News Dated December 25th
Direct delivery of "MasterCard" cards to retired Iraqis residing in Amman
saay whaaaaat?
Al-Rafidain Bank announced on Saturday that it has started handing over MasterCard cards to retirees residing in the Jordanian capital, Amman.
The bank's media office said in a statement today that a delegation headed by the general manager of the bank, Abdul Hassan Jamal, visited Jordan with a delegation from the Central Bank of Iraq and supervised the process of issuing MasterCard cards for retirees residing in the Jordanian capital, Amman.
The statement indicated that the delegation met a number of retirees and listened to their problems and expressed its readiness to provide all support and assistance to retirees in Jordan to solve their problems, especially with regard to the delay in their salaries.
After that, the delegation visited the Iraqi embassy in Jordan and held a meeting with the Iraqi ambassador to discuss the obstacles and problems that hinder the payment of retirees' salaries and strive to provide everything possible to alleviate the suffering of retirees.
Kuwaiti Ambassador: A decision will be issued to permanently close the compensation file
The Kuwaiti ambassador to Baghdad, Salem Al-Zamanan, confirmed today, Saturday, that the Compensation Committee will issue a decision to permanently close the file of financial compensation.
Al-Zamanan said during his visit to Anbar Governorate, in a statement to the official agency, followed by "Nass" (December 25, 2021), "I am very happy to be among my family and brothers in Anbar, which is witnessing a major urban campaign," noting that "Kuwait does not support Anbar." It only supports the whole of Iraq and is always interested in its security and stability."
He added, "Since 2003, Kuwait has been a supporter of Iraq in various fields and has participated in alleviating the suffering of the displaced by building camps and providing them with the equipment they need, caravan schools and mobile medical clinics."
He pointed out that "Kuwait at the donors' conference in 2018 had contributions through a $100 million grant, which was allocated to the stricken governorates, including Anbar Governorate," noting that "there are pledges in the Kuwait conference that still exist, as one billion dollars were allocated for the rehabilitation of infrastructure, as well as billion dollar investment.
He continued, "We are always present with the brothers in Iraq, and they are our people, our brothers and our brothers," stressing that "there are great plans in the future that will be announced soon."
On the compensation file, Al-Zamanan said, "The compensation approved by the United Nations had a deduction to meet it, and a decision will be issued close to the Compensation Committee to close this file permanently."
The Kuwaiti lawyer and former deputy, Suleiman Al-Fazi', confirmed that Kuwait will not demand Iraq again for compensation or financial belongings, after the end of paying the compensation due for the events of 1991.
Al-Fazia said, during his participation with his colleague, Saadoun Mohsen Damad, and followed by “Nas” (December 23, 2021): “I do not think that the State of Kuwait will demand Iraq again, to pay any compensation, but rather Kuwait seeks to achieve more stability for Iraq, and the achievements of previous governments. I was able to bring about a rapprochement in the Iraq-Kuwait file, where we reached synergy, and we reached a great result in this path.”
He added that "the last four years, there was an important achievement, with regard to the file of Kuwaiti victims, and the handing over of their remains to their country in cooperation with Iraq.
And the Central Bank of Iraq announced, earlier, the completion of the payment of compensation to the State of Kuwait.
The bank stated in a statement, of which “Nass” received a copy, (December 21, 2021), that “the payment of the last remaining installment of the State of Kuwait’s compensation amounting to (44) million US dollars has been completed, and thus Iraq has completed the payment of the full compensation amounts approved by The United Nations Compensation Committee of the UN Security Council pursuant to Resolution No. (687) for the year 1991, with a total of (52.4) billion US dollars for the State of Kuwait.
The statement indicated that "it is hoped that ending the payment of compensation will contribute to removing Iraq from Chapter VII, as well as its impact on re-integrating the Iraqi banking system with the global banking system and benefiting from the financial abundance that will be achieved."
The legal expert, Ali Al-Tamimi, confirmed, on Thursday, that Iraq has fulfilled all the financial benefits that it accumulated due to the invasion of Kuwait, stressing that this matter has positive repercussions on the economy in the coming years.
