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The government is reassured.. New fears of a deficit that cuts the salaries of employees and retirees
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2023-02-06 05:29
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Shafaq News/ A new crisis is looming, represented by the inability of the Iraqi government to pay the salaries of employees, retirees, and other social benefits as a result of the lack of financial liquidity, after the new conditions imposed by the US Federal Bank on the Central Bank of Iraq regarding money laundering and stopping some banks from entering the currency auction after being accused currency smuggling.
In November 2022, the US Federal Bank imposed sanctions on 14 Iraqi banks and blacklisted them as a result of smuggling dollars and carrying out money laundering operations, which were stopped by the Central Bank of Iraq after they entered the window of selling foreign currencies.
rentier economy
The Iraqi economy is described as "rentier" as a result of its 95% reliance on oil revenues, as the Ministry of Finance transfers dollars from oil sales to the Central Bank to obtain the Iraqi dinar to pay operating expenses such as salaries and other things that are paid monthly.
As a result of the decrease in the bank’s sales through the auction it conducts daily for banks and transfer companies, obtaining dinars will become difficult in the future, according to the opinion of a number of specialists.
Kurdistan experience and currency printing
The economist and professor of economics at the Iraqi University, Abd al-Rahman al-Mashhadani, said in an interview with Shafaq News Agency, "There are serious fears that the government will not be able to pay the salaries of employees and retirees during the coming period."
And that "the government sells oil in dollars, and the central bank sells dollars through the window and gives dinars to the government, and the latter distributes dinars as salaries."
And he continued, "More than 3 months ago, the bank's sales in the window decreased to levels of less than 100 million dollars per day and sometimes even reached less than 50 million dollars per day, and per month it reaches nearly two billion dollars, while the government needs 5.5 billion dollars to distribute expenses." Operational salaries and other things.
Dinar in the citizen's pocket
Al-Mashhadani added, "The government and the Central Bank do not have other sources that enable them to replace the Iraqi dinar, because the dinar is in the pocket of the Iraqi citizen, and all the bank's means of issuing bonds are ineffective, and the tax system and customs fees are a failure, and even the government is unable to collect electricity consumption fees."
He pointed out that "the central bank could not create a banking culture over the past 50 to 60 years, there is fear and there is a deadly administrative routine when opening an account and when depositing and withdrawing amounts, and even the interest that the bank sets is not rewarding, and therefore the citizen prefers to put the amounts at home instead of depositing it with banks.
"hot money"
He pointed out that "more than 77% of the currency issued outside the banking system with the public, which is hot and not hoarded money, the banking system could not withdraw any part of it, just as the Ministry of Finance does not have the money that it got from selling the dollar to the central bank because the sale It was done monthly, and this money was paid as salaries, wages, and operating and investment expenses.
He stressed that "the government does not have many options, as it either goes to the compulsory savings process on which the experience of the Kurdistan Region was based, or prints a new currency and distributes it as salaries."
Payment in dollars
For his part, the economist, Muhammad al-Hassani, considered, in an interview with Shafaq News agency, that "what some people said to address the rise in dollar prices and avoid the government's failure to pay employees' salaries by paying salaries in dollars is incorrect because this is related to national sovereignty and the economic problems that follow. And this would lead to a decrease in the value of the dinar more than it is now.
He added, "The government is not completely incapable of paying salaries to employees and retirees, as it has cash that it can maneuver with for several months."
And he added, "The government has the ability to borrow and sell bonds, as it was doing previously during the financial crisis that occurred in 2019."
Incorrect rumor
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said, in an interview with Shafaq News Agency, "What some people say about the government's inability to pay the salaries of employees and retirees in the future is incorrect, and it is a rumor and narrow conclusions that harm the citizen."
He stressed that "the state does not wait and is not static without finding solutions to all the problems it faces."
He pointed out that "the state has many tools capable of finding solutions, whether borrowing or encouraging savings by raising interest or debt instruments issued by the government."
Saleh noted that "there are two factors, namely, the high value of the dinar and the high interest rate that would bring cash."
employment of thousands of unemployed
The government has returned to employing thousands of citizens in a number of ministries and departments affiliated to it after a hiatus that lasted for more than a year as a result of the decrease in Iraq’s general budget after the spread of the Corona epidemic, which generated additional pressure on the government and raised the number of employees in the public sector, in addition to millions of retirees and those covered by care. Social.
"The number of employees is within the competence of the Ministry of Finance, but the Ministry of Planning has entered the employees into the job number platform," said Abdul-Zahra al-Hindawi, a spokesman for the Ministry of Planning, in an interview with Shafaq News agency.
And he indicated that "3 million and 300 thousand employees have been introduced to this platform, and the work is still continuing until now."
He continued, "The platform is a project that has been implemented since 2021, and includes the details of every employee working in the Iraqi state, and each employee has his own job number, which is more like a (code), and it contains details from the date of his appointment, salary, and other details of his own."
Official statistics indicate that there are more than four million employees, more than 3 million retirees, and more than two million who receive social protection network salaries. According to economists, 70% of the budget goes to the operational budget as salaries and other operating expenses.
