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The government and the central bank restore the world's confidence in the Iraqi economy

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The government and the central bank restore the world's confidence in the Iraqi economy

August 16, 2017

Iraq is currently experiencing an economic crisis and large and difficult challenges, which are due to the control of the terrorist "Da'ash" organization on vast areas; and the low oil prices globally, which affected its budget for the years 2017-2017, reaching a current year about 95 billion dollars and a deficit of about 20.5 billion dollars , Damaging the non-oil economy by destroying infrastructure and assets, disrupting trade, deteriorating investor confidence, the external sector and medium-term growth potential.
In order to meet all the political and economic challenges experienced by Iraq, the Central Bank has taken a number of measures to correct the financial situation and finance, while continuing to adhere to the system of linking the exchange rate, while the Iraqi government at the same time and after the end of the war against "Daash," towards planning and economic development , Contributing to a qualitative shift in the Iraqi economy.
The governor of the Central Bank, Ali al-Alaq, said that an international group to monitor the movement of funds confirms the confidence of the world in Iraq financially, and intends to pull Iraq out of the gray list to Al-Bayda, adding that the bank is working to activate the Office of anti-money laundering and grant the powers of the administrative and financial portfolios and full independence, To coordinate with international organizations, and the Financial Action Task Force, an intergovernmental body to study money laundering techniques and trends, to develop policies to combat it, and to finance terrorism locally and internationally.
Al-Alak pointed out that this step, which would increase the world's confidence in Iraq financially and economically, was the result of reforms carried out by the Iraqi government and central bank, which contributed to reducing the fiscal deficit gap.
The issuance of the Central Bank of Iraq, the currency of the category of 50 thousand Iraqi dinars, a successful step in strengthening the performance of the Iraqi dinar, without affecting the exchange rate against the US dollar, carrying a security mark sophisticated and high protection such as transparent window and Mark Spark, which defies currency counterfeiting.
He stressed that "the issuance of high categories of good performance of the Iraqi dinar and reduced dependence on the dollar in large transactions, as the performance of large transactions in Iraqi dinar, and there is no policy to raise the value of the dollar against the Iraqi dinar, noting that" the central bank has a foreign currency is double the currency Local market ", which is reassuring.
In order to implement best practices, the Central Bank of Iraq cooperated with Talal Abu-Ghazaleh Organization for International Professional Services (TAG-Org), which developed a plan to train and develop the Bank's human resources in the field of information technology. Implementation of the global IT standards.
The general approach of the Central Bank is to develop banking services, introduce new banking products and electronic payment systems, based on advanced technologies to meet the challenges facing the banking sector, and establish an advanced monitoring system for all electronic banking and services,
Iraq's reserves of foreign currency will reach 62 billion dollars in 2018, he said, adding that there is no risk of a drop of reserves to 49 billion dollars. "The currency reserves, according to international standards, should be enough," he said. For six months as an international demand or measure, stressing that the reserves of hard currency in Iraq enough to pay debt and take into account the geographical diversification and enough to the need of the domestic market of goods and services and economic and social requirements and pay the salaries of retirees abroad and for the purposes of treatment and study and travel and religious tourism.
"The International Monetary Fund in a study: there are Arab countries exceed their reserves real spending, including Iraq, Saudi Arabia, Algeria, Lebanon, Kuwait and Bahrain, and this is evidence of the stability of Iraq's reserves of hard currency."
The IMF expected that Iraq's reserves in 2018 will reach 62 billion dollars and then rise to 91 billion dollars in 2020 as a result of improving the conditions of the Iraqi economy and its exports of oil and its derivatives and the supply of electricity imported to some provinces, exporting gas and encouraging tourism and industry, .
He also stressed that Iraq has exceeded the biggest financial challenges faced in the past year, noting that he also managed to maintain an acceptable level of cash reserves, noting that "the Central Bank and despite the decline in dollar imports from the sale of crude oil to 70% managed to maintain At an acceptable level of cash reserves estimated at a total of 49 billion dollars in hard currency and gold. "
In spite of all the critical conditions that plague the country, the Iraqi government, headed by Haider al-Abadi, and the Governor of the Central Bank, succeeded in developing a clear economic plan in the current year to cope with economic crises, in cooperation with the International Monetary Fund, and indicators of recovery of the Iraqi economy began to appear After the relative rise in oil prices globally; after the implementation of the OPEC agreement to reduce production and reduce supply in the world oil market.
In light of the correct monetary policy, followed by the Central Bank of Iraq in the development of new mechanisms and applications consistent with the strategy for the years of "2016 2020", with the program of economic and financial reform, which was agreed with the International Monetary Fund and in particular for the first and second review between the Iraqi delegation and a delegation The World Bank in Washington, which reflected the high value of the Iraqi dinar. Iraq's monetary policy has begun to establish a framework to strengthen confidence in the Iraqi dinar, which helps to create strong and deep conditions for the stability of the financial system, ie to transfer the impact of the operational objectives of monetary policy to the immediate goals of the policy itself. Cash is used to provide an effective signal to make the Iraqi dinar more attractive, which is usually reflected in the stability of the monetary demand function, or the decline in the speed of circulation and stability of the money. The cash at the same time. The gradual decrease in the phenomenon of inflation has positive effects on the policy of the Central Bank of Iraq in strengthening the exchange rate of the Iraqi dinar, which has had a strong impact on the stability of the prices of tradable goods, which at the same time referred to the annual inflation expressed, For consumer prices. The International Monetary Fund said that the activity of the Iraqi economy will remain limited this year, due to the reduction of oil production, by 1.5% under the agreement with OPEC, and the modest recovery of the non-oil sector.

