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The Iraqi dinar against the dollar ... a deepening political dispute and talk of foreign agendas

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The Iraqi dinar against the dollar ... a deepening political dispute and talk of foreign agendas

Reports | 06:51 - 03/30/2021
Baghdad - Mawazine News

Iraqis are impatiently awaiting the approval of their country’s budget for 2020, which ended without any result for three months, due to the politicians ’disagreements over several items.

Among the contentious issues, which affect the lives of Iraqis and their economic incomes, the exchange rate of the US dollar, it is related to commodity prices, salaries and other issues of daily life.

The Iraqi Prime Minister, Mustafa Al-Kazemi, called for the necessity to "expedite the passage of the federal budget law, and the paragraphs it contains that address the needs of the poorest classes, and
support service projects that affect the citizen's life."

Central settles the controversy

The Central Bank of Iraq has resolved the controversy over the exchange rate of the dinar against the dollar, and a demand to reduce it, declaring that

"there is no return to the previous price, and the price will not be reduced under any circumstances,"

stressing that there is no intention to raise the price from 145 thousand per 100 dollars.

The general manager of accounting at the bank, Ihssan Shamran, said in a press statement, "The current price of the dollar is very reasonable, and therefore the bank has settled on it, and that any decision to reduce it means that we are heading towards an economic massacre," indicating that

"reducing it is a major sin that the bank will not go to." Central ".

The Central Bank called for "ending" what it called "the quarrels and shouts calling for the return of the previous price," indicating that "this matter is not based on any economic vision ... despite the integrity of the intentions of those demanding that."

And he considered that "these statements contribute to the instability of the price, since the news and its disagreement contribute to a lack of confidence in the exchange market and its stability."

Shamran, an advisor to the central bank governor, considered that "the process of raising the dollar against the dinar was long overdue because this matter contributed to protecting the domestic product in addition to that the lifting process increased the financial costs of exporting countries to Iraq by 22 percent, which contributes to increasing competition between the producer." Importer and domestic producer."

And Shamran said, "Even suspicions of money laundering also ended with the raising of the dollar, and this is one of the most important benefits that Iraq obtained as a result of the process of changing the exchange process."

The Director General of Accounting at the Central Bank revealed that "the public finances obtained about 10 trillion dinars as a result of the process of raising the exchange rate of the dollar against the dinar, and therefore it is now assumed that this ministry allocates about 20 to 30 percent of the amount collected (10 trillion) for the purpose of distributing it to citizens who are Within the poverty line, and today they went below this line, amounting to about ten million citizens, as financial grants, and this is part of the central bank's understandings with the ministry regarding the process of changing the currency exchange rate.

Political differences

But political differences deepen between the parliamentary blocs in the Iraqi Council of Representatives, which is discussing the draft budget law for approval, as the parties have not yet reached an agreement on the points of disagreement.

Last January, the Central Bank of Iraq reduced the value of the Iraqi dinar against the dollar from 1180 dinars to the dollar to 1460 dinars.

Al-Kazemi called the parliamentary blocs to "stay away from auctions in the issue of the dollar exchange rate," stressing that "the decision (to reduce the value of the dinar) was taken by the central bank according to a purposeful vision and strategy."

Al-Kazemi said at the cabinet meeting that was held, Tuesday, that Iraq began to see the results of the decision "on the growth of cash reserves, and on Iraq's international credit rating."

Hard to reduce the dinar

The political debate on the issue of the Iraqi dinar exchange rate escalated to the point that an armed party carried out a review in Baghdad, last Thursday, and demanded that the decision to reduce the value of the dinar be canceled.

The decision to devalue the dinar greatly affected exporters of services and goods to Iraq, whose goods were benefiting greatly from government support for the dollar.

Political science professor Iyad Al-Anbar says, "The origin of the issue of the devaluation of the dinar is to protect Iraqi industry and Iraqi products."

And Al-Ambar added, "Groups affiliated with foreign agendas are trying to embarrass the government by exploiting the resentment and discontent that the poor have because of this decision, to serve external parties that were benefiting from the low exchange rate of the dollar in Iraq and also to embarrass the government."

Amber believes that "there is no horizon for a solution, and the political tension may remain the same, or there may be a simple reduction in the dollar price to satisfy both parties."

In Parliament, political blocs, such as the Al-Fateh bloc, called for "retreating from the devaluation of the dinar."

Economic implications

Iraqi political and economic analysts say that the move to lower the dinar's price is "important" but "incomplete", due to "the government's inability to manage this file well," according to political analyst Iyad Al-Anbar.

Supporters of the government's decision believe that despite the effects of the decision on the prices of basic goods and services, it "carries positive dimensions that could benefit the Iraqi economy."

Economic analyst Mustafa Moayad believes that "reducing the value of the dinar against the dollar will encourage local industries and invest in agriculture, and this will have important implications for reducing imports and creating local job opportunities."

But opponents of the decision say that "the incomplete steps of the Iraqi government prevent them from benefiting from the decision to devalue the dinar."

The Iraqi economic analyst, Manar Al-Obeidi, said that the devaluation of the dinar "increased inflation rates by 4 percent, according to the Central Bureau of Statistics, and the industrial sector and the transport sector were greatly affected by this decision," and that foodstuff prices "increased significantly" in the last period..

Al-Obaidi says that "without the existence of strategic projects such as the iron and steel industry and the petrochemical industries, the government's decision will not be of benefit in supporting the Iraqi industry, because Iraqi manufacturers import raw materials and are affected by the high price of the dollar."

The price of Iraqi foodstuffs increased after the decision to reduce the value of the dinar, as basic materials such as edible oil increased their price by 25 percent, according to what Salem Ahmed, a wholesaler in the Iraqi Jamila market, says.

Salem says that the purchasing power of the Iraqi citizen has decreased dramatically, and that greater proportions of Iraqis have begun to lose the ability to purchase basic foodstuffs.

Salem does not believe that the decision to reduce the value of the dinar will benefit local industry and agriculture, since "the industry in Iraq is transformative or is limited to canning products manufactured abroad."

But Muhammad al-Jumaili, a farmer and owner of citrus orchards and farms, disagrees.

Al-Jumaili says, "The high prices benefit us, and it has become due to the efforts we exert in agriculture for a reasonable price

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