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Is Iraq going to issue new money to face the dinar crisis?
[You must be registered and logged in to see this link.]an Iraqi reporter
Tuesday, January 24, 2023 0:19
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The Iraqi economy depends almost entirely on Iraqi oil sales in US dollars (AFP)
The restrictions imposed by the US Federal [You must be registered and logged in to see this link.] in the dollar file, and the introduction of the Iraqi financial transfer within the "Swift" system, caused a series of crises that led to a contraction of the Iraqi market and a decline in the purchasing power of most Iraqis during the past weeks.
Despite these negative effects, the crisis that [You must be registered and logged in to see this link.] may face and threatens to anger the Iraqi street is providing the salaries of [You must be registered and logged in to see this link.] , and social welfare subscribers, who number about 10 million people, for whom about six trillion Iraqi dinars are allocated.
Oil dollar
The Iraqi economy depends almost entirely on Iraqi oil sales in US dollars, which are transferred through the Iraqi Ministry of Finance to the Central Bank, which sells them to banks to obtain Iraqi dinars to finance the needs of the Iraqi state in terms of operational and investment expenses in all areas of life.
And in the absence of any other resource other than oil to bring in the dollar in conjunction with the absence of real economic activity or other revenues for the Iraqi government from taxes, fees and investments, obtaining the Iraqi dinar will become very difficult, and Baghdad may be forced to use alternatives, which will cause an increase in inflation rates in the country. .
The dollar crisis prompted the Iraqi Prime Minister, Muhammad Shia'a al-Sudani, to dismiss the governor of the Central Bank, Mustafa Ghaleb, and to return the former governor, Ali al-Alaq, to his post, and to dismiss Salem Chalabi, director of the Iraqi Trade Bank, which is the most important government bank used in Iraqi financial transfers abroad.
Employing millions
Since the fall of Saddam Hussein's regime in 2003, successive Iraqi governments, under pressure from the parties participating in the political process, opened the door wide for appointments in Iraqi state departments as an important part of their campaign for elections, which raised the number of workers in the public sector from 850,000 in 2003 to four. Millions of employees, workers, wage earners and contractors earn about 43 trillion Iraqi dinars (about 29 billion dollars) annually, in addition to millions of retirees and those covered by social care, bringing the number to about 10 million people, according to the Iraqi Ministry of Planning.
Dinar printing
It is likely that the financial expert, Muhammad Dagher, will resort to the Central Bank of Iraq to issue new money from the dinar to meet its needs of paying the salaries of employees, if its sales continue in this way, while noting that "the central bank has enough local currency now."
Dagher said, "The issue of salaries is a red line that cannot be touched, and if we do not get Iraqi dinars through the dollar sale window, then the Central Bank of Iraq must issue new money," indicating that the cost of employee salaries amounts to six trillion dinars that must be covered, despite Risks of increasing the money supply represented by inflation.
The dollar is rejected
Dagher ruled out that salaries would be distributed in US dollars instead of dinars if an Iraqi dinar was not available at the central bank, due to national and other economic considerations represented in the possibility of price increases.
He stressed that "the central bank has a reserve of local currency and can maneuver it and meet the needs."
[rtl]read more[/rtl]
alternative procedures
In the context, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed that the Central Bank of Iraq has temporary alternative procedures for absorbing liquidity, which are under study and awaiting implementation, but he did not disclose these procedures.
And the specialist in economic affairs, Safwan Qusay, said that Iraq suffers from a deficit of four trillion dinars per month as a result of the decline in dollar sales, while he referred to a set of solutions to bridge the deficit, including the issuance of bonds in Iraqi dinars.
economic steps
Qusai said, "The currency selling window decreased at a rate of 130 million dollars per day, around 200 billion dinars, which will lead to a decrease in the possibility of obtaining the Iraqi dinar to meet the requirements of the operational and investment budget," pointing to "the importance of expanding the outlets for obtaining the dinar, such as selling part of the property." The state in Iraqi dinars to cover the deficit in dinars.
shortage in months
He explained that "the deficit will not appear in the coming months, as there are dinar balances with the central bank, and it is possible for the central bank to issue dinar bonds to obtain dinars to finance the deficit," noting that "the Iraqi Central Bank is trying to move away from issuing new currencies because it will lead to a devaluation." Dinar is more than it is now.