Al-Tamimi said in an exclusive statement to "Nass" (December 23, 2021), that "Iraq was placed in Chapter VII of the Charter of the United Nations after entering Kuwait, according to UN Security Council Resolution 666 in 1990, and that this decision came after warnings, warnings and an economic siege imposed On Iraq, then international sanctions came to place it under Chapter VII, which means that Iraq’s character at the international level has become weak, so it is not permissible for it to contract and conclude import and export agreements.
He added, "Iraq exited from Chapter VII in 2017 under Resolution No. 23/90 - but entered Chapter VI due to the presence of related matters with Kuwait worth 4 and a half billion dollars (compensations), and after it fulfilled these financial obligations, the Iraqi government and its representative at the United Nations must Notifying the Security Council in order for the Council to issue its decision that Iraq has completely completed Chapter VI and VII
Iraq .. a move to increase the grant of 3 categories in the 2022 budget
Tehran: The frozen Iranian assets in Iraq range from 5 to 7 billion dollars
Head of the Iranian-Iraqi Chamber of Commerce, Yahya Al Ishaq, said today, Saturday, that the process of releasing Iran's frozen assets in the neighboring country is going smoothly.
Ishaq added, in a statement followed by Mawazine News, that "the majority of Iraq's dues are related to the energy, electricity and gas sector, while there are no arrears related to the private sector, which receives its dues regarding export goods."
He added, however, that "some contractors working in the technical, engineering and urban services sector are facing some problems, which are being addressed."
He added, "The Iraqi side recently announced its readiness to pay all of its debts to Iran, the majority of which pertain to gas sales," noting that "the frozen Iranian assets in Iraq range from 5 to 7 billion dollars
Since the exchange rate change...the annual inflation in Iraq has risen by 1000 percent
The American "Global finance" magazine revealed that the annual inflation in Iraq rose to nearly 1000% in one year.
And the magazine stated in its table of 191 countries that were included about the inflation rates in these countries, seen by Shafak News Agency, that "the annual inflation of Iraq for the month of October 2021 rose to 6.4% compared to the same month of last year 2020, which amounted to 0.6%, with an increase rate of 966.67%".
She added that "inflation also rose from the same month of 2019, in which the annual inflation was 0.2%," noting that "Iraq ranked fifth in the Arab world in terms of high inflation after Sudan, where annual inflation reached 194.6%, and Yemen 40.8 %, Libya 21.1%, Algeria 6.5%", while the lowest Arab countries in terms of annual inflation were Bahrain, at 1%."
Globally, Venezuela came first with the most annual inflation with a rate of 2,700%, followed by Sudan with 194.6%, then Zimbabwe with a rate of 92.5%, while the most declining country in its annual inflation was Samoa with a decrease of -3%, preceded by Comoros with a decrease of -1%.
The magazine's report noted that "Afghanistan, Argentina, Lebanon, Somalia and Syria" are not included in the table because there are no statistics for these countries.
Continuing inflation may end up in stagflation where economic growth slows, unemployment remains high, inflation remains at high levels, and what is (much) worse, although very uncommon, is the specter of a hyperinflation scenario, in which prices grow unsustainably Control it which leads to a depreciation of the currency.
The American magazine concluded its report by saying that "reducing inflation does not mean that prices will return to what they were before, as it will stop growing at an accelerated pace."
It is noteworthy that the annual inflation in Iraq rose significantly after raising the exchange rate of the dollar in the budget for the current year 2021, to equal every 100 dollars 145 thousand dinars, after it was 121 thousand.
News Dated December 24th,
The International Monetary Fund extends the emergency financing program
The International Monetary Fund announced that it will extend for an additional 18 months access to the emergency financing program to help countries severely affected by the Covid-19 pandemic.
A statement issued by the Washington-based fund said that its Executive Board had approved a “temporary increase” to the limits to the use of its resources under the emergency financing instruments until June 2023.
And in April 2020, when the first wave of infections and deaths from the Corona virus hit the world, the IMF provided facilities to countries to access such aid, including raising the level of financing that countries can obtain.
