November 6th, 2015
Governor of the Central Bank of Iraq Ali Mohsen Keywords said that the devaluation of the Iraqi dinar options by raising the dollar exchange rate of 10 percent to 1300 dinars to the dollar, is providing general budget of 5 trillion dinars ($ 4.2 billion), and between that raising the exchange rate 20 percent to 1400 dinars, provides for the budget 9 trillion dinars.
He added, in a seminar held by «Institute of the progress of development policies», attended by experts and interested in the money sector of the economy, that the nature of the Iraqi economy Reclining on oil resources, make the relationship between fiscal and monetary policy interactive relationship As required by the nature of the revenue and expenditure of the pricing of the dollar.
He pointed out that «Central» exercised important roles in this process, including the financing of the current expenditure of the public budget, with the dollar buying from the Ministry of Finance to cover the needs of the Iraqi dinar, in accordance with the allocations required in the general budget.
contributes «Central» also in the financing of imports of the commercial sector, while the dollar selling process means the withdrawal of the dinar from the local market, which will help the bank to curb money supply and reduce the resort to printing more currency.
He added that «such activity is not essential for central banks in the world.
It is rare so that the central sales window, but because of the nature of the Iraqi economy, Central took over this task, while the task required to intervene when there is an imbalance in the exchange rate, as in the European Union ».
He pointed to the issue of monetary reserves are still under discussion, and stressed that the the reserve is the difference between what the central buys and sells. And over, it goes to the international reserves, and that the function of the reserve financing imports and other transfers and coverage, and reserves of foreign currency is the difference between the dollar sales of the Ministry of Finance to the Central Bank and sales of central bank to the private sector.
and confirmed the existence of the adequacy of the reserve criteria, such as coverage of imports for a period of 6 months and the coverage of the local currency and foreign debt.
He noted Keywords to the presence of important rules govern the process of selling the dollar to cover imports of personal and transfers of the private sector, including the Central Bank Law Article 28 and guidance of the International Monetary Fund and economic order in accordance with the Constitution, and the law against money laundering.
He pointed to the real solutions such as purchase or simple unconditional sales, cash and futures, and to require banks to apply the principle «know your customer» and the application of anti-money laundering and terrorism financing law.
He said that the reduction option easy, but it does not help in the reform of the structural problems.
The local currency is good for exporting countries cut to stimulate exports. He added that «Iraq importing country, and to reduce the currency hurt the purchasing power of citizens with limited income.
And between, citing a report by the" life "of the International via its website, it« can taxes play an important role in the finance, justice and balance without prejudice to slide low-income , as can achieve economic goals and social and financial ».
The head of the« Institute of the progress of development policies »former Planning Minister Mehdi al-Hafez, pointed out that the national need not require the continuation of the so-called auction the dollar, which is organized by« Central », but must be treated free and without restrictions.
and calls for counter-opinion to uphold the auctions and to provide the necessary facilities for the conduct of this operation, and we must stop at the experiences of neighboring countries and operations. He asked Hafiz for the exchange rate, which raises problematic kit.
He said «How can that half of the process required to determine the exchange rate, and is related to the economic and financial situation of the state»?
Turning economist Ahmed Alobreha to points concerning the path expected of the Iraqi economy.
He pointed to the difficulty of reducing the demand sector Special for foreign currency in the current scope of the exchange rate and income levels. He added that the national economy is a lack of diversified production base that can supplement the national market alternatives to imports of goods and services, adds restrictions and weakens the effectiveness of efforts to address the problem of policies.
He pointed out that «the private sector was unable to contribute to the display of foreign currency, as well as government non-oil sector, and foreign investment policy did not succeed in adding a tributary albeit in a limited form. Iraq has faced interest on the loans in the international market can not afford the prices, and as a result of crude oil remains the only source of foreign currency, and must be serious and responsible move towards real economic development to pay a danger for Iraq ».
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