Specialists point out that reducing the dollar sales ceiling for travelers in Iraq from $7,000 to only $2,000 will reduce fraud through “rented travelers,”, which will ease the momentum at the banks’ gates, but according to specialists, will harm “real travelers”, and will raise the dollar price in the parallel market, which will reflect negatively on the prices of all materials.
The Central Bank of Iraq had set the sale of dollars to travelers to $2,000 instead of $7,000 as of Sunday, 2023/3/19 and at the official price of 1320.
This comes a day after a new mechanism was put in place starting on Wednesday to sell dollars to travelers at the bank’s port at Baghdad International Airport and set $3,000 in cash as a higher ceiling for selling dollars to travelers instead of $7,000 and at the official Central Bank of Iraq’s official price of 1320.
Those decisions raised resentment from some citizens who called for such decisions to be deliberate “not arbitrary”, causing a crisis and exploitation by some to deport citizens free of charge, calling for the need to develop a study by specialists to address them.
Pros and cons
Specialists explain that the measures of the Central Bank of Iraq are intended to preserve the amounts of cash from foreign currencies, specifically the dollar, from holding it within the local economy, and not to leave a large amount of it out of the country, which will directly affect the smuggling of the dollar and keep foreign currency out of the reach of the local economy.
A set of pros and cons emerges in this area, according to the economist, Dr. Salem Swadi, as for the negatives, “the supply of the dollar will be in limited quantities, and therefore will affect the rise in the price of the Iraqi dinar against the dollar, which will be reflected on price levels in general, and to economic inflation at the moment, but it is hoped that over time there will be a balance between supply and demand, which will directly affect the overall stability of prices.”
On the pros of reducing the upper limit for selling the dollar, Sawadi explains to Shafaq News, “the central bank’s attempt to rely on the electronic card system and the cash (domestic or foreign) – instead of being carried by individuals in their wallets or within their reach – in (MasterCard) or with a credit card carried by travelers or even individuals within the local economy.”
He shows: “This is a positive factor so that the monetary mass – whether from foreign or local currency – is within the banking system, and this has great repercussions on the economy in the future, and the global and international trend is not dealing with Cash Money, but often with a credit card, with the availability of ways to ensure the success of these cards within the local economy.”
For his part, the researcher in economic affairs, Ahmed Eid, adds other positives for the reduction, which are “reducing fraud and unjustified travel taken by companies and speculators through (rented travelers) for the purpose of collecting dollar amounts by depositing in banks and withdrawing from airport outlets, which will ease the momentum and the queues of citizens at the gates of banks.”
As for the negative side of it, Eid tells Shafaq News, that “there are official travelers who reside outside Iraq, or want to travel for the purpose of treatment, study or entertainment, these categories of travelers have been greatly affected, because determining the amount of this amount will be very harmed to them.”
Eid proposes, “setting determinants and conditions for obtaining the dollar amount for residents, by proving their official residence outside the country, or travelers for the purpose of treatment through fundamentalist official reports, and for students it is very necessary to facilitate their access to the dollar through their study residence, or proof of final acceptance for each student.”
As for the impact on the local market, he explains that “the dollar price will rise in the parallel market, and speculators will record this opportunity to raise the exchange rate of the dollar, which will reflect negatively on the prices of goods and materials in all their forms,” calling on the government to the importance of “developing real solutions instead of squeezing and floundering with random decisions,” he said.
In turn, the economist, Mustafa Akram, says that “the issue of selling the dollar to citizens is a temporary, non-permanent stage, the purpose of which is to increase the supply of the dollar cash from outside the platform, because at the beginning of its application it was difficult to cultivate cultures for traders such as opening credits or with an electronic payment card.”
Akram adds to Shafaq News, “But now the Central Bank of Iraq has reduced these amounts to $2,000 (cash) in cash, and those who want the dollar and want to travel abroad, there is a mechanism adopted by the Central Bank, which is to fill in the payment card you have (regular, creditor or debit).”
The economist continues, “the payable and debit cards may contain more than 10 thousand dollars or 10 million dinars, and they fill them in Iraqi dinars, and dispose of them inside the country exclusively in Iraqi dinars, but when leaving the country, they are disposed according to the currency of the country in which.”