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The Minister of Finance confirms that the dollar exchange rate will not change and proposes a grant for vulnerable groups

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The Minister of Finance confirms that the dollar exchange rate will not change and proposes a grant for vulnerable groups

political| 07:09 - 28/02/2022
Baghdad - Mawazine News

, the House of Representatives hosted, in its session today, Minister of Finance Ali Abdul-Amir Allawi, to discuss the dollar exchange rate and its repercussions on the local market.

The council, during its hosting of the Minister of Finance, discussed the rise in the dollar exchange rate and its repercussions on the market through the rise in prices and the damage to the poor segment, as well as the discussion of the public debt and the financial policy of the Ministry of Finance and the proposed treatments.

The Speaker of the Council welcomed the attendance of Finance Minister Ali Abdul-Amir Allawi and the Undersecretary of the Ministry to the session at the request of Deputy Burhan Al-Maamouri, accompanied by the signatures of 100 deputies.

For his part, Allawi reviewed in a detailed explanation the reasons for changing the exchange rate and its relationship to economic reform, which was according to an extensive study in which concerned parties participated and was not an individual decision by the Ministry of Finance, noting that

the exchange rate change at that time was against the background of the deterioration of global oil prices due to the impact of the Corona pandemic.

A decline in the volume of Iraqi oil exports, estimated by the International Monetary Fund, amounted to (4.9%), as well as the failure to approve the 2020 budget due to the resignation of the government, which led to a stifling financial crisis that prevented the payment of salaries of employees and retirees, which prompted the House of Representatives to pass a law financing the deficit in the amount of 27 trillion dinars.

The Minister of Finance indicated that the 2021 budget, which was

developed according to reform plans,
contributed to developing solutions,
addressing the financial situation and
working to develop the long-term financial strategy by presenting the white paper that restored balance to the Iraqi economy,
provided economic stability for people with limited income and
corrected local investment, indicating that

the imbalance The Iraqi economy is due to negative accumulations and direct and indirect state control over the economy since the seventies of the last century.

He noted that reconsidering the exchange rate of the currency in an unconsidered manner leads to financial chaos similar to some countries,

so the trend was to set the exchange rate of the Iraqi dinar comfortably to protect it from any external changes,

a proactive and correct step in coordination with the Central Bank and study it with the Prime Minister and heads of political blocs And other parties in addition to the support of the International Monetary Fund on changing the price at a reasonable rate

The minister explained that the draft budget law for the year 2021 focused on protecting vulnerable groups in society, applying some elements of the white paper, increasing non-oil imports, and the ministry's treatment of these groups by allocating more than 9 trillion dinars to help increase social protection allocations, improve the effectiveness of the ration card, and support small and medium enterprises. For young people, in addition to increasing the pensions of retired people and the allowances for martyrs and political prisoners.

Allawi indicated that the benefits of devaluing the Iraqi dinar increased government revenues by 23 percent, including maximizing the funds allocated to finance reconstruction projects

and allowing the government to respond to the increase in citizens' needs

and contribute to strengthening the balance of payments for the country and avoiding risks
, in addition to

the International Monetary Fund's support for the reduction process as it would strengthen The financial situation of Iraq, especially the competitiveness of the private sector against cheap foreign imports.

Foreign investments have been revived as a direct result of the development of the financial and economic situation, which is witnessing a recovery and stability of markets.

Allawi pointed out that the rise in prices in the Iraqi markets was not only due to the decrease in the exchange rate of the dollar, but rather as a result of the increase in global food prices since 2020,

explaining that the rise in global oil prices is beneficial for Iraq and at the same time affects its needs of foodstuffs and oil derivatives and the import of gas that is used To generate electricity by 30%, alluding to the reduction of the Iraqi external debt by 4 billion dollars in 2021.

The minister suggested supporting vulnerable segments of society by allocating a direct grant to be distributed through the ration card or social welfare, and supporting small and medium-sized enterprises, especially in rural areas, as a result of the financial abundance resulting from the increase in oil prices.

On the same subject, Representative Burhan Al-Maamouri asked about the results obtained from the decision of the Ministry of Finance and the Central Bank to change the exchange rate of the dollar and its repercussions on the livelihood of citizens in light of the rise in food prices in local markets and knowing the percentage of completion of the white paper and its impact on the work of government institutions,

in addition to his question about the lack of implementation The provisions of the budget for the past year by paying farmers’ dues, objecting to the establishment of the Petrodollar Fund, and depriving the producing governorates of additional amounts to improve their situation.

In his response, the Minister of Finance indicated that there is a global imbalance in the economy and a defect in the commercial, import and institutional situation in Iraq, especially the uncontrolled outlets, as well as the poor absorption of the agricultural, industrial and private sectors of the economic changes taking place in the world, indicating that the rate of paying farmers’ dues amounted to 65 percent with the presence of many backlogs. For the years 2019 and 2020.

He stated that the financial crisis that occurred in 2021 affected the possibility of implementing some of the items contained in the budget law.

He stressed that the percentage of completion of the white paper, which included 322 axes, reached 61%,

declaring that 60% of the border crossings are not controlled, including those located in the Kurdistan region

In the interventions of the deputies during the session, which was presided in part by Governor Al-Zamili, a number of deputies demanded to know the possibility of restoring the dinar exchange rate to its predecessor to reduce price inflation, address currency smuggling outlets and delay payment of farmers’ dues, in addition to the demand for the automation of border crossings and reservations on the government’s reliance on the policy of External loans, burdening the country with debts, putting in place actual reform steps without overburdening the citizen, and asking financial authorities to make denominations of small currencies to avoid price hikes due to the lack of middle classes.

For his part, Hakim Al-Zamili called on the government to work to impose its control over the financial sectors and to develop a basic solution with the commitment of the Ministry of Finance to support the simple classes in society.

In the same context, the Chairman of the Council called on the Ministry of Finance to work on presenting a new vision to address the negative effects that resulted from changing the exchange rate, provided that it is presented to the Council within a period of two weeks.

In turn, the Minister of Finance made it clear that it is not possible at the present time to change the exchange rate, as it has achieved stability in the Iraqi economy, and its change is linked to the rise in financial abundance that satisfies ambition.

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