Qusai added, "It is possible to obtain the Iraqi dinar by expanding government services and carrying out tax and customs reconciliation with all those charged with these fees to obtain the collection of the Iraqi dinar, as well as proceeding with this stage by strengthening investment spending."
Federal aid Iraq
Qusai continued, "The US federal wants to improve the economic situation of the Iraqis and create job opportunities. The more we raise the level of investment spending with international companies, the more we will get a dollar, and convert it into Iraqi dinars to spend on these projects," noting that "Iraq has to move in two directions, the first is to enhance the possibility of Obtaining dollars through the Federal Bank and through the investment budget and investment spending with well-known international companies, and secondly, expanding government services and collecting dinars in order to pay the dues of those covered by dinar obligations at the appropriate times.
50 trillion dinars annually
And Qusay indicated that the amount of the monthly deficit amounts to 2.5 billion dollars, that is, about four trillion Iraqi dinars, and therefore we need 50 trillion dinars annually, up to ($ 34 billion), stressing that what is now available to the Iraqi ministries and the Central Bank is less than this number, which will mean that the government You will be in trouble for the next six months.
The central bank can issue monetary currency according to the law to cover the deficit, but it is better not to issue it and preserve the monetary mass, which is 84 trillion Iraqi dinars (57 billion dollars) issued by the central bank, according to Qusai, who emphasized that “covering the deficit by issuing currencies This will contribute to the depreciation of the dinar.
He pointed out that there are more than 70 trillion dinars (47 billion dollars) with the Iraqis, and it is possible to withdraw part of it to fulfill the obligations through selling the state’s lands and properties in Iraqi dinars, and issuing dinar bonds, which contributes to absorbing the surplus dinars.
[You must be registered and logged in to see this link.]
He may face a deficit in providing the salaries of employees and retirees, who number about 10 million people
[You must be registered and logged in to see this link.]an Iraqi reporter
Tuesday, January 24, 2023 0:19
[You must be registered and logged in to see this image.]
The Iraqi economy depends almost entirely on Iraqi oil sales in US dollars (AFP)
The restrictions imposed by the US Federal [You must be registered and logged in to see this link.] in the dollar file, and the introduction of the Iraqi financial transfer within the "Swift" system, caused a series of crises that led to a contraction of the Iraqi market and a decline in the purchasing power of most Iraqis during the past weeks.
Despite these negative effects, the crisis that [You must be registered and logged in to see this link.] may face and threatens to anger the Iraqi street is providing the salaries of [You must be registered and logged in to see this link.] , and social welfare subscribers, who number about 10 million people, for whom about six trillion Iraqi dinars are allocated.
Oil dollar
The Iraqi economy depends almost entirely on Iraqi oil sales in US dollars, which are transferred through the Iraqi Ministry of Finance to the Central Bank, which sells them to banks to obtain Iraqi dinars to finance the needs of the Iraqi state in terms of operational and investment expenses in all areas of life.
And in the absence of any other resource other than oil to bring in the dollar in conjunction with the absence of real economic activity or other revenues for the Iraqi government from taxes, fees and investments, obtaining the Iraqi dinar will become very difficult, and Baghdad may be forced to use alternatives, which will cause an increase in inflation rates in the country. .
The dollar crisis prompted the Iraqi Prime Minister, Muhammad Shia'a al-Sudani, to dismiss the governor of the Central Bank, Mustafa Ghaleb, and to return the former governor, Ali al-Alaq, to his post, and to dismiss Salem Chalabi, director of the Iraqi Trade Bank, which is the most important government bank used in Iraqi financial transfers abroad.
Employing millions
Since the fall of Saddam Hussein's regime in 2003, successive Iraqi governments, under pressure from the parties participating in the political process, opened the door wide for appointments in Iraqi state departments as an important part of their campaign for elections, which raised the number of workers in the public sector from 850,000 in 2003 to four. Millions of employees, workers, wage earners and contractors earn about 43 trillion Iraqi dinars (about 29 billion dollars) annually, in addition to millions of retirees and those covered by social care, bringing the number to about 10 million people, according to the Iraqi Ministry of Planning.