These programs have already been extended twice, in September 2020 and last March, and the Executive Board has also agreed to reduce all other temporarily increased benefit limits to pre-pandemic levels as of January 1, 2022.
The Fund stressed that the decision guarantees "continuous access" for member states to the IMF's emergency financing programs in the event of urgent problems in the balance of payments.
They include the Rapid Credit Facility, an interest-free program available to low-income countries, and a rapid financing instrument available to all members of the Fund, which can disburse funds very quickly to help member countries implement emergency response policies
Iraq And Iran Are Discussing The Issue Of Electricity And Reducing Gas Prices
On Friday, The Person In Charge Of Managing The Ministry Of Electricity, Adel Karim, Discussed With The Iranian Ambassador, Iraj Masjedi, Gas Rates And Price Reduction.
A Statement By The Ministry, Received By Al-Ahed News, Stated That "The Tasked With The Duties Of The Minister Of Electricity, Engineer Adel Karim, Received In His Office At The Ministry's Headquarters The Iranian Ambassador And Discussed With Him Ways Of Joint Cooperation In The Field Of Electrical Energy."
The Statement Added That "The Meeting Discussed Gas Supplies From The Iranian Side To Maintain The Momentum Of Work At Production Stations, And Maintenance Of Broken Transformers, As Well As Discussing A Number Of Issues Related To Gas Rates, The First Is The Possibility Of Reducing Prices, And The Second Is The Issue Of Fines, And That There Is A Contract Signed Between The Two Parties Stipulating The Necessity Of Commitment Its Terms.”
The Iranian Ambassador Stressed, According To The Statement, That "His Country's Government Is Interested In Cooperation With Iraq And Hopes To Overcome And Solve All Problems And Obstacles, And It Has A Specific Energy To Pass Them On To Iraq On A Commercial Basis, And It Does Not Have A Large Surplus," Explaining That "Iran Is Working With Iraq With Strong Ties And Good And Great Joint Relations."
For His Part, The Minister Explained That “We Greatly Appreciate The Energy Situation In Iran, But There Are Contracts That Must Be Adhered To, And The Price Equation Is Keen To Be Suitable For Both Parties, And That It Is Necessary To Refer To The Central Government For The Purpose Of Extending Contracts And Their Dealings, And That There Are Legal Consensus Governing The Conclusion Of Contracts, We Are Continuing Our Relations With The Iranian Islamic Government In All Fields, Including The Electricity Sector.
Al-Kazemi’s advisor: $79 billion in Iraq’s internal and external debt
Today, Friday, the economic advisor to the Prime Minister, Mazhar Muhammad Salih, determined the size of Iraq's remaining internal and external debts and the mechanism for paying them.
Saleh said in a statement to the official agency, which was followed by (Al-Oula News), that "with regard to foreign debt, there is a suspended amount that has not been settled under the Paris Club Agreement to settle Iraq's external debt, and it goes back to the so-called debts before 1990, estimated at 41 billion dollars, which requires that the debt is correct. To be discounted by 80% or more according to the terms of the Paris Club agreement, with no more than $8-9 billion.”
He added that "the aforementioned amount appears in the accounting books of four Gulf countries, at a rate of approximately 66%, distributed between Saudi Arabia, Kuwait, Qatar and the Emirates, and it dates back to the era of the Iran-Iraq war and is expected to be written off by 100% because it is a debt associated with wars and not for development purposes."
He pointed out that "the remaining 34% belongs to eight different countries, and in general, it can be said that the sovereign debt on Iraq is divided between the group of Paris Club countries and countries outside the Paris Club, and commercial debts," explaining that "Iraq's foreign debts, especially debts before the year 1990 was settled under the Paris Club Agreement 2004, where it was agreed to write off 80% and more of those debts whose initial estimates at the time approached 129 billion dollars, and most of them were written off and the rest of the debt was scheduled for 20 years.