The real growth of Iraq's gross domestic product (GDP) reached 11% last year, supported by a large increase in oil production, which benefited from previous oil investments. It was agreed on the willingness of credit with Iraq, which led to correcting the balance of public finances and balance of external status, Public finances, while protecting social spending.
The sharp drop in oil prices caused Iraq's total international reserves to fall from $ 53.7 billion at the end of 2015 to a comfortable level of $ 46.5 billion at the end of December 2016.
Here we come to the conclusion: The policy adopted by the Central Bank of Iraq as the first official as stated in its law (56 for the year 2004) on supervision and monitoring of the banking system and its conduct according to its means in the applications of monetary policy and impact on the macroeconomic on the basis that the financial and monetary adviser to the government To the main tasks in maintaining the exchange rate of the Iraqi dinar, against foreign currencies and build a foreign cash reserve and reduce inflation, all this requires the support of the government and study and analysis of the reality of the Iraqi economy rent which depends on a single resource basis is oil, which is about (54 - 60%) of the Domestic product output, and needs to be coordination between the fiscal and monetary policies and different economic policies, according to the new building of the economy "market economy" to reach the central objectives set out in addition to the organization of work in the legislation of economic laws governing the development process.
One of the challenges facing the banking sector in Iraq is finding executive means to implement the government program in the banking sector, setting time limits, developing a monitoring and evaluation program, and enhancing the role of proactive measures to reduce money laundering and smuggling. Suffer some private sector banks because of the current conditions until they exceed after the improvement of the financial situation of the country, and the stability of world oil prices.
And the means to implement what is stated in the government program, the preparation of programs and policies for continuous cooperation between government and private banks with uniformity of treatment of the parties, and the development of criteria for the classification and evaluation of banks in the light of financial indicators and measuring the efficiency of their performance and role in economic development, and support and activate and develop the initiative of the Central Bank of Iraq, 5) Iraqi dinars trillions for specialized banks (housing, agricultural,
And to contribute to the economic and social development plans. The main objective of the Central Bank of Iraq is to implement the government program in the right manner, especially in the context of promoting privatization of the private sector and paragraph (d) of it, Which sets the general tracks and mechanisms for the development of banking, which is definitely need to make great efforts from government agencies with the relationship with the government sector and private to overcome the challenges and obstacles to reform and development of the Iraqi banking sector, and propose the foundations and strategies P To build the introductions and features of the transition from banking to the developmental role through the treatment of all mistakes and failures in the economic construction during the coming years, along with chart the paths of success and achievement of goals.
The Central Bank of Iraq (CBE) is an independent organization committed by the government to manage key financial functions such as the issuance of the state currency and the governorate. And to contribute to the regulation of the amount of money supply, and follow-up all the operations of commercial banks, and defines the Central Bank as the National Bank of States, and contribute to the provision of a range of banking and financial services to the Government of States Which followed her, and is interested in following up the commercial banking system, and the implementation of government fiscal and monetary policies, is also interested in development of financial plans of the state government, and contributes to its implementation, and controls the funds within the economic sector.
The central bank is a monetary institution that follows public ownership. It is managed by the governments of the countries and supervised by establishing a set of laws that define their duties and objectives. The central bank is at the forefront of the banking system because it has a supervisory power over commercial banks. Profit, but depends on the existence of the public interests of the state, and the central bank has the ability to convert assets of real nature or fixed, such as real estate to cash assets.
The central bank is the financial institution that monopolizes the process of issuing money. It has a strong relationship with commercial banks. It has different methods and authority to influence the activities and activities of these banks. This contributes to the achievement of the economic policy of the state. It has an independent management of monetary policy.
Many economic experts called for the independence of the Central Bank from the legal, financial and administrative point of view, with a certain degree of correlation between it and the state. The role of the state is very important in building a strategy for the development of small and medium enterprises. The role of the private sector is weak, to a large extent. The sector can not be promoted without a plan to develop this sector and to build clear and declared mechanisms in which the private sector is active so that it can be transformed from a small subsidiary of the government sector into a Senior Partner, Then to a leader in investment and construction operations.

Shatha Khalil
Economic unity

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