DELTA: Deleting zeros or printing a new category? .. What saves the Iraqi dinar from collapsing against the dollar?
A new storm hit Iraq this time, with the local currency depreciating against the US dollar after political, security and health storms preceded it with the outbreak of the Corona virus, the decline in oil prices, the government reaching the stage of deficit in paying its employees’ salaries, and the House of Representatives forced to vote on the internal borrowing law to fill the deficit.
The government started with the initial steps to implement the provisions of the White Paper that it launched and talked about a lot over the past months to support its economy by raising the price of the dollar against the local currency from 1184 dinars to 1450 dinars to the dollar at the selling prices approved by the Ministry of Finance of the Central Bank, and this step was negatively reflected on the prices of goods, commodities and daily needs. For the citizen, with rates not less than 25%.
The crises were exacerbated by this step economically and preceded by health after it was limited to the political and security sides, and all this came at a time when Iraq is considered a rentier country that depends about 95% on oil to cover state expenses, especially salaries.
The Central Bank against a new issuance of the dinar at the present time (Al-Jazeera)
Loss of currency difference
Economic studies and research conducted by institutions concerned with economic affairs indicated that the central bank’s sales for the years 2004-2020 amounted to about $ 582 billion, with a loss estimated at 20.7 billion, as a result of the difference between the official price of the dollar and its price on the black market.
The decision to reduce the local currency – which came into effect a month ago – provides about 10 trillion dinars (6.9 billion dollars), targeting the segment of employees who were greatly affected by the decision and lost about 30% of income due to the high prices of basic commodities that are imported from abroad, including mainly food. Followed by medications.
Some opinions saw the need to find alternatives to save the dinar and prevent its deterioration further against the dollar, and in order to overcome this problem, talk about some solutions returned, specifically canceling zeros or printing a higher cash denomination such as 100,000 dinars, but the two possibilities seem to be outside the reform measures of the government and the central bank, because there are many Another obstacle is the lack of logistical supplies.
This comes at a time when the volume of cash transactions is very large in Iraq, and the vast majority of daily transactions are in cash without banking transactions. Note that less than 25% of Iraqis have bank accounts, and after the devaluation of the dinar against the dollar by about 23%, the exchange value increased by about 25% because most of the goods in the market are imported from abroad and in dollars.
Al-Naciri explained the danger of printing large denominations of currency for fear of facilitating smuggling and money laundering (Al-Jazeera)
The economic expert Aqeel Al-Nasiri believes that the last procedure does not take into account the reality and future of the Iraqi economy nor other risks, especially in printing a new currency denomination with a value of 100 thousand, stressing to Al-Jazeera Net that large groups facilitate the process of smuggling and laundering of money to increase its value and decrease its size, and thus facilitate smuggling or taking it out.
Al-Nasiri cites – for the above reasons – what the European Central Bank did to cancel the 500 euro denomination in 2019.
As for deleting zeros, it is the target closest to the ambition of the citizen – according to Al-Nasiri – as well as the dealer, because of its great facilities, especially in banking and account transactions, which reduces arithmetic errors and facilitates daily dealings of the citizen and the merchant.
But he warns at the same time that any change at the present time is added to the changes that have occurred and are expected to happen after the approval of the 2021 budget and the entry into force of the white paper, which will increase the confusion in the markets and the Iraqi economy, which is looking for stability.
For this, the economist proposes a two-year process plan based on the seriousness of relying on electronic banking transactions, and reducing the need for cash because of its great benefits, including “saving the costs of printing currency, controlling the movement of money, controlling the market, reducing money laundering operations and knowing the volume. The real income of the individual and companies and providing security for the dealer, in addition to transparency, and after two years the market and the citizen are ready for the process of deleting zeros.
As for the present time, neither the Iraqi economy nor the markets are ready for such a change, especially after the confusion that occurred after the devaluation of the dinar against the dollar, according to his opinion. Cougar considered that the decision to reduce the dinar was made to fill the budget deficit and support local production (Al-Jazeera Net)
In turn, the Central Bank does not agree with making any change to the local currency or addition, whether it is deleting zeros or printing the 100 thousand denomination in the current stage because of the lack of logistical supplies and the need for a long period of time, but it supports at the same time the second option more than the first in the case of differentiation between The best of them – says a bank official, attributing the reason to the impossibility of collecting all these quantities of the local currency within a short period in addition to the need for a long period to print the new currency.
A member of the Parliamentary Finance Committee, Jamal Cougar, supported the difficulty of printing a new currency, at a time when the decision was made to reduce the dinar against the dollar.
In an interview with Al-Jazeera Net, Cougar ruled out the Central Bank going to at least one of the two options, the current stage to restore the dinar to its previous state against the dollar, while continuing to print the 50 thousand denomination below 100 thousand, a trend that has nothing to do with the devaluation of the dinar.
The government was forced – as Cougar asserts – to go to the decision to reduce the dinar against the dollar to fill its deficit on the one hand and to support domestic production, which has declined significantly in recent years, in addition to relieving many of its burdens on the other hand.
