Poor management and planning of Iraq’s resources caused the rise of the dollar against the Iraqi dinar

Poor management and planning of Iraq’s resources caused the rise of the dollar against the Iraqi dinar

12-5-2022

Poor management and planning of Iraqs resources caused the rise of the dollar against the Iraqi dinarResearcher Shatha Khalil*
The deterioration of the Iraqi economy and the collapse of the currency and its reflection on the Iraqi citizen is the most important reason for the demand to raise the value of the Iraqi dinar against the US dollar. Representatives made decisions that restore the exchange rate of the dollar to what it was previously, as political statements aimed at playing on the feelings of citizens, for many reasons that changing the exchange rate is one of the prerogatives of the Central Bank and the Ministry of Finance, developing local industry, increasing the country’s exports, economic development, and what we mean by economic development in short is development. It is an essential element for human and social stability and development. It is a process of comprehensive or partial continuous development that takes various forms aimed at advancing the human condition to well-being, stability and development in accordance with its economic, social and intellectual needs and capabilities. It is considered a person’s means and goal.Specialists also said that the financial abundance resulting from the global increase in the price of oil and the increase in the quantities of production and export in Iraq must reflect positively on society. This movement must yield remarkable results after putting pressure on the Ministry of Finance and the Central Bank of Iraq, but where is the economic planning and investment here, the dispersed political situation The non-unified direction towards achieving the goal is the biggest obstacle to the poor economic situation in Iraq.

Currency sale: The currency auction in Iraq is one of the most dangerous economic files, which is confirmed by many Iraqi politicians and economists who see it as a drain on hard currency and one of the doors to smuggling stolen or corrupt money. The auction witnessed a decline in the sale of currency by between 40% and 50%, which economists see as linked to the rise in the exchange rate of the dollar in the parallel (black) markets, which led to a rise in the exchange rate to more than 1,500 dinars per dollar, at a time when the Central Bank sells one dollar. For 1460 dinars.
And the instability of the dollar exchange rate on the black market led to the disruption of the commercial movement in the country, which contributed to the rise in consumer prices and directly affected the life of the citizen, which raises many questions about the reasons for the high exchange rate, and its relationship to the procedures of the Central Bank of Iraq and preventing several banks from entering the auction. Selling the currency after warnings from the US Treasury.

Some economists emphasized that the auction consumes effort and time that the bank was supposed to spend in supporting the Iraqi market and performing its real role, because this will cause significant inflation in the Iraqi market, and also that it is not possible to transfer it to the custody of the Ministry of Finance or the Iraqi stock market due to “lack of experience and restrictions ( US Federal Bank).
And because of the impact of the currency auction on the life of the Iraqi citizen, the Iraqi economist, Hammam Al-Shamaa, confirmed that there is a direct impact of the increase in currency auction sales of the dollar on the local market, and this large increase is caused by the approval of the emergency support law for food security, which opened the way for money laundering and suspicious corruption deals.

And the increase in sales in the currency auction has become double what it was before the adoption of the emergency support law for food security, in addition to the presence of funds gained from Law 1/12 of the 2021 budget, in addition to the presence of internal investments for these funds that were employed to purchase real estate inside the country, which caused a significant increase in real estate prices.
And the Iraqi market now suffers from many problems of stagnation and economic deficit, because of the money smuggled abroad, and there are no internal investments employed in the productive and commercial fields, which increased poverty levels and the sharp decline in demand for goods due to the smuggling of Iraqi money abroad.

And the percentage of cash purchases of dollars increased by private banks that serve foreign loyalties, and as is known specifically Iran, through the auction organized by the Central Bank on a daily basis in Baghdad, to reach more than one billion dollars within one week. The window indicates that the dollar sale offered by the Central Bank during the week before last was at a daily rate of $245 million, up by 86.1 percent from the previous week.
In conclusion, the financial strategies adopted by the Iraqi state must change, as they do not serve the country, the economy, or the citizen. This procedure is a drain on hard currency, and a primitive means that can be replaced by more modern methods to preserve the value of the Iraqi dinar.

Economic Studies Unit / North America Office
Rawabet Center for Research and Strategic Studies

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