The "Central Bank" complains of the vague economic policy of the government
Low reserves may prevent him from granting loans
06/29/2020 | 7:30 pm
The Iraqi observer / Mushtaq Al-Hasnawi
Parliament approved an external and internal borrowing mechanism for financing the salaries of employees and some investment projects, in light of low oil prices globally and Iraq reducing its production according to OPEC decisions, as well as the Corona pandemic that invaded the countries of the world and which negatively affected its economies and Iraq also suffered greatly From her puppies, what affected the living conditions of his children.
The central bank informed the House of Representatives earlier, its fear of the wrong economic policy of the government, and this may prevent it from granting any financial loans at the present time, and this is justified by the rise of internal debts, which amount to about 40 trillion dinars, representing treasury transfers and debits with government banks and the central bank.
The latter is forced to lend to the government because of the official decisions, knowing that it is inconsistent with the Central Bank’s independence law.
The previous governments that borrowed from the central bank did not return the entire debt, but put it as a candle for their internal crises.
And the economic rule indicates that when a country is indebted and pays its debts and interest in the currency of the creditor country (the dollar), the debt burden resulting from it in this case increases in the general budget of the country where a greater amount of its national currency is allocated to pay off its debt in foreign currency and thus will increase the default budget deficit.
Specialists believe that if the debtor country pays in its national currency, it pays the same amount of debts and interest, and in this way it will not be affected much,
but previous governments were rushing to the international financial institutions to borrow, no matter how unfair the conditions are and this is due to the lack of experience of the negotiator and a political desire to obtain funds,
They also assert that resorting to external borrowing is lazy solutions by the government that can overcome the crisis by putting an end to corruption in the outlets, increasing the currency, and reducing the salaries of special grades and other solutions, but the government appears unable to fight corruption.
For his part, Sami Salman, a specialist in financial affairs, sees in connection with the (Iraqi observer): that the Central Bank's statements did not come from a vacuum, but rather as a result of the government’s economic policy flaws and its program that is free of reforms and what are declared from the reform plans is ink on paper,
it is powerless On combating corruption in border crossings or restoring the state’s properties by force, as well as not returning the money borrowed from the central in previous years, which contributed to reducing the cash reserve from $83 billion to $43 billion, just as the foreign monetary reserve is a cover for the Iraqi dinar and in If reduced, the value of the dinar will decrease against the other currencies.
Salman continued: We need real reforms and not provoking artificial contradictions at times with the holy crowd and the ineffective administration in the Corona file in order to divert attention from the failures in the work of the government, and the central bank informed the parliament about its fears of lending to the government because of its failed policy that it may have to borrow More than once the cash reserve.
For his part, the economist, Bassem Jameel, sees in connection with the (Iraqi observer): that the borrowing law came as a result of an emergency crisis due to the wrong policies of previous governments, even though they were explosive budgets.
Those governments did not think about establishing sovereign funds to face crises, and the private sector, which is about 8 Millions of people who need work and pensions for their families have been marginalized, and today loans are important for walking economic matters, but they have negative consequences for society.
Several solutions have been ignored, including investing in state land and tackling corruption in outlets, dual salaries and state real estate, which provides huge funds instead of borrowing.