Tishwash: Al-Ani: The Price Of The Printed Dinar In 2003 Is Better Than The Rate Of The Central Bank Today
MP Dhafer Al-Ani criticized the Central Bank of Iraq’s policy aimed at reducing the price of the Iraqi dinar against the dollar to reach 1450 dinars per dollar.
Al-Ani said in a tweet on his personal page on the social networking site Twitter, today, Sunday, “In 2003, when the American occupation took place, the exchange rate of the Iraqi dinar printed in government presses and on plain paper was better than the current Swiss dinar price.”
It is noteworthy that the exchange rate of the dinar in 2003 had reached 1300 dinars per dollar, which is less than the price that the Central Bank and Ministry of Finance want to reach in its current policy, which is facing public rejection and anger, link
Harambe: Yahoo: Iraq Devalues Its Currency by a Record as Economy Unravels
Iraq devalued its currency by almost 20% against the dollar, the most on record, as the cash-strapped government faces an economic crisis brought about by low crude prices and oil-production cuts.
The central bank on Saturday reduced the official rate to 1,450 dinar per dollar, the first devaluation since 2003. That’s from about 1,190 previously. Dollars will be resold to local banks at 1,460 dinar apiece.
The devaluation in the world’s third-largest oil exporter threatens to put some goods beyond the means of ordinary Iraqis, and trigger unrest in a country that imports heavily and is still reeling from last year’s deadly anti-government protests.
Finance Minister Ali Allawi said one main reason for the move was to activate the private sector and local production while avoiding a severe budget deficit.
“What has been done is a preemptive step,” Allawi said in a televised interview on the state-run Iraqiya channel. Without the move, he said, inflation will soar and “we will hit the wall.”
Cash-Strapped Iraq Seeks $2 Billion Upfront Payment for Oil.
Iraq is taking the steps to avoid depleting its foreign-currency reserves after the coronavirus sapped demand for energy and caused prices to decline. Without the devaluation, the reserves would have been drained within six to seven months, and the budget deficit could reach 100 trillion dinars ($84 billion) in 2021, Allawi said.
The International Monetary Fund expects Iraq’s economy to shrink 12% this year, more than that of any other OPEC member under a production quota, and that its budget deficit will reach 22% of gross domestic product. The government last month sought upfront payments in exchange for a long-term crude-supply contract to help mitigate its dire financial situation.
What Bloomberg Economics Says…
“The devaluation was inevitable given the drop in oil prices and the budgetary pressures Iraq is facing. The government says that this is a one-off and won’t be repeated, but we’ll see if that will be the case. It is also important to watch the popular response to the resulting increase in living costs and the government’s austerity program.”
— Ziad Daoud, chief emerging-markets economist
The economic crisis adds pain for a nation that’s been in chaos for most of the period since the U.S.-led invasion of 2003 that toppled Saddam Hussein, suffering civil war, an insurgency by Islamic State and a push by the Kurds for independence in the north, a major oil-producing region.
All major oil producers have taken a hit from the coronavirus-induced plunge in crude prices. But Iraq, where oil accounts for almost all government revenue, is in a worse position than most.
Quotas agreed with other oil exporters in an effort to stabilize the market mean the number of barrels Iraq can pump is restricted. Prime Minister Mustafa Al-Kadhimi, who came to power in May, has warned that authorities will therefore struggle to pay civil servants without raising more debt. That’s threatening a repeat of the upheaval that last year brought down the government and saw hundreds of protesters killed.
Iraq’s Crumbling Economy Is Becoming a Threat to OPEC
Demonstrators at a rally at Tahrir Square at the end of October denounced corrupt politicians, daily power cuts, dilapidated hospitals, crumbling roads and a lack of jobs, and urged the government to ignore OPEC output cuts.
Headinablender: This new IQD rate is leaving a lot of people scratching their heads. The citizens will not allow this, other institutions and countries have been told different and we all know Iraq is a rich country with vast wealth. I don’t when but the rate will adjust to be on par with the US dollar. Time will tell.
Fuze: GM guys the 1460 may have been a necessary evil in the process to the revalue upward. But it does say this. According to Iraqs exchange rate law, they can NOT change the rate again this 2020 fiscal year. so we can move on to 2021 with great anticipation 2 weeks
Bodyman: what better way to put people off guard and add confusion, than to decrease the value just before an RV
Shybaby: IMHO… this current developments, though rather unsettling, are part and parcel of the ” REINSTATEMENT FOLLOWED BY REVALUATION ” that has been talked about for years…. STAY IN Faith !
