Exchange rate.. look ahead
Wed, Mar 9, 2022 11:44 AM
Abdul-Zahra Muhammad Al-Hindawi
For more than a year, the talk and debate about the exchange rate change that took place before the end of 2020, did not stop, under very complicated circumstances, in which the country was facing a dangerous slide, after oil prices continued to collapse, accompanied by severe repercussions resulting from the continuation of the Corona pandemic.
Perhaps changing the exchange rate was the most effective solution, in order for the state to be able to confront this crisis, after the public debt rates rose, and the foreign exchange reserves began to decrease, with the Central Bank.
Certainly, the decision was not easy, and everyone was aware of its immediate, difficult repercussions, and this is a natural result of any complex treatments of this kind..
And after about 15 months of the change, and with the unprecedented rise in oil prices, the voices demanding a return to the price rose again. The dinar is back to what it was before the change, so is a decision like this possible??
I think that the matter is not as easy as those who claim to return to the past, as there are many reasons that prevent this, among them, that
the process of changing the value of the currency, up and down, loses its prestige, and that more than a year has passed since the change process, witnessed many internal contracts And the foreign affairs, all were concluded according to the current price, and accordingly,
lowering the price again, will
create a severe state of confusion, which will cast dark negative shadows on the economic scene, and will
expose the Iraqi economy to aftershocks that may be violent,
at a time when the government is still dealing with the repercussions resulting from raising the price.
The year 2020 related to government contracts, and damage to contractors, and on the other hand, the budget still faces a not small deficit, noting the ruling spending doors which are very wide and large (operating spending), this was offset by a sharp rise in food, consumer and construction prices worldwide during The past two years, accordingly a return to the price
The old price will not contribute to reducing the prices of these materials, as much as the state of confusion that will result from this measure, and the average selling price of Iraqi oil, during the past year 2021, ranged between 65-70 dollars per barrel, at a time when the oil market cannot be trusted, as prices may be exposed To a state of collapse at any moment, as a result of the accelerating events the world is witnessing.
So, what is the solution?..the solution lies in
activating the non-oil development sectors,
supporting vulnerable segments, through the social protection network,
improving the level of the ration card,
encouraging more investment in all sectors,
giving the private sector the space required to revitalize the economic movement, and
providing more decent job opportunities..