And he indicated that "despite the fact that Iraq made some external borrowings due to financial distress after the year 2014 as a result of the war on ISIS terrorism and the drop in oil prices and its direct impact on the country's public budgets, the total external public debt subject to repayment obligations does not exceed today 20 billion dollars."
He added: "As for the internal public debt, it is the largest today and amounts to about 50 billion dollars, but it is a debt between government financial institutions exclusively, and it is settled within the internal economic policies, and it is a low-risk debt," noting that "the increase in oil revenues will provide high financial leverage to settle the debts." The remnants of indebtedness and soft choices.”
Saleh explained: “In light of the foregoing, the public debt components can be re-analyzed as follows: As the internal public debt touched nearly $50 billion, 67% of it goes back to the Central Bank of Iraq with an average annual interest of 3%, while the debt the external, the remaining amount to be paid is about 20 billion dollars.”
He stressed that “recalculating the actual external public debt is $29 billion, and the actual total internal and external debt is $79 billion, and assuming that the gross domestic product for the year 2021 is $178 billion, the ratio of the actual debt to the mentioned output is about 45%, and it is still It is within the safe range of EU standards for stability and growth.
Will the verdict hearing on the election results be postponed? .. A legal expert clarifies
Legal expert, Tariq Harb, revealed, today, Friday, the fate of the Federal Court session to pronounce the judgment of the lawsuit filed regarding falsifying the election results and demanding their cancellation.
Harb said in an interview with "Mawazine News", that "according to the pleadings law, the hearing will be postponed to the next day, meaning that the hearing will be next Monday."
He added, "The law says that if the trial date falls on an official holiday, the next day will be a date for the hearing.
Legal: The Government Can Remove Iraq From Chapter VI After Paying Kuwait Compensation
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, told {Euphrates News}: "The percentage of deduction that was allocated to compensation for the Kuwaiti woman will return to the financial budget to enhance revenues."
And regarding the possibility of allocating this percentage to the Generation and Sovereign Funds, Saleh said, “The idea of establishing such funds is usually for small oil countries, where their money is invested outside the country in funds, securities, real estate and bonds to generate financial income for the country.”
However, he added, "But these projects are for the surplus economy and not for the deficit economy, as in Iraq, which does not have a financial surplus for these funds with a deficit in its budget."
The day before yesterday, Iraq announced the closure of the file of compensation payments to Kuwait, which amounted to 52 billion dollars, more than 30 years after the Saddam regime invaded the neighboring country.
And the Central Bank of Iraq announced last Tuesday, the payment of the last installment of $ 44 million.
A Year On The Rise In The Value Of The Dollar
A year has passed since the Iraqi government decided to raise the value of selling the US dollar against the Iraqi dinar, so the selling price of the US dollar was 1182 Iraqi dinars and it became 1460 Iraqi dinars, and it is noteworthy that the official responsible for the exchange value and monetary policy is the Central Bank of Iraq, because it is the one who sells dollars and hard currency to banks and companies Banking and brokers.
After that, Parliament approved the Federal General Budget Law for the fiscal year 2021 No. 23 for the year 2021, which included the exchange rate of the US dollar at the new value, in Article (I-B), and where the objection of some deputies to the exchange rate was rejected, considering that changing the price is not within the powers of the House of Representatives. Rather, the Central Bank has complete independence in formulating and implementing its monetary policy, according to its new Law No. 56 of 2004, which allowed it financial, administrative and legal independence.
Where the law stipulates in Article (16-b) as follows:
Formulating policies that would achieve the main objectives of monetary policy, including the exchange rate policy, restrictions imposed on the operations carried out by the Central Bank of Iraq in the open market, the interest rate policies that are imposed on the procurement of funds for the banking sector, and all forms and levels of reserves that are required from diaper banks. However, the board does not have the authority to join a fixed exchange rate regime such as a monetary union or a currency board)
- The jurisdiction of the Federal Court over him
As for Article (63-4) a text that the Federal Court does not have jurisdiction over the Central Bank’s procedures regarding the exchange rate, and the text is:
(The court does not have jurisdiction to review decisions or procedures of the Central Bank of Iraq regarding the development and implementation of monetary policy, including foreign exchange rate policy).
