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The Ministry of Finance: The decision to devalue the dinar was part of a package of reforms

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The Ministry of Finance: The decision to devalue the dinar was part of a package of reforms

political    Yesterday, 19:29

The Ministry of Finance confirmed, today, Sunday, that the decision to reduce the value of the dinar came as part of a package of reforms.

The ministry said in a statement received by the Iraqi News Agency (INA), that it "sought with all its institutions to correct the structural distortions in the Iraqi economy, which the public financial policy lacked, which led to restricting the ability of financial reform in the country."

She added: "Why was the exchange rate devaluation in December 2020 necessary?

When oil revenues collapsed two years ago, the Iraqi government was facing enormous funding pressures while it was struggling with its basic internal and external obligations, as the central bank's cash reserves were in rapid decline and in December 2020,"

It was expected to be implemented within a year, and Iraq was on the brink of a comprehensive economic crisis that came as a result of the drop in oil prices."

She stressed that "the decision to devalue the dinar came within a package of fundamental reforms that target the structure of the Iraqi economy, and

this decision was taken as a result of a stifling economic crisis that befell the whole world represented by the Corona pandemic, as the price of a barrel of oil at the time reached 20 dollars, and

this is what caused an economic crisis that led to The difficulty of meeting the government’s financial obligations from previous external and internal debts, in addition to the salary bill for employees, retirees, and social protection, as

the Social Protection Authority was supported by increasing the allocations of new targeted groups to compensate for the emergency change in the exchange rate and subsidizing the poor segment, but the House of Representatives reduced the amounts allocated to the new inclusion, which

This led to the non-inclusion of new families in social protection.

She pointed out that "the change in the exchange rate of the dinar came in conjunction with the implementation of the economic reform project, which the Iraqi government called the "white paper"

and was a necessary option to reform the structural system of the Iraqi economy," adding that

"the change in the exchange rate gave great strength in the economic joints of the country and is consistent with With the statements of the Central Bank,

which confirmed that raising the exchange rate led to an increase in the possibility of competition for the local product, and to

reduce the pressure of expenditures on the Ministry of Finance by 23%, which enabled the Ministry of Finance to overcome the crisis resulting from the drop in global oil prices during 2020 and the first months of 2021.

She pointed out that "the decision to adjust the exchange rate came after the state's foreign currency reserves were depleted and

some private banks took control of the currency selling market by illegal means.

One billion dollars from the reserves of the Central Bank of Iraq, and raising the global credit rating of Iraq internationally,” indicating:

“The statistics of specialized international organizations indicate an increase in gross domestic product by 9% for the first half of 2021, and the growth of the non-oil economy by more than 21% in the first half of 2021, and

this is due to the strong performance in the service sectors after easing measures to prevent the emerging corona virus.

And this recovery reduced the sluggishness in the oil sector, by 10% in the first half of 2021, as Iraq adjusted its share in the Organization of the Petroleum Exporting Countries (OPEC).

And the basic in Iraq for the period from January to July 2021, reaching 5.2% and 6.3%, respectively, due to the increase in domestic demand and the insufficient supply of commodities to meet the entire growing demand,

in addition to the positive impact of inflation due to the decline in import prices in some exporting countries facing deterioration in the value of their local currencies.

And she added, "It has worked to attract companies to support investment in Iraq for the purpose of advancing the country's economy by maximizing non-oil revenues and

emphasizing the need to adopt the budget of programs to achieve the best performance of the plans and timings set and to

develop appropriate mechanisms within its strategy to finance and

involve the private sector

and to approve the completion of strategic projects with a multiplier effect and scaling." The banks’ monopoly of foreign currency,” stressing that,

“in light of the stifling financial crisis, they dealt with the suffering of a large segment of the contracts of the Ministry of Electricity and free lecturers, as they were converted into contracts based on Cabinet Resolution No. 315 of 2019 and all the problems that many ministries faced from their contracts terminated, including the Ministry of The Defense, the Interior, the Popular Mobilization Authority, and the solution of all problems related to bonuses, promotions and other benefits for all employees and citizens.

And she added, "It also worked within its strategy to prepare a sound and stable financial position for the country by preparing budgets for the coming years within the available resources to address the reluctance that occurred in strategic projects," indicating that

it "worked in difficult economic conditions in which it dealt with most financial situations and through its plans for the draft white paper."

Which the government and the Ministry of Finance adopted with its reform project in order to advance the economic reality, as

the Ministry of Finance invested those positions that were put in place to reform the economic situation and the stifling financial crisis after it preferred difficult solutions,

including raising the dollar exchange rate against the Iraqi dinar

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