[You must be registered and logged in to see this link.]
[You must be registered and logged in to see this image.]
2023-02-06 05:29
Share
Font
Shafaq News/ A new crisis is looming, represented by the inability of the Iraqi government to pay the salaries of employees, retirees, and other social benefits as a result of the lack of financial liquidity, after the new conditions imposed by the US Federal Bank on the Central Bank of Iraq regarding money laundering and stopping some banks from entering the currency auction after being accused currency smuggling.
In November 2022, the US Federal Bank imposed sanctions on 14 Iraqi banks and blacklisted them as a result of smuggling dollars and carrying out money laundering operations, which were stopped by the Central Bank of Iraq after they entered the window of selling foreign currencies.
rentier economy
The Iraqi economy is described as "rentier" as a result of its 95% reliance on oil revenues, as the Ministry of Finance transfers dollars from oil sales to the Central Bank to obtain the Iraqi dinar to pay operating expenses such as salaries and other things that are paid monthly.
As a result of the decrease in the bank’s sales through the auction it conducts daily for banks and transfer companies, obtaining dinars will become difficult in the future, according to the opinion of a number of specialists.
Kurdistan experience and currency printing
The economist and professor of economics at the Iraqi University, Abd al-Rahman al-Mashhadani, said in an interview with Shafaq News Agency, "There are serious fears that the government will not be able to pay the salaries of employees and retirees during the coming period."
And that "the government sells oil in dollars, and the central bank sells dollars through the window and gives dinars to the government, and the latter distributes dinars as salaries."
And he continued, "More than 3 months ago, the bank's sales in the window decreased to levels of less than 100 million dollars per day and sometimes even reached less than 50 million dollars per day, and per month it reaches nearly two billion dollars, while the government needs 5.5 billion dollars to distribute expenses." Operational salaries and other things.
Dinar in the citizen's pocket
Al-Mashhadani added, "The government and the Central Bank do not have other sources that enable them to replace the Iraqi dinar, because the dinar is in the pocket of the Iraqi citizen, and all the bank's means of issuing bonds are ineffective, and the tax system and customs fees are a failure, and even the government is unable to collect electricity consumption fees."
He pointed out that "the central bank could not create a banking culture over the past 50 to 60 years, there is fear and there is a deadly administrative routine when opening an account and when depositing and withdrawing amounts, and even the interest that the bank sets is not rewarding, and therefore the citizen prefers to put the amounts at home instead of depositing it with banks.
"hot money"
He pointed out that "more than 77% of the currency issued outside the banking system with the public, which is hot and not hoarded money, the banking system could not withdraw any part of it, just as the Ministry of Finance does not have the money that it got from selling the dollar to the central bank because the sale It was done monthly, and this money was paid as salaries, wages, and operating and investment expenses.
He stressed that "the government does not have many options, as it either goes to the compulsory savings process on which the experience of the Kurdistan Region was based, or prints a new currency and distributes it as salaries."
Payment in dollars
For his part, the economist, Muhammad al-Hassani, considered, in an interview with Shafaq News agency, that "what some people said to address the rise in dollar prices and avoid the government's failure to pay employees' salaries by paying salaries in dollars is incorrect because this is related to national sovereignty and the economic problems that follow. And this would lead to a decrease in the value of the dinar more than it is now.
He added, "The government is not completely incapable of paying salaries to employees and retirees, as it has cash that it can maneuver with for several months."
And he added, "The government has the ability to borrow and sell bonds, as it was doing previously during the financial crisis that occurred in 2019."
Incorrect rumor
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said, in an interview with Shafaq News Agency, "What some people say about the government's inability to pay the salaries of employees and retirees in the future is incorrect, and it is a rumor and narrow conclusions that harm the citizen."
He stressed that "the state does not wait and is not static without finding solutions to all the problems it faces."
He pointed out that "the state has many tools capable of finding solutions, whether borrowing or encouraging savings by raising interest or debt instruments issued by the government."
Saleh noted that "there are two factors, namely, the high value of the dinar and the high interest rate that would bring cash."
employment of thousands of unemployed
The government has returned to employing thousands of citizens in a number of ministries and departments affiliated to it after a hiatus that lasted for more than a year as a result of the decrease in Iraq’s general budget after the spread of the Corona epidemic, which generated additional pressure on the government and raised the number of employees in the public sector, in addition to millions of retirees and those covered by care. Social.
"The number of employees is within the competence of the Ministry of Finance, but the Ministry of Planning has entered the employees into the job number platform," said Abdul-Zahra al-Hindawi, a spokesman for the Ministry of Planning, in an interview with Shafaq News agency.
And he indicated that "3 million and 300 thousand employees have been introduced to this platform, and the work is still continuing until now."
He continued, "The platform is a project that has been implemented since 2021, and includes the details of every employee working in the Iraqi state, and each employee has his own job number, which is more like a (code), and it contains details from the date of his appointment, salary, and other details of his own."
Official statistics indicate that there are more than four million employees, more than 3 million retirees, and more than two million who receive social protection network salaries. According to economists, 70% of the budget goes to the operational budget as salaries and other operating expenses.
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