- The relationship of the House of Representatives with the Central Bank of Iraq
The Central Bank of Iraq Law No. (56) of 2004 stipulated in appointing the governor that he should have a “university degree at least and have a long professional experience and specialists in banking, economic, financial, commercial or law fields (M 12/1). He has the rank of Minister and is appointed upon the proposal of the Prime Minister and the approval of the House of Representatives (Article 13 / A). This means that the House of Representatives has a decisive role in deciding who will manage the Central Bank of Iraq.
As there is no explicit text about the subordination of the Central Bank to the House of Representatives, but the governor of the bank is in the position of a minister and is treated as a minister, and the House of Representatives can vote on him and hold him accountable as well. Thus, the House of Representatives can hold accountable the deviation or bad decisions, if any, by the Central Bank of Iraq.
- Among the points that are important to clarify here are:
The decision came at a request from the Ministry of Finance to the Central Bank of Iraq. It came at a request from the Iraqi government, and this means that the government interfered in the work of the Central Bank of Iraq, and this contradicts Article (16-b) that we mentioned above.
The decision was made between the government and the active political forces
The Iraqi constitution talked about multiple bodies, some of which linked the executive authority. As for the central bank, it is supposed to be subject to a certain authority, especially the parliament, that is, the legislative authority represented by the House of Representatives, because its association with the government is incorrect, as we have seen in past eras. But a member of the Finance Committee, Rep. Magda Al-Tamimi said on Tuesday 16/3/2021 that changing the dollar exchange rate is not within the authority of the Finance Committee.
Everyone noted that the decision left clear damage to important segments of the Iraqi people, especially the middle and poor classes, and this led to an increase in the prices of consumer goods in the local markets and increased the suffering of the simple citizen due to the increase in the value of materials in the local market by 23%, and thus it harmed more than 60% from the Iraqis.
- At the time, the Iraqi government had several justifications, namely:
1- Strengthening the financial budget by providing 23% of the salaries of employees who receive salaries from the government, such as retirees and daily wage earners.
2- The government could save between 20 to 23 trillion dinars as a result of the decrease in the real value of employees’ salaries, which rebounded to the benefit of the country’s operational and investment budget.
3- An increase in the size of the monetary reserve in the Central Bank or the maintenance of the current reserve.
4- Supporting industry and agriculture.
5- Reducing sales of hard currency in the banknote auction, and thus reducing the exit of hard currency outside Iraq.
- What are the downsides to the decision?
1- The rise in overall prices in the country, for example, that real estate prices rose by about 50%, in addition to the fact that some foodstuffs increased their prices by more than 23%.
2- The high rate of unemployment and the level of inflation of large numbers that Iraq has not witnessed since 2003.
3- The annual inflation rate increased by 8% last November compared to the same month of last year 2020.
4- Iraqis lost confidence in the government, which was reflected in the rise in consumer prices at a rate much greater than the change in the exchange rate.
5- The value of the Iraqi people’s revenues in the public and private sectors decreased by 23%
6- The return of the rate of sales in the banknote market to its previous era, as the Central Bank announced that sales to the dollar on December 21, 2021 amounted to 197 million dollars.
- topic discussion
1 - It should be noted that 90% of Iraq's consumer needs are imported, and that the government should have exempted raw materials (which are not available locally) entering the local industry from taxes and customs, thus reducing the burden on the Iraqi citizen.
2 - The increase in reserves by an estimated 15 billion dollars during the current year did not come as a result of the exchange rate change, but rather due to the recovery of oil prices globally, and therefore one of the justifications used by the Central Bank has vanished.
3- As for the point of support for industry and agriculture, it has two parts
A - Part of the industry is dependent on raw materials that are imported from abroad, and therefore the decision has harmed the local industry.
B - The exemption of goods from customs and tax, and I mean the agreement with Jordan, has harmed the local industry and made it unable to compete with the importer.
4 - One of the goals of this decision is to reduce the deficit, and one of the ways of that process is to maximize revenues, especially non-oil revenues, and the repeated exemptions on goods and commodities from composting and tax have violated this goal.