Master: On the 21st at sunset the star of Bethlehem will show first time since 1226 almost 800 hundred years
Tishwash: The central bank issues new instructions to banks
The bank said in a document signed by the Director – General Mazen morning, addressed to the banks, that “the commission cash withdrawal of the US dollar derived from the remittances received by the Bank to our accounts in the US Federal Reserve, as well as remittances received by the banks from other banks by ( 0 . 007) , seven thousand ” .
She emphasized the necessity, that “the above-mentioned remittances are disbursed to banks at a rate of ( 20%) in cash in dollars according to the above commission, and ( 8%) an Iraqi dinar is paid according to the official exchange rate ( 112) dinars to the dollar .”
He called on banks “to do regardless of the percentage of (25 %) above to its customers the owners of remittances at the price of 1200 dinars / USD, and submit their requests at the end of each month to the accounting department in the Central Bank for the purpose of addressing the two rates difference in the accounts of our Iraqi dinar, banks exchange the full amount of the transfer received In Iraqi dinars, if the customer so desires, and the difference in the two prices is processed by the same mentioned mechanism.
He emphasized that “the above mechanism does not include customer deposits in dollars in cash, as it is paid to the customer in full, but rather is limited to customers who receive incoming transfers from outside Iraq of whatever kind, and internal dollar transfers between banks in their accounts with us link
Tishwash: The decision to raise the dollar begins to reap the parliamentary and legal objections .. The opportunity is a “ripe” to cancel this step
Member of the Parliamentary Finance Committee, Ahmed Mazhar, confirmed that the Ministry of Finance is the one who owns the dollar and determines its price, not the Central Bank, and the leakage of the dollar’s price in the draft budget exposes the national currency to collapse.
Mazhar said in a statement, “It is the duty of the bank to maintain the exchange rate and not determine the price. Article 3 of the Central Bank Law No. 56 of 2004, as amended, clearly indicated its role in maintaining the exchange rate, not setting it.”
Mazhar explained that “the price setting equation is governed by several rules, including that whoever owns the commodity determines its price,” in addition to other rules, in addition to the laws in effect, and because the Ministry of Finance is the party to which hard currency flows through its imports from the export of oil, it is its owner and it is “Whoever sells it to the bank to finance the budget.”
Parliament is aiming at the government
For his part, a member of the Saeron Alliance, MP Salam al-Shammari, bore the government the repercussions of raising the dollar’s exchange rate on Iraqi markets.
Al-Shammari said in press statements, that raising the exchange rate of the dollar, the government bears its burden, given its negative repercussions on the file of high food prices and others, which means that Iraqis are affected, especially since unemployment and poverty rates are very high.
Al-Shammari added, “Members of Parliament are against raising the exchange rate of the US dollar, given the great burden it causes on citizens, and that they will have a position under the council’s dome in terms of returning the exchange rate to what it was during the past five years.”
Al-Shammari pointed out that “the Ministry of Finance would not have made this step without the presence of a green light from the government, which should have been calculated because the country’s situation is exceptional due to the financial and economic crises.”
For his part, the legal expert, Ali Al-Tamimi, said that the rise in the dollar exchange rate to 1450 in the budget law violates the Iraqi constitution and the Charter of the International Covenant, and can be challenged
Can the decision be appealed?
Al-Tamimi stated in an explanation given to “Yis Iraq”, that “raising the dollar exchange rate to 1450 violates articles 30 and 31 of the Iraqi constitution that require the state to provide a free and decent life and suitable income, and also this procedure violates Articles 23 and 26 of the International Covenant on Civil Rights. And political, which all countries of the world that are members of the United Nations Organization must abide by. ”
He added: “Also, the Central Bank Law, according to its Law No. 56 of 2004, is an independent body under Article 3 of this law and also the Central Bank’s instructions for the year 2017, and therefore it is the one that determines the exchange rate. Poverty read ”.
He pointed out that “this law can be challenged if it is legislated by Parliament before the Federal Court, and Parliament can not agree to legislate this law and return it to the government for an amendment because Parliament can do so constitutionally as it represents society. link