IMF praises positive developments in Iraq in financial and banking aspects
The International Monetary Fund praised, on Wednesday, the positive developments witnessed by Iraq in the financial and banking aspects.
A statement by the Presidency of the Republic received by (Al-Rabia) stated that “President of the Republic, Abdul Latif Rashid, received today, Wednesday, at his residence in the Azerbaijani capital, Baku, the Director of the International Monetary Fund, Kristalina Georgieva, within the framework of His Excellency’s participation in the United Nations Climate Conference (COP29).”
He added, “During the meeting, the cooperation relations between Iraq and the International Monetary Fund and ways to enhance them in the context of supporting the development path in Iraq were reviewed. During the meeting, His Excellency the President of the Republic stressed Iraq’s endeavor to implement integrated programs and plans to stimulate the economy and support the financial and banking reform process.”
Rashid thanked the International Monetary Fund for its efforts to support Iraq’s budget during the crises it faced and overcame, stressing the importance of completing coordination and joint cooperation in order to continue efforts to combat corruption, support investment, and develop the private sector, leading to building a strong, cohesive, and recovering economy.
For her part, Kristalina explained that “the primary mission of the International Monetary Fund is to provide support to countries’ budgets during crises, and this is what the Fund did with Iraq during a difficult period, but it overcame it,” praising “the positive developments that Iraq witnessed in the financial and banking aspects and in the field of stimulating the investment environment, which contributed to a decrease in the inflation rate, growth in the non-oil GDP, and implementation of controls that contribute to combating money laundering.”
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Sudanese advisor indicates an increase in the Central Bank’s foreign exchange reserves
The Prime Minister’s Financial Policy Advisor, Mazhar Mohammed Salih, confirmed today, Wednesday, the increase in the accumulation of foreign reserves of the Central Bank of Iraq.
Saleh said in an interview with Al-Maalouma Agency, “There is a direct correlation between the current account surplus of the Iraqi balance of payments and the development of the foreign reserves of the Central Bank of Iraq.”
He explained that “as long as there is a surplus in the current account of the balance of payments that has been achieved during the current year, which is positively indicated by the accumulation of the foreign reserves of the Central Bank of Iraq during 2021, with a change rate towards an increase of more than 20% compared to the levels of 2020.”
He pointed out that “foreign currency coverage of the Iraqi dinar has increased and is approaching matching its coverage of the basic currency.”
He added that “the monetary policy of the Central Bank of Iraq enjoys the availability of a strong foreign reserve tool that can maintain the purchasing power of the Iraqi dinar and confront inflationary expectations with high and comfortable capacity through the power of intervention in imposing stability in the exchange market through open market operations practiced by the monetary authority to achieve the operational goals of monetary policy with ease and flexibility.”
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The Iraqi government reveals the reasons for the scarcity of gold in its reserves compared to other currencies
The financial advisor to the Prime Minister, revealed on Wednesday the reasons for the scarcity of gold in the state’s reserves compared to other hard currencies.
Saleh told Shafaq News Agency, “Some countries still only keep quantities of gold as part of their cash reserves, as the greater focus today is on other assets that can be quickly and easily converted into productive assets that generate returns in the long term.”
He added that “countries are moving away from using gold as a primary store of cash reserves for several reasons related to international economic developments and changes in the nature of modern financial systems, which are restricted by the following main reasons: low returns compared to other assets such as: investment in deposits, or government bonds with a very high credit rating, and far from risks, so gold does not achieve fixed returns like government bonds.”
Saleh continued, saying: “Therefore, most countries prefer to hold assets that provide them with a fixed and stable income, such as: US or European Treasury bonds that can actually generate annual interest. Also, it is difficult to deal with gold in times of crisis, as it is difficult to convert gold into liquidity quickly compared to other financial assets such as foreign currencies and bonds.”
He explained that “the changes in the global financial system since World War II have imposed conditions in which most countries have come to rely on the US dollar as a primary reserve, given that it is the most widely accepted and used global currency in international transactions, which makes holding the dollar or assets linked to it a more flexible option.
The Prime Minister’s advisor pointed out that “the cost of storing gold requires secure spaces to protect it from theft or damage, which may represent an additional burden compared to digital financial assets or liquidity.”
He pointed out that “countries seek to diversify their reserves to include different currencies and various financial assets to achieve greater stability, instead of relying solely on gold to avoid the gold asset cycle and its problems. Therefore, the standard rule is that gold should not exceed an average of 10% of the total value of countries’ reserves.”
Iraq has a foreign exchange reserve of about $100 billion, and 152 tons of gold in its reserves, equivalent to about $12 billion.