5 - The decision was made by the government and with the approval of most of the political blocs and parliament's approval of the federal general budget, which included the new price, and therefore they are the ones who bear the responsibility for that.
6 - The affiliation of the central bank to the government is incorrect and does not exist, but whether it is subject to the control or supervision of the Iraqi parliament, the issue is not clear and this must be determined.
- Conclusion
The decision had some benefits for the government, such as raising the hard currency reserve to 64 billion dollars, as well as negatives in the Iraqi economy, such as the rise in inflation to 8.4%, according to a statement by the Ministry of Planning on 12/22-2021, but at the same time it harmed many citizens. They are from the poor and middle classes, and increased in unemployment and poverty.
The exchange rate of the dollar against the Iraqi dinar in Iraq today, Friday, December 24, 2022
Favorite Currencies Forex Quotes
| Symbol | Bid | Ask | High | Low | Open | Change | Time |
|---|---|---|---|---|---|---|---|
| USD/IQD |  1457.0000 |  1462.0000 | 1458.3000 | 1458.1000 | 1458.3000 | 0.5000 | 00:00 |
| USD/VND | 22840.0000 | 22860.0000 | 22956.8700 | 22919.3900 | 22956.8700 | -39.5600 | 03:58 |
| USD/CNY |  6.3670 | 6.3690 | 6.3700 | 6.3669 | 6.3686 | -0.0023 | 04:33 |
| USD/KWD | 0.3020 | 0.3030 | 0.3023 | 0.3022 | 0.3023 | -0.0002 | 04:20 |
| GBP/USD | 1.3402 | 1.3411 | 1.3415 | 1.3385 | 1.3395 | 0.0007 | 04:39 |
| USD/IRR | 42025.0000 | 42500.0000 | 42257.1000 | 42240.5000 | 42257.1000 | 25.0000 | 00:00 |
| USD/IDR | 14180.0000 | 14180.0000 | 14218.0000 | 14146.0000 | 14174.0000 | 6.0000 | 04:35 |
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Al-Kazemi’s advisor: $79 billion in Iraq’s internal and external debt
Today, Friday, the economic advisor to the Prime Minister, Mazhar Muhammad Salih, determined the size of Iraq's remaining internal and external debts and the mechanism for paying them.
Saleh said in a statement to the official agency, which was followed by (Al-Oula News), that "with regard to foreign debt, there is a suspended amount that has not been settled under the Paris Club Agreement to settle Iraq's external debt, and it goes back to the so-called debts before 1990, estimated at 41 billion dollars, which requires that the debt is correct. To be discounted by 80% or more according to the terms of the Paris Club agreement, with no more than $8-9 billion.”
He added that "the aforementioned amount appears in the accounting books of four Gulf countries, at a rate of approximately 66%, distributed between Saudi Arabia, Kuwait, Qatar and the Emirates, and it dates back to the era of the Iran-Iraq war and is expected to be written off by 100% because it is a debt associated with wars and not for development purposes."
He pointed out that "the remaining 34% belongs to eight different countries, and in general, it can be said that the sovereign debt on Iraq is divided between the group of Paris Club countries and countries outside the Paris Club, and commercial debts," explaining that "Iraq's foreign debts, especially debts before the year 1990 was settled under the Paris Club Agreement 2004, where it was agreed to write off 80% and more of those debts whose initial estimates at the time approached 129 billion dollars, and most of them were written off and the rest of the debt was scheduled for 20 years.
And he indicated that "despite the fact that Iraq made some external borrowings due to financial distress after the year 2014 as a result of the war on ISIS terrorism and the drop in oil prices and its direct impact on the country's public budgets, the total external public debt subject to repayment obligations does not exceed today 20 billion dollars."
He added: "As for the internal public debt, it is the largest today and amounts to about 50 billion dollars, but it is a debt between government financial institutions exclusively, and it is settled within the internal economic policies, and it is a low-risk debt," noting that "the increase in oil revenues will provide high financial leverage to settle the debts." The remnants of indebtedness and soft choices.”