FRANK26: DELTA ……………. I LOVE YOU BUT I DO NOT LISTEN TO ADVISORS NOR COUNSELORS NOR ECONOMIST NOR GOVERNMENT NOR CONCERNED INSTITUTION SOURCES CONSERNING THE IQD MR !!! THEIR OPINIONS ARE ALWAYS CARELESS AND IGNORANT OF THE ACTUAL STEPS BEING TAKEN BY THE CBI’S GOVERNOR.
I DISAGREE WITH YOUR ASSESSMENT OF THIS WORTHLESS ARTICLE.
IF IT WAS MUSTAFA OR KAZIMIE DIRECLY SAYING THIS ……………. THEN IT WOULD AGREE………BUT IT’S NOT.
AND THEY SURE AS HECK ARE NOT PRINTING ANYTHING NEW !!! IT’S ALREADY PRINTED AND THE CBI IS PREPARING TO RELEASE IT.
DELTA: DEAR BROTHER………….WE SHOULD CONSIDER ANY ARTICLE …..
Samson: Imprisonment of an official in the Investment Authority for a period of 4 years and confiscation of all his money
Today, Wednesday, the Integrity Misdemeanor Court sentenced an official in the Investment Authority to four years in prison and confiscated all his money.
The court stated in a statement that Al-Furat News received a copy of it that “Misdemeanor of integrity issued a prison sentence against the director general of the window in the Investment Authority (Saad Jamil Huwaidi) for a period of 4 years, confiscation of funds, and his dismissal from his post.” LINK
Samson: Parliamentary Finance: The budget will be ready next week
20th January, 2021
He explained that the Finance Committee will start amending the budget as of next week, and I think that the bill will be ready for voting during the next week. LINK
Jerry1971: GREAT NEWS Parliament Finance are informing that the budget will be ready for the vote during the next week …..hope it gets approved soon for the new rate to come out….. exciting times here in dinarland
Samson: Parliamentary finances “devote themselves to” the final drafting of the budget law
12:30 – 20/01/2021
The representative of the Iraqi Forces Union, Zaitoun Al-Dulaimi, revealed, on Wednesday, that the Finance Committee had moved outside the Parliament building in order to prepare the final wording of the budget bill, indicating that the committee’s transfer was due to its emptiness and not allowing the representatives to enter the committee to pressure it.
Al-Dulaimi said in a statement to / al-Maalouma /, that “the Parliamentary Finance Committee upon completion of the second reading of the budget bill decided to move from the Parliament building to the guest house in the Council of Ministers.”
She added that “the committee’s decision to the guest house, because the committee is empty and not allowing the deputies to enter the committee and put pressure on it,” stressing that “the committee’s decision is correct and will accelerate the completion of the final draft of the bill.
The House of Representatives had completed the second reading of the draft federal budget bill for the fiscal year 2021. LINK
Samson: The Constitutional Amendments Propose Reducing The Number Of Members Of Parliament To 180 Members
20th January, 2021
The Constitutional Amendments Committee in the Presidency of the Republic has completed its work, amid expectations that a committee will be formed between it and the House of Representatives to discuss it and come up with a common formula to pass it.
In an interview with the independent newspaper, Al-Sabah, a member of the committee, Mohsen Saadoun, said: “The committee headed by the chief advisor of the Presidency, Dr. Ali Al-Shukry, with a membership of 25 professors and specialists in constitutional law, made great efforts and conducted recorded discussions to complete the amendment of all articles, and there was nothing left. Except for its review, which was postponed due to the Korna pandemic, “noting that” the amendment is consistent with what is required by the deficiencies in the constitution. ”
He added, “The important constitutional articles that have been amended are to reduce the number of members of Parliament to 180 instead of 329, in addition to Article 76, which has been radically amended from what is in place, and one of its paragraphs states (assigning the candidate of the largest parliamentary bloc, To form the Council of Ministers)”
Saadoun explained that “the most important article is related to (the Union Council), for which several chapters have been set, after it was referred to in the constitution by one article and is enacted by law, knowing that it constitutes the second chamber of legislation, that is, a council of elders or notables, as it should be. At the level of the House of Representatives.
Saadoun continued: “The committee decided that there should be more powers for the president of the republic after they were formal, instead of making the system presidential, as the demonstrations that started in Baghdad and some provinces demanded,” stressing “the difficulty of transforming the system from parliamentary to presidential, which calls for amending many Constitutional articles ”, describing these amendments as“ the best among their counterparts that were previously presented.
Saadoun explained that “the House of Representatives decided to form a committee for constitutional amendments after popular pressure on them, while they should have formed this committee and completed its work within 4 months, as stipulated in Articles 126 and 142, and despite that, they did not reach any result.”
A member of the Constitutional Amendments Committee in the Presidency of the Republic confirmed that “Whoever wants the people’s interest chooses what is best for him,” indicating that “the general rule is that the country’s stability is linked to the stability of the constitution,” noting that “the amendments committee in the Presidency of the Republic will send the amendments to Parliament in preparation for forming a committee “Between the two, to discuss it and come up with a common formula for amendments between the two institutions that the people badly need.”
Saadoun hinted to the need for “a common political will that can pass these amendments by voting on them in the House of Representatives, so that there will be a constitutional amendment with the elections.” He expected that a meeting would be held during the next stage between the members of the committee to discuss these amendments, then adopt and publish them to be the basis for the constitutional amendment, and then they would be sent to Parliament to produce positive results in the interest of the Iraqi people. LINK