amount now deposited in the bank is approximately 83 trillion dinars (56 billion dollars) and there is a need to take quick solutions." The official finds, "This does not bode well, and we cannot relax," stressing that "the currency auction outlet for the dollar is our main means of meeting the state's needs of the Iraqi dinar." The official noted, "The currency auctions are low, and if they remain so low, the central bank must issue a new edition of the local currency."[/size]
[size=45]And the report went on, that "officials said that the issuance of a new edition of the currency will lead to a devaluation of the dinar and increase the inflation rate more and increase the burdens more on the government and on the citizen."[/size]
[size=45]About: (Middle East Eye)[/size]
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