Researcher detonates a bomb: Iraqis lose 2.5% of the value of their money deposited in banks
848 economy 2022/11/09 23:11
Economic researcher Rami Jawad, on Wednesday, described
the policy of the Central Bank of Iraq as contributing to inflation, by continuing to grant loans and maintaining a low interest rate,
pointing out that depositors in banks lose about 2.5% of the value of their money.
"The central bank's policy is still contributing to the rise in inflation rates, which reached 6%, which is a high percentage, and
the central bank has not taken any measures to reduce the rise in inflation,
but its measures for granting loans and advances, reducing the interest rate and increasing cash issuance have become in the interest of the wealthy and hit the middle and low income people towards the poverty curve," Jawad said in a statement seen by Baghdad today. He explained that
"the rise in inflation rates in exchange for a decrease in bank interest on deposits below the inflation rate means the loss of depositors in banks, because the real interest rates have become less than 0%," noting that
"depositors are currently losing their balances in favor of borrowers from banks, especially large loans.
In a detailed explanation to clarify the matter, Jawad explained that
"banks grant annual interest on deposits at a rate ranging from (3.5% - 5%), and the current inflation rate (6%),
which means that the real interest on deposits is equal to (the interest rate minus the inflation rate), so the result is negative," which means that
"every depositor currently in banks loses by (2.5% to 1%), so borrowing at low interest in times of high inflation is considered less risky and more profitable for entrepreneurs.