Dinar printing
It is likely that the financial expert, Muhammad Dagher, will resort to the Central Bank of Iraq to issue new money from the dinar to meet its needs of paying the salaries of employees, if its sales continue in this way, while noting that "the central bank has enough local currency now."
Dagher said, "The issue of salaries is a red line that cannot be touched, and if we do not get Iraqi dinars through the dollar sale window, then the Central Bank of Iraq must issue new money," indicating that the cost of employee salaries amounts to six trillion dinars that must be covered, despite Risks of increasing the money supply represented by inflation.
The dollar is rejected
Dagher ruled out that salaries would be distributed in US dollars instead of dinars if an Iraqi dinar was not available at the central bank, due to national and other economic considerations represented in the possibility of price increases.
He stressed that "the central bank has a reserve of local currency and can maneuver it and meet the needs."
[rtl]read more[/rtl]
- [You must be registered and logged in to see this link.]
- [You must be registered and logged in to see this link.]
- [You must be registered and logged in to see this link.]
alternative procedures
In the context, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed that the Central Bank of Iraq has temporary alternative procedures for absorbing liquidity, which are under study and awaiting implementation, but he did not disclose these procedures.
And the specialist in economic affairs, Safwan Qusay, said that Iraq suffers from a deficit of four trillion dinars per month as a result of the decline in dollar sales, while he referred to a set of solutions to bridge the deficit, including the issuance of bonds in Iraqi dinars.
economic steps
Qusai said, "The currency selling window decreased at a rate of 130 million dollars per day, around 200 billion dinars, which will lead to a decrease in the possibility of obtaining the Iraqi dinar to meet the requirements of the operational and investment budget," pointing to "the importance of expanding the outlets for obtaining the dinar, such as selling part of the property." The state in Iraqi dinars to cover the deficit in dinars.
shortage in months
He explained that "the deficit will not appear in the coming months, as there are dinar balances with the central bank, and it is possible for the central bank to issue dinar bonds to obtain dinars to finance the deficit," noting that "the Iraqi Central Bank is trying to move away from issuing new currencies because it will lead to a devaluation." Dinar is more than it is now.
Qusai added, "It is possible to obtain the Iraqi dinar by expanding government services and carrying out tax and customs reconciliation with all those charged with these fees to obtain the collection of the Iraqi dinar, as well as proceeding with this stage by strengthening investment spending."
Federal aid Iraq
Qusai continued, "The US federal wants to improve the economic situation of the Iraqis and create job opportunities. The more we raise the level of investment spending with international companies, the more we will get a dollar, and convert it into Iraqi dinars to spend on these projects," noting that "Iraq has to move in two directions, the first is to enhance the possibility of Obtaining dollars through the Federal Bank and through the investment budget and investment spending with well-known international companies, and secondly, expanding government services and collecting dinars in order to pay the dues of those covered by dinar obligations at the appropriate times.
50 trillion dinars annually
And Qusay indicated that the amount of the monthly deficit amounts to 2.5 billion dollars, that is, about four trillion Iraqi dinars, and therefore we need 50 trillion dinars annually, up to ($ 34 billion), stressing that what is now available to the Iraqi ministries and the Central Bank is less than this number, which will mean that the government You will be in trouble for the next six months.
The central bank can issue monetary currency according to the law to cover the deficit, but it is better not to issue it and preserve the monetary mass, which is 84 trillion Iraqi dinars (57 billion dollars) issued by the central bank, according to Qusai, who emphasized that “covering the deficit by issuing currencies This will contribute to the depreciation of the dinar.
He pointed out that there are more than 70 trillion dinars (47 billion dollars) with the Iraqis, and it is possible to withdraw part of it to fulfill the obligations through selling the state’s lands and properties in Iraqi dinars, and issuing dinar bonds, which contributes to absorbing the surplus dinars.
[You must be registered and logged in to see this link.]
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