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Crippling dollar shortage underscores vulnerability of Iraq’s oil-based economy
March 28, 20230
Attempts to control a monetary crisis have had unintended consequences for a country struggling to get back on its feet
By Raya Jalabi in Sulaimaniya, Iraq
Iraq is struggling to control a crippling currency crisis that has roiled the country for months, underlining the fragility of its oil-dependent economy 20 years on from the US-led invasion.
Ali Mohsen al-Allaq, the new central bank governor, defended measures introduced to stabilise the monetary crisis that has led to an acute shortage of US dollars and a sharp fall in the dinar.
“We’ve focused on resolving the root of the problem and we’re seeing some positive indicators,” Allaq said in an interview, referring to central bank and government efforts to calm the panic that has taken hold since the crisis erupted in November.
This was when Iraqi’s authorities, with the US, implemented tough rules for banks as part of efforts to stamp out money laundering and surreptitious cash flows abroad.
But the package of measures had unintended consequences, including drastically cutting the dollar supply in an economy where the US currency is heavily favoured, pushing up inflation and creating hardships for Iraqis who trust neither their institutions nor their own currency.
Hamoody Ismail, 27, a personal trainer in Baghdad, said he was struggling to find the $4,300 he was due to pay in rent and business payments.
“My landlord refuses to take dinars and I’ve spent several days this week trying to find dollars.”
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[ARTICLE CONTINUES]
http://iraqieconomists.net/en/2023/03/28/crippling-dollar-shortage-underscores-vulnerability-of-iraqs-oil-based-economy/
March 28, 20230
Attempts to control a monetary crisis have had unintended consequences for a country struggling to get back on its feet
By Raya Jalabi in Sulaimaniya, Iraq
Iraq is struggling to control a crippling currency crisis that has roiled the country for months, underlining the fragility of its oil-dependent economy 20 years on from the US-led invasion.
Ali Mohsen al-Allaq, the new central bank governor, defended measures introduced to stabilise the monetary crisis that has led to an acute shortage of US dollars and a sharp fall in the dinar.
“We’ve focused on resolving the root of the problem and we’re seeing some positive indicators,” Allaq said in an interview, referring to central bank and government efforts to calm the panic that has taken hold since the crisis erupted in November.
This was when Iraqi’s authorities, with the US, implemented tough rules for banks as part of efforts to stamp out money laundering and surreptitious cash flows abroad.
But the package of measures had unintended consequences, including drastically cutting the dollar supply in an economy where the US currency is heavily favoured, pushing up inflation and creating hardships for Iraqis who trust neither their institutions nor their own currency.
Hamoody Ismail, 27, a personal trainer in Baghdad, said he was struggling to find the $4,300 he was due to pay in rent and business payments.
“My landlord refuses to take dinars and I’ve spent several days this week trying to find dollars.”
...
[ARTICLE CONTINUES]
http://iraqieconomists.net/en/2023/03/28/crippling-dollar-shortage-underscores-vulnerability-of-iraqs-oil-based-economy/
