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POSTED ON 2021-08-16 BY SOTALIRAQ
Economists expect the dollar exchange rate to remain in place for a long time: it will multiply the suffering of the poor
Baghdad / Hussein Hatem
Specialists in economic affairs are talking about the negative effects that the rise in the exchange rate of the dollar against the Iraqi dinar will have if it continues over a long period, such as 5 years or more.
They stressed that the continued rise in the exchange rate of the dollar against the Iraqi dinar will double the suffering of the poor classes and make the poor poorer and the rich richer, calling for the revitalization of the productive sectors to create an economic balance.
The specialist in economic affairs, Basem Jamil Antoine, said in an interview with (Al-Mada), that “the white paper launched by Al-Kazemi General to reform the Iraqi economy ranges between 3 to 5 years,” noting that “the exchange rate is expected to remain the same during these years, as the effects of The reforms of the white paper will continue for a long period between determining the sources of income, the deficit and oil prices (…) in this period.”
On Sunday, the Parliamentary Finance Committee indicated that the exchange rate will remain at its current status, while stressing that raising the exchange rate aims to achieve three main factors. Committee member Naji al-Saidi said that "the exchange rate will remain in place during the coming period for the next five years, describing that the real value of the Iraqi dinar is determined by the exchange of the dollar against the dinar, in addition to the purchasing power of the Iraqi dinar and the resulting net goods and services during a certain period."
Al-Saidi added that "the government is firm in achieving its goal by defining three main goals: the first is financial, which is to reduce the deficit in the public budget, the second goal is a monetary goal by increasing reserves, and the third goal is to increase the competitiveness currently produced within the country towards other goods exported from neighboring countries." This is the main goal that the government seeks by closing the budget deficit.” The member of the Finance Committee pointed out that “reducing the value of the dinar increased the competitiveness of the Iraqi price, describing that the goods that come from abroad, especially Turkey, Iran, Syria, Saudi Arabia and Jordan benefit from the strength of the Iraqi dinar against the dollar because the dollar currency is a global currency, and when the exchange rate of the dollar is raised, it will raise competitiveness.” Goods are declining, because they reduce Iraqi imports from abroad.”
The economic affairs specialist, Basem Antoine, adds, “The continuation of the rise in exchange rates will have clear negative results in the coming years on the poor and middle classes due to weak purchasing power and low income.”
He believes, "The continued rise in the exchange rates of the dollar against the Iraqi dinar without economic reforms that support the private sector leads to an increase in the poor poorer and the rich richer." Antoine points out, "Raising the exchange rate will significantly reduce the budget deficit," adding, "But that is not enough, as the Iraqi economy needs a real will to revitalize it and work to fight corruption and encourage internal production from the agricultural and industrial sectors." In turn, another expert in economic affairs, Dia Al-Mohsen, said in an interview with Al-Mada, "When the budget was approved, the prices of basic commodities for the citizen increased by 33%, which affected their lives greatly," wondering, "How is the situation if prices continue to rise over 5 years?" .
Al-Mohsen added, "More than a quarter of the population is below the poverty line, and the continued rise in the dollar exchange rate will double their living suffering even more."
And the specialist in economic affairs believes that “the government is determined to adopt the current exchange rate in the long term without looking at the poor and middle classes,” adding, however, that “Iraq lacks the productive sectors that cover the market need.”
And the Central Bank of Iraq decided earlier to adjust the exchange rate of the dollar against the Iraqi dinar, as the purchase price of the dollar from the Ministry of Finance amounted to 1450 dinars, and the price of selling it to banks was set at 1460 dinars per dollar, while the selling price to the citizen is 1470 dinars per dollar.