- PUBLISHED ON 02.05.2015
Starting, I would like to thank Dr. Ali Mirza on in-depth analysis of the potential consequences of the application of Article 50 of the federal budget law on the national economy and fiscal policy. I have some comments on this article ...
Starting, I would like to thank Dr. Ali Mirza on in-depth analysis of the potential consequences of the application of Article 50 of the federal budget law on the national economy and fiscal policy. I have some comments on this article values included them in below.
1. Article (50) and the independence of monetary policy
The article (50) was the first under the law set by federal authority on monetary policy since the legislation of the Iraqi Central Bank Act with a number (56) for the year 2004. It sees d. Mirza that Article (50) interfere with the independence of the central bank set forth in Article 2 of the law referred to above. Article (2-2) of the Central Bank Law "has a bank central Iraqi independence with the doing of efforts in order to achieve its objectives and the implementation of its functions, and is subject to questioning , according to the states by this law. Nor the central bank has However, as mentioned the provision of the law without it in this law ... ".
In principle, Article 103 of the Constitution provides as follows:
First - The Central Bank of Iraq, and the Office of Financial Supervision, and the media and communications, and the Endowment, independent bodies, financially and administratively, and law regulates the work of each of them.
Second - The Central Bank of Iraq is responsible before the House of Representatives ...
In this regard, I believe that the central bank can not be independent of absolute independence unconditionally. Article 103 of the Constitution to make it "liable to the House of Representatives," the Constitution is superior to any law. The fall of monetary policy within this responsibility, especially since the " lower balance of foreign exchange reserves in particular and the fear of the "drained" and then the desire to take action to reduce this decline is expected in this balance or slow down the decline rate incentive to add Article (50), also concluded Dr. . Mirza, who also pointed to the decline in reserves of the Central Bank of 76 billion dollars in late 2013 to 67 billion dollars in November 2014, that the reserves of the central bank exhausted at a rate of (818) million dollars a month, or the equivalent of about 12% in (11) months, and this is worrying. In other words, the central bank, and the entity's policies, subject to the supervision of the federal legislature, unchanged if all state institutions, which, as I see it, the right to intervene and impose limitations or restrictions, especially when it comes to the interests of the national high.
Also, I see what you mean by Article (2-2) from the central bank law to "government agencies" the executive branch, not the legislative branch, which specializes in legislation and Alrkabhvqt.
2. roof dollar sales
Lie oblige the central bank in Article (50) of the roof of dollar sales in the auction currency does not exceed 75 million dollars a day to rational justifications. This ceiling, which is (19.6) billion dollars a year (based on 260 working days per year) accounts for about one-third of the projected oil revenues after deducting the share of the Kurdistan region. This amount immense majority needs import fills the private sector, if well used, and has been directed towards the priorities, particularly the use of productive, and if the central bank stressed the anti-money-smuggling measures under import cover. This is the case imposed on the Iraqi government and the central bank to determine controls and priorities for the use of cash Alogni sold and not Leave it to the decisions taken individually or on the principle of "by-case basis."
3. Economic Consequences
I fully agree with the analysis d. Mirza economic consequences of the application of Article (50), particularly the imbalance markets and increase the rate of inflation and the cost of economic transactions and increasing corruption. But the high cost of imports will stimulate the national industrial production, which relies on local ingredients and limit the competition of imported agricultural products for domestic agricultural production, which is almost wipe out any hope for the development of national agriculture. This will reduce the trend to import and demand for the dollar.
Finally, I would like to comment on what he said d. Mirza "Perhaps this is what happened in 2012, in the wake of the US military withdrawal in late 2011, the case worthy of analysis. Since early 2012, resulted in an increased demand for the dollar in the face of the display has not matched the increase is due to the widening gap between the official exchange rate and the market exchange until the rate has reached more than 8% in April 2012, with the knowledge that there was no roof advertiser sales of the dollar. " . Maybe there was a slight effect of the withdrawal of US troops on the exchange rate, but the biggest impact was, in my opinion, to another factor. The imposition of international sanctions on Syria and its emphasis on Iran has led to the Iraqi market to become the only source available to these countries for the dollar. The sudden increase in demand to the scarcity of the dollar in the Iraqi market and the increasing gap between the official exchange rate and the exchange rate in the market.