Clarification from the remittance officer
Central bank settles dollar deposits: The era of “dollarization” is over in Iraq
2023-10-08 | 23:57
The Director of Foreign Remittances at the Central Bank of Iraq, Mazen Sabah Ahmed, said today, Sunday, that dollar customer deposits are not afraid of them yesterday, today and the future, and what is currently happening is the tendency to restrict remit remittances from abroad through bank accounts, where we are studying their delivery in dinars, and he says that this is happening in most neighboring countries while Iraq is living in the era of “dollar” since 2003, and it seems that the recent crises are pushing it to review this.
Sabah said in an interview with the media man Karim Hammadi, which was followed by the News
In the past days there has been a lot of ado on the subject of dollars and cash withdrawals, and it started from my meeting with Reuters, a respected and prestigious agency with its place among the news agencies, but my phrase was drafted in a way that seemed not to have been understood by the reporter, and it was conveyed in a way that led to a misunderstandings of the public in Iraq.
Frankly and I say it on behalf of the Central Bank of Iraq, there is no concern for any of the accounts of individuals and companies in any Iraqi bank, whether these deposits were called, for example, in 2015, 2019, 2020, 2023 or 2024, now, before and in the future, “”the Central Bank of Iraq with its current capabilities will not be unable to meet its financial obligations””, praise be to God, the bank's reserves are at their best levels, and we are fully able to meet the customer's need, especially since these deposits constitute only a very small percentage compared to the reserves.
The most important detail in this subject is the dollar imports to Iraq as of next year 2024, so that it is clear, and what I said is distinguished regarding dollar deposits in bank accounts and between incoming remittances.
It is known that the Iraqi economy (Meddler) is very large, so almost all contracts concluded by foreign companies operating in Iraq are in US dollars, and the transfers received to these companies are transferred from bank accounts (not cash paper), and go down in the accounts of the correspondents of these companies in Iraq, or in our accounts, which are required of us here as a central bank, to deliver them in cash.
Frankly, most neighboring countries, incoming remittances are restricted and delivered in local currency.
This situation, that is, the phenomenon of “dollarization”, which has marred the Iraqi economy since 2003, contributed to the establishment of working relations and contracts between foreign companies operating and processors inside Iraq as well as employees, all these relations have become in US dollars.
The central bank is not binding and is definitely not obliged to give incoming transfers of balances, convert them into cash and deliver them in dollars.
If this company called these amounts in cash in any of its accounts inside Iraq, it would take them in the same way, which is the cash form “cash”.
Let me give you an example of this topic “Let’s assume that there is an incoming transfer to a certain company, and this company distributes it within the bank accounts to 10 employees, for example, the recipient of the incoming transfer has the right to credit the amount of the transfer contained in his account in US dollars, and take from this account a credit card, whether (DBT) or (CredT), and he has the right to transfer any amount of this balance, to any party, but when he wants to disburse it and it received in the form of a balance or an account, he will not be able to disburse it in cash).
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The end of an era is upon iraq. The process to de-dollarize the country is clearly not going away. The central bank has plenty of money and reserves and is solid.
What is interesting is they tell us about contracts in dollars. Over the years there have been contracts to do re construction and infrastructure, etc. They used dollars to do so, not dinars. Those that think they did massive amounts of upgrading to the present day Iraq in dinar may need to rethink that.
Suggesting that they are going to do the development road projects is highly mistaken and may need to read this to get better understanding of what is coming and it is not a status quo. The country is not obliged to take incoming transfers in dollars.
They are de-dollarizing. Let that sink in. They’re going to have to so in dinar. It will be far to expensive at 1310. The better the new exchange rate is the cheaper it is going to be. Things need to change now and we’ll ahead of the end of year! Imo~ MM | | | |
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