Saleh explained: “In light of the foregoing, the public debt components can be re-analyzed as follows: As the internal public debt touched nearly $50 billion, 67% of it goes back to the Central Bank of Iraq with an average annual interest of 3%, while the debt the external, the remaining amount to be paid is about 20 billion dollars.”
He stressed that “recalculating the actual external public debt is $29 billion, and the actual total internal and external debt is $79 billion, and assuming that the gross domestic product for the year 2021 is $178 billion, the ratio of the actual debt to the mentioned output is about 45%, and it is still It is within the safe range of EU standards for stability and growth.
The International Monetary Fund extends the emergency financing program
The International Monetary Fund announced that it will extend for an additional 18 months access to the emergency financing program to help countries severely affected by the Covid-19 pandemic.
A statement issued by the Washington-based fund said that its Executive Board had approved a “temporary increase” to the limits to the use of its resources under the emergency financing instruments until June 2023.
And in April 2020, when the first wave of infections and deaths from the Corona virus hit the world, the IMF provided facilities to countries to access such aid, including raising the level of financing that countries can obtain.
These programs have already been extended twice, in September 2020 and last March, and the Executive Board has also agreed to reduce all other temporarily increased benefit limits to pre-pandemic levels as of January 1, 2022.
The Fund stressed that the decision guarantees "continuous access" for member states to the IMF's emergency financing programs in the event of urgent problems in the balance of payments.
They include the Rapid Credit Facility, an interest-free program available to low-income countries, and a rapid financing instrument available to all members of the Fund, which can disburse funds very quickly to help member countries implement emergency response policies
A Year On The Rise In The Value Of The Dollar
A year has passed since the Iraqi government decided to raise the value of selling the US dollar against the Iraqi dinar, so the selling price of the US dollar was 1182 Iraqi dinars and it became 1460 Iraqi dinars, and it is noteworthy that the official responsible for the exchange value and monetary policy is the Central Bank of Iraq, because it is the one who sells dollars and hard currency to banks and companies Banking and brokers.
After that, Parliament approved the Federal General Budget Law for the fiscal year 2021 No. 23 for the year 2021, which included the exchange rate of the US dollar at the new value, in Article (I-B), and where the objection of some deputies to the exchange rate was rejected, considering that changing the price is not within the powers of the House of Representatives. Rather, the Central Bank has complete independence in formulating and implementing its monetary policy, according to its new Law No. 56 of 2004, which allowed it financial, administrative and legal independence.
Where the law stipulates in Article (16-b) as follows:
Formulating policies that would achieve the main objectives of monetary policy, including the exchange rate policy, restrictions imposed on the operations carried out by the Central Bank of Iraq in the open market, the interest rate policies that are imposed on the procurement of funds for the banking sector, and all forms and levels of reserves that are required from diaper banks. However, the board does not have the authority to join a fixed exchange rate regime such as a monetary union or a currency board)
- The jurisdiction of the Federal Court over him
As for Article (63-4) a text that the Federal Court does not have jurisdiction over the Central Bank’s procedures regarding the exchange rate, and the text is:
(The court does not have jurisdiction to review decisions or procedures of the Central Bank of Iraq regarding the development and implementation of monetary policy, including foreign exchange rate policy).
- The relationship of the House of Representatives with the Central Bank of Iraq
The Central Bank of Iraq Law No. (56) of 2004 stipulated in appointing the governor that he should have a “university degree at least and have a long professional experience and specialists in banking, economic, financial, commercial or law fields (M 12/1). He has the rank of Minister and is appointed upon the proposal of the Prime Minister and the approval of the House of Representatives (Article 13 / A). This means that the House of Representatives has a decisive role in deciding who will manage the Central Bank of Iraq.
As there is no explicit text about the subordination of the Central Bank to the House of Representatives, but the governor of the bank is in the position of a minister and is treated as a minister, and the House of Representatives can vote on him and hold him accountable as well. Thus, the House of Representatives can hold accountable the deviation or bad decisions, if any, by the Central Bank of Iraq.
