Al-Asadi: Reducing the dinar exchange rate represents a penalty for the Iraqi people because of economic failure

Al-Asadi: Reducing the dinar exchange rate represents a penalty for the Iraqi people because of economic failure

06/06/2020 00:53

Al-Asadi - Reducing the dinar exchange rate represents a penalty for the Iraqi people because of economic failureBaghdad today – Baghdad

Hussein al-Asadi, a member of the House of Representatives, considered that attempts to reduce the price of the Iraqi dinar are a punishment for the Iraqi people because of wrong policies and economic failure.

Asadi said in a publication on his account in “Facebook”, said that “Iraq is passing through the conditions of extremely sensitive Iraqi economy faces a real challenge after the failure to find alternatives for the sale of crude oil, and I confirm here the sale of crude oil and not the oil industry Oil Refining Industry and petrochemicals industry Petrochemical industry , Iraq is one of the largest oil reserves oil reserves in the world it has 147.2 billion barrels , according to explorations in 2018 ie 8.5% of the world ‘s reserve thebalance – – However it imports annually 3.3 trillion Iraqi dinars oil products, according to the annual import of Iraq ‘s 2018 report of the Central Bureau of Statistics 2019, and it also imports energy worth 7 trillion Iraqi dinars, according to the 2019 budget published in the Iraqi Al-Waqa’iq newspaper: Issue 4529 on 11/2/2019.

He added: “And all of them can be produced in Iraq, in addition to other resources such as agriculture, various industries, trade, tourism, etc., with the absence of Sovereign Wealth Funds that provide additional imports and a portfolio to protect the future of generations, especially in times of crisis.”

He continued: “Today, Iraq is asking for aid to pay the salaries of employees and retirees, because what enters the treasury is not worth a quarter of what Iraq needs to cover salaries only. 43,404,629,267,000 (Iraqi dinars and the total annual salaries for the year 2019 will be 52,721,281,684,000) Iraqi dinars, which means that Iraq needs monthly (4,393,440,140,000) Iraqi dinars, and if we take into account that the Iraqi dinar exchange is 1,200 dinars per dollar means that 3,6,000 per month (Almost a dollar, while the GDP of Iraq is approximately (1,100,000,000) dollars for the month of March and (1,200,000,000) approximately $ for the coming months, as Iraq needs (2.5) billion dollars approximately per month in order to cover the monthly salary expenses only, this is regardless of other needs.)

And that “to address this catastrophic failure, some voices have begun to rise in order to reduce the Iraqi dinar exchange rate against the US dollar in order to increase the budget number and reduce the deficit in it. I find it necessary to clarify some terms, so the reader may be surprised by the ignorance of many who speak in this field, and perhaps they are in positions Mission of responsibility. ”

He pointed out that “float currency Floating Exchange Rate float the currency is the currency exchange rate , which has made a float so became an editor in full, do not interfere with the government or the central bank to be determined directly, but are automatically excreted in the currency market through the supply and demand mechanism Supply And Demand that allows setting the exchange rate of the national currency against foreign currencies, and this term corresponds to the fixed price of the currency exchange Fixed Exchange Rate Specific price will be determined against a major global currency (usually the US dollar, but also other major currencies such as the euro or the yen or a basket of currencies) In order to maintain the local exchange rate, the central bank buys and sells its own currency on the foreign exchange market for the currency in which it is linked.

He noted that ” the devaluation Devaluation , which cut the official exchange rate of the currency comes against the international reference currency (dollar US or the euro , for example), so that fewer units of foreign currency that can be obtained in exchange for one unit of the national currency, and the right to talk about devaluation of the currency when the exchange rate under the direct management of the government or central bank, which sets this price through a government decision, according to the logic of the same, we can talk about raising the price of the currency revaluation in exchange for reduced, and this is when the exchange rate under the direct management of the government or central bank also, we note that the reduction of the price of the currency and lifted them within the framework of one which exchange hard currency, but when the exchange rate is subject to the forces of supply and demand (float currency) and gets a decline in the value of the currency, devaluation of the currency Depreciation the decline as a result of an automatic free interaction between supply and demand in The foreign exchange market without direct interference from the government or the central bank, and according to the same logic, it is possible to talk about the rise in the value of the currency Appreciation in exchange for its decline, and we note that the high and low currency price is within the float of the world Religion”.

Then he added: “Since the Iraq works within the fixed exchange system Fixed Exchange Rate , we can talk about reducing the currency exchange rate and here I do not want a trade – off between the two systems each one of them his conditions, although the market economy Market Economy and the idea of non – interference of the state in economic activities and left The market is controlling itself by operating a system of floating the currency, and its price depends on the iron principle of supply and demand, but the actual conditions of Iraq do not allow for reasons that are too long to be explained.

He added: ” The same exchange rate countries hard to resort to reduce the currency exchange rate for economic reasons to improve its trade balance Balance Of Trade is due mainly mainly to the increase in domestic production in exchange for imported Reducing currency makes the disparity between the outside and inside thereby reducing imported in the tribes have the source, This assumes that there is an internal production that covers the domestic need and is intended to maintain and export it abroad, but in the Iraqi case, unfortunately there is no industry, no agriculture, no internal production, covering the local need as well as being an exporter, as Iraq has nothing to export other than Crude Oil. ) , And I am talking here about the reality of what is there and not what I call for, the total imports for the year 2018 for commodities and oil products amounted to (37) billion dollars, equivalent to (43. Iraqi dinars, and the total imports for the year 2018 for the commodities (34) One billion dollars, equivalent to (40.5) trillion Iraqi dinars, and Iraq does not need to reduce the exchange rate, but it suffices to prevent the import of any indispensable material. ”

He added: “As for the real effect of the devaluation, it is the direct punishment for the Iraqi people, so if we know that 6 million Iraqis receive a salary or aid from the Iraqi government and the number of members of the Iraqi family is 5, we are talking about about 30 million Iraqis who live on what they receive from salaries or aid from the government.” Iraqi all these will be affected by this measure in order to get inflation inflation in prices because of the low purchasing power purchasing power Iraqi Dinar the family that they could live a million dinars Iraqi after the devaluation became worth 500 thousand dinars , and they receive a number is one million and are therefore going to live a great distress because of this reduction, and affected other are debt holders internal internal debt in local currency, amounting to about 40 trillion, which represents remittances treasury bonds , discounted at the government banks and the central bank for companies, contractors and traders These dinars , and they number will remain the government of Iraq owes them 40 trillion , but that after reducing The currency will be owed 20 trillion on the assumption that it has been cut in half. As for the external debtor, it remains the same because it is in the foreign currency. Lar or something. ”

He continued: “The confidence of investors and companies in the currency after the devaluation is much less because the stability of the currency is one of the factors that encourage investment and entering into projects as well as problems related to economic feasibility after the devaluation, which is the basis of the intervention of the government or the central bank in fixing the exchange rate or only to work with the principle Floating the coin from the beginning. ”

He concluded his speech by saying: “Hence, we believe that those who seek to actually reduce the currency price are punishing the Iraqi people because of the wrong policies and economic failure that brought the country to this situation. The people in this bear the mistakes of politicians and are punished instead of them.”