Editorial (Part2): Inflation in the Iraqi economy and how to reduce its repercussions

part 1 previously posted–


(2-2) of the economic and social consequences of inflation, loss of confidence in the national currency. Sharp Valtsaad in prices weaken the purchasing power of the Iraqi dinar and investors and consumers heading toward security havens Instead, they resort to convert their savings into gold or National Real Estate or replaced in foreign currencies, leading to the emergence of the phenomenon of dollarization in the economy.

The high rates of inflation to the deterioration of the purchasing power of consumers and increase cash incomes for speculators and realtors leading to the redistribution of income in favor of categories parasitic and exploitative and leads to deepening inequality and social community due to variation sharp in the distribution of wages and wealth. And thus contribute to inflation in the increasing richness of the rich and the poor even poorer.,

and the consequences of inflation worsening imbalance in the balance of payments as a result of increasing the volume of foreign imports and declining commodity exports. Leading to increased economic dependency abroad.

inflation also leads to increase the budget deficit and public to resort to external borrowing to cover the deficit. And inflation creates an unwelcoming environment for domestic and foreign investment. Thus shrinking job opportunities and worsen unemployment.

proposed treatment

to reduce the consequences of inflation and its impact on the economy and living life requires took a package of remedial actions to eliminate tumors price and their secretions, including:

1 – Work planned for bridging the gap between supply and demand Bjanabih monetary and commodity to balance the To achieve an economic growth rate over the annual rate of increase for inflation. Recession inflationary experienced Iraqi economy leads to continued high prices because of the employment of available economic resources in the production process.

2 – support the agricultural sector and giving it priority in the allocation of financial to be a major base in the provision of food and reduce dependence on import external and thus lower prices and leakage of hard currency.

3 – State continue to work ration card system and increase vocabulary commodity quality and quantity because it contributes to securing the basic needs of the citizens and protects the poor from the consequences of inflation. The abolition of ration card will unleash sharp upward prices.

4 – In the case of inflation resulting from the increase in the rise in prices is one of inflation in the Iraqi economy. For the CBI to execute fiscal and monetary policies to influence the volume of cash in circulation. The State should take some necessary measures such as reducing government spending Albzkhi and increase taxes on luxury goods and combat the smuggling of hard currency and maintain raw materials and raw materials from theft and smuggling.

5 – can the Ministry of Finance to contribute to the reduction of the money supply offered through its sale of public debt to the public either directly or through their financial institutions, leading to the withdrawal of surplus cash in the market and reduces the amount of supply in circulation and thus contribute to the reduction of the high rate of inflation.

6 – can be applied to the principle of saving compulsory who can whereby deduct part of the employees’ salaries for a specific period and employ resources withheld in productive projects with financial returns and refund withheld to their owners with the benefits of a relative in the form of monthly payments or quarterly in order to reduce cash in circulation.

7 – the need to raise the ceiling of government spending on productive projects that lead to GDP growth, and in turn reduce spending on service projects is essential that do not affect directly on the lives of citizens.

8 – issuing antitrust law either in import or export and fight monopoly markets by some mafias and traders crises and encourage freedom of action to grant loans productivity and strengthen small businesses in order to increase domestic production.

9 – state could raise the proportion of the legal reserve in government and private banks, leading to reduced liquidity at the individuals and banks and other financial institutions. Monetary policy on addressing the issue of inflation and lower levels, especially emerging inflation of aggregate demand.

10 – in the case of continuing escalation of inflation the central bank’s demands to lift interest rates on deposits of all kinds in order to encourage individuals, companies and institutions on the savings to deposit their money in banks, and so absorbed ratios high excess liquidity from circulation and keep the central bank.

11 – central bank can do by asking securities to be sold to commercial banks in order to pull possible cash in the coffers of banks to limit their ability to get credit.

conclusion that prove it

1 – The inflation quo in Iraq and higher prices for some commodity groups is a logical consequence of the deterioration and disruption of productive forces are unable to provide quantities of goods sufficient to meet the demands of the Iraqi market.

2 – Some aspects of emerging inflation in Iraq is imported inflation due to the high total cost of imports of goods from international markets experiencing inflation and economic stagnation and unemployment and the prohibitively high prices and debt.

3 – The fact treatment of the phenomenon of inflation in the Iraqi economy is to re-spin the wheel of economic development and operation of material production sectors to finance local markets its products and needs compensation for commodity import from abroad. Vchgal available production capacities and deactivated will provide a golden opportunity to run the armies of the workforce unemployed and active movement of the local markets. Without it you can not deal with inflation and the disposal of its consequences economic and social development.

فاندماج Iraqi economy economy capitalist international make an exhibition of injury all diseases and infections of the capitalist system of inflation and recession, recession and the high cost obscene and foreign debt and a rise in prices of raw materials and foodstuffs and other consequences other inherent to the capitalist system internationally.

Therefore we do not find a real interest to our national economy from the open-door policy is planned on the outside and enter into agreements unequal achieve the interests of the stronger party which foreign countries at the expense of the national interests of Iraq.