- Among the points that are important to clarify here are:
The decision came at a request from the Ministry of Finance to the Central Bank of Iraq. It came at a request from the Iraqi government, and this means that the government interfered in the work of the Central Bank of Iraq, and this contradicts Article (16-b) that we mentioned above.
The decision was made between the government and the active political forces
The Iraqi constitution talked about multiple bodies, some of which linked the executive authority. As for the central bank, it is supposed to be subject to a certain authority, especially the parliament, that is, the legislative authority represented by the House of Representatives, because its association with the government is incorrect, as we have seen in past eras. But a member of the Finance Committee, Rep. Magda Al-Tamimi said on Tuesday 16/3/2021 that changing the dollar exchange rate is not within the authority of the Finance Committee.
Everyone noted that the decision left clear damage to important segments of the Iraqi people, especially the middle and poor classes, and this led to an increase in the prices of consumer goods in the local markets and increased the suffering of the simple citizen due to the increase in the value of materials in the local market by 23%, and thus it harmed more than 60% from the Iraqis.
- At the time, the Iraqi government had several justifications, namely:
1- Strengthening the financial budget by providing 23% of the salaries of employees who receive salaries from the government, such as retirees and daily wage earners.
2- The government could save between 20 to 23 trillion dinars as a result of the decrease in the real value of employees’ salaries, which rebounded to the benefit of the country’s operational and investment budget.
3- An increase in the size of the monetary reserve in the Central Bank or the maintenance of the current reserve.
4- Supporting industry and agriculture.
5- Reducing sales of hard currency in the banknote auction, and thus reducing the exit of hard currency outside Iraq.
- What are the downsides to the decision?
1- The rise in overall prices in the country, for example, that real estate prices rose by about 50%, in addition to the fact that some foodstuffs increased their prices by more than 23%.
2- The high rate of unemployment and the level of inflation of large numbers that Iraq has not witnessed since 2003.
3- The annual inflation rate increased by 8% last November compared to the same month of last year 2020.
4- Iraqis lost confidence in the government, which was reflected in the rise in consumer prices at a rate much greater than the change in the exchange rate.
5- The value of the Iraqi people’s revenues in the public and private sectors decreased by 23%
6- The return of the rate of sales in the banknote market to its previous era, as the Central Bank announced that sales to the dollar on December 21, 2021 amounted to 197 million dollars.
- topic discussion
1 - It should be noted that 90% of Iraq's consumer needs are imported, and that the government should have exempted raw materials (which are not available locally) entering the local industry from taxes and customs, thus reducing the burden on the Iraqi citizen.
2 - The increase in reserves by an estimated 15 billion dollars during the current year did not come as a result of the exchange rate change, but rather due to the recovery of oil prices globally, and therefore one of the justifications used by the Central Bank has vanished.
3- As for the point of support for industry and agriculture, it has two parts
A - Part of the industry is dependent on raw materials that are imported from abroad, and therefore the decision has harmed the local industry.
B - The exemption of goods from customs and tax, and I mean the agreement with Jordan, has harmed the local industry and made it unable to compete with the importer.
4 - One of the goals of this decision is to reduce the deficit, and one of the ways of that process is to maximize revenues, especially non-oil revenues, and the repeated exemptions on goods and commodities from composting and tax have violated this goal.
5 - The decision was made by the government and with the approval of most of the political blocs and parliament's approval of the federal general budget, which included the new price, and therefore they are the ones who bear the responsibility for that.
6 - The affiliation of the central bank to the government is incorrect and does not exist, but whether it is subject to the control or supervision of the Iraqi parliament, the issue is not clear and this must be determined.
- Conclusion
The decision had some benefits for the government, such as raising the hard currency reserve to 64 billion dollars, as well as negatives in the Iraqi economy, such as the rise in inflation to 8.4%, according to a statement by the Ministry of Planning on 12/22-2021, but at the same time it harmed many citizens. They are from the poor and middle classes, and increased in unemployment and poverty.
CBI Update: Just a note:
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