Member of Parliamentary Finance: The government is heading for an “urgent” economic step to control the dollar situation
Member of Parliamentary Finance: The government is heading for an “urgent” economic step to control the dollar situation
TUESDAY, 08-12-2020, PM 12:10
A member of the Parliamentary Finance Committee, Ahmed Hama Rashid, spoke today, Tuesday, about a new step that the government will take “compelled” to reduce the exit of hard currency from the country and control the gates of currency auction.
Deputy Rashid commented on what the media reported about the existence of negotiations between Iraq and the International Monetary Fund, to determine a new exchange rate for the dollar against the Iraqi dinar, saying that “there are tools that the government uses to adjust the exchange rate, which is considered (income from inflation), or increase its revenues. Through a currency auction, to reduce the deficit gap. ”
He added, “The government will also work to absorb the purchasing power of the Iraqi dinar, to reduce the marginal propensity to consume, thus the state’s imports will decrease, which leads to a reduction in the dollar exit rates from Iraq, and this also leads to a reduction in the dollar’s demand.”
He continued, “This mechanism allows the central bank to control the outlets for selling the currency, with the aim of also controlling the exchange rates of the dollar,” according to the Baghdad website today.
Regarding the reasons for this approach, the deputy affirmed that “the government is obliged to follow this path, since Iraq has nothing but oil as a main source of revenue through its export and the entry of hard currency to it.”
Earlier, Mazhar Muhammad Salih, the financial advisor to Prime Minister Mustafa Al-Kazemi, commented, on Monday, on Iraq’s negotiations with the International Monetary Fund on determining the exchange rate of the dollar against the Iraqi dinar.
Saleh said that “all matters related to negotiations between Iraq and the International Monetary Fund to determine the exchange rate of the dinar are in the process of discussions only.”
He added, “The correct decision is for the cabinet when it discusses the draft budget very soon.”
The Finance Committee revealed before that, negotiations between Iraq and the IMF on determining the exchange rate of the dollar, while warning that those decisions may lead to inflation, which greatly affects the owners of limited income.
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