Al-Alaq for Sabah: The country is not threatened with bankruptcy according to international standards
Al-Alaq for Sabah: The country is not threatened with bankruptcy according to international standards
31/8/2017 12:00 am
International praise for the government’s reform measures
Baghdad / Tareq al-Araji
The governor of the Central Bank of Iraq Ali al-Alaq, that the Bank and the International Monetary Fund praised the reform measures in the monetary and financial policies conducted by the government and central alike, indicating that more than 250 companies of different nationalities competed for the purchase of international treasury bonds launched by Iraq recently. Interview with «morning»: «The law of the general budget for the current year guarantee the issuance of international bonds worth two billion dollars as part of the coverage of the deficit in the budget of 2017», noting that «the first billion was issued with a guarantee from the US government, which helped to reduce the interest rate to the limit of 2 Percent Iraq needed this type of guarantee so that the bonds of the second meal, which is worth two billion, can also be issued at a higher interest rate than the first, and when the interest is collected, the interest is acceptable and does not constitute a burden on the public treasury of the state. “We were surprised by the volume of turnout and the willingness to buy treasury bonds for the second billion dollars when they were put on the global financial market as more than 250 international financial companies from America, Europe and Asia filed applications amounting to 6.5 billion dollars and the interest rate stood at 6.75 percent, The interest rate is expected to be more than 8 percent, “he said.” When you raise the 6 percent, the second interest rate with 2 percent, the first interest rate and divide it by 2, for two billion, the total interest rate is 4 percent, which is acceptable. 2014 was the interest rate that I applied With these companies more than 11 percent, which led us to refrain from issuing bonds at the time because the interest rate was high ».
On the impact of global companies’ appetite and their desire to buy treasury bonds on the financial and economic situation of Iraq, the Governor of the Central Bank that «gave an indication of the recovery of the Iraqi economy and the confidence of these companies have been raised during the meetings of promotional bonds with the 250 companies questions on the economic, The country to the Iraqi Committee, headed by the Governor of the Central Bank of the membership of the Ministry of Finance and the Prime Minister’s Office, and the Committee provided answers to these companies backed by data was highly reliable and reinforced the reports of the International Monetary Fund, The nature of the sources of these reports gave credibility and a good impression of all companies and there was a focus on monetary policy because it is matters of the investor in terms of the exchange rate of the dollar and the cash reserve and the volume of debt and others, as well as the extent of the commitment of the borders and ceilings. That the success of these dialogues a decision by the Board of Directors of the International Monetary Fund to ratify the report of the Fund’s team, which included the results of the second review of the credit agreement with Iraq, which gave positive indicators of Iraq’s commitment to the terms of agreement and commitment Financial and monetary indicators issued thanks to the Central Bank and the Finance Ministry and the Prime Minister ‘s Office. »
“I can proudly say that the Central Bank had fully met the requirements of the Fund and was fully in line with the indicators set by the Fund in terms of reserves and exchange rate and audit the accounts of the Central Bank internationally and the significant development of the Bank’s procedures in banking supervision and combating money laundering and terrorism financing and other points that Was the focus of the fund ».
“The size of debt in the international standard is relative to GDP, and this ratio according to the capabilities of countries may reach 100 percent in some developed countries,” he said. In Iraq, according to the international standard, the ratio so far within 60 percent of gross domestic product », adding that« when analyzing Iraq’s debt, we find that 45 billion dollars of them back to pre-2003 and most of the Gulf countries, especially Saudi Arabia and these countries gave signals in On several occasions that it did not demand Iraq to block So far, some of these countries have noted their consent to settle them, so when talking about public debt, we must put about 45 billion in isolation because these debts in the worst case will be settled at the Paris Club and under which to pay 10 percent of the amounts or perhaps extinguish » .
“The pessimistic analysis did not distinguish between the so-called” obnoxious “debts of pre-2003 that should be subject to certain adjustments that have not been made so far. When we exclude these debts, we will see that we are still within the acceptable limits of international debt General.
He pointed out that the «central bank has debts on the state up to 16 trillion dinars and the bulk of the domestic debt is under control and does not consume the budget of Iraq or lead to bankruptcy», indicating «calculate the ability of the country to bear debt through the annual installment required of the size The total size may be a little but is required for a short period may be large but for long periods and for us the benefits of external debt up to one billion dollars a year and this is affordable and the premiums of the entire domestic debt of up to 5 trillions dinars and repayment of external loan installments 400 million dollars a year rise in Age Wat the next ».
Al-Alak said that «required from Iraq annually as the benefits of loans up to 5.5 billion dollars a year and this figure does not lead the country to bankruptcy, there are countries unable to pay their obligations and then develop solutions to address this deficit, but we are called to take necessary precautions and strengthen the financial situation of the country for the coming years» , Noting that «the year 2016 was a big shock could not be easily absorbed by the decline of oil prices and therefore was to adapt to this situation is almost impossible but then began some of the measures taken by the government to adjust through the pressure of expenditure and increase domestic revenue is required to plan properly , The country is not subjected to financial pressures or crises and reconsidering the structure of public expenditure of the state and activating and maximizing domestic revenues within the law and order and regulations currently in force. We do not call for the imposition or increase of fees or taxes or other, but call for control of state resources and prevent access to pockets of corrupt and manipulative as Regrettably weak in the contribution of tax and customs revenues in the state budget ».
“We have relations with all the central and international Arab banks in particular, and we meet within the framework of the Arab Monetary Fund as governors and we meet in different international financial institutions. The meeting and coordination in some matters with Saudi Arabia is far from Political issues and the issue of debt cancellation or settlement of a political issue par excellence, and therefore expect that the improvement of relations with other countries, especially the Gulf and Saudi Arabia provides a suitable framework to resolve this issue ».
And the calls for devaluation of the dinar against the US dollar to stop waste in hard currency, Al-Aalak said that «the subject put on several occasions and at various levels and was carefully studied by the Central Bank and consultation with the International Monetary Fund about him», noting that «the Central Bank of Iraq takes a look We are aware that the income of a large percentage of Iraqis comes from the government salary. If the value of the dinar is reduced, the purchasing power of a large number of Iraqi families will drop as if we imposed a tax on all citizens regardless of Their standard of living, which will hurt everyone, especially those working in the government service, and the reduction would be provided only a small amount ».
“Monetary policy is not built on the basis of events or emergency crises, but we must take them on a path in medium and long-term calculations. For us, we do not resort to adjusting the value of the currency whenever the price of oil falls,” he said. Foreign currency and his job and mission to fill the shortage of crises to go beyond the stage and this is what happened in 2009 ».
“Central bank investments are denominated in foreign currencies, gold and treasury bonds. These are primarily risk-free and have central banks or banks rated first in the world. We deal with the US Federal Reserve Bank and the banks of London, France and Holland,” he said. And Australia is now looking for investment in the Chinese currency », pointing out that« there is a base in the investment that the more the degree of risk little or no, the return is little and therefore the nature of our investments are free of risk and the return is very limited ».
“There is room for maneuver and diligence within certain limits that may create a difference, such as investment in gold, which may rise and is a good return or not rise, and we intend to store it,” he said, adding that “we thought that we do not pay for gold, “We are making a small profit and we have achieved success by investing in the Islamic Development Bank
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