The Minister of Finance talks about the process of changing the exchange rate of the dollar

The Minister of Finance talks about the process of changing the exchange rate of the dollar

THURSDAY, 08-26-2021,PM 2:51

USD-Iraqi dinarToday, Thursday, Finance Minister Ali Allawi announced that the process of changing the exchange rate was not easy, and while he indicated that Iraq came out of the difficult economic situation safely, he revealed the reasons for the delay in paying salaries.

Allawi said in an interview with a number of media outlets, “Iraq’s financial policy during a year and a half went through five exceptional circumstances,” noting that “entering at the beginning of the government’s work, there was no financial safety valve.”

He pointed out that “the Iraqi economy has changed since 2019 and the obligations of the previous government, and the Corona crisis led to the collapse of oil prices and increased unemployment,” noting that “the government’s policy worked to control expenditures and thus reflected on state revenues.”

He added, “The process of changing the exchange rate was not easy, but the fiscal and monetary policy is reformist and it must be continued. The reform process is correct and started with banks and customs,” stressing that “the fiscal policy aims to balance oil and maximize other resources.”

He pointed out that “the process of changing the dollar exchange rate should have taken place years ago, which reflects something beneficial to reform the economic system, as it is not possible to create an incubating environment for a private economy without the government’s ability to change the distortion of public finance.”

And he indicated, “The exchange rate reflects many issues and its rise is beneficial for some economic sectors,” noting that “the process of changing the exchange rate was wanted to create a competitive atmosphere in Iraq, especially since today there is a balance between demand for currency and supply.”

The Minister of Finance stressed, “The ministry aims to stabilize the exchange rate and will defend it, and government banks aim to support the national economy, not the advances per se,” noting that “the government is not against the advances, but it must diversify the sources to which these advances go.”

He stated, “The relationship with the IMF is good, and it stands with Iraq’s policy of reform, including changing the dollar exchange rate, and during the recent visit to the World Bank, we did not ask for any loan, especially that the financial situation is going better.”

On the other hand, Allawi stressed, “We came out safely from the difficult economic situation, and we have coordination with the Central Bank and cooperation is necessary between the fiscal and monetary policies.”

In the meantime, the Minister of Finance revealed, “The Kurdistan Region has not implemented its obligations regarding the payment of oil prices,” stressing that “the federal government has paid the region’s entitlements, and as a result, the center must be granted oil and customs entitlements.”

He added, “The price of oil obtained by the region is above the equilibrium price by about $10, and for humanitarian purposes, the Council of Ministers granted the region’s salaries according to the Council’s directive and with a reservation of finance.”

He continued, “Our position is neutral, professional and objective regarding the region’s salaries, and it should be given 200 billion dinars per month, and the interest will be about 6 percent in terms of bonds, and we expect a great demand for it.”

He pointed out, “The state’s oil resources are eroding due to the large obligations of salaries and retirement, and the improvement in oil prices does not solve the financial distress quickly, due to internal and external debts,” noting that “the delay in the payment of salaries is caused by massive inflation in Iraq, especially since 65 percent of the state budget goes for salaries.”

He added, “We are not against government employment, but we are against the loss of productivity in the state’s sectors,” noting that “taxes are important in stimulating production and investment, and they are very few in Iraq, as they are not equivalent to 1% of the national income.”

He added that “the citizen has the right to complain about taxes because the method of obtaining them from them is not a proper method, and the state’s resources in Iraq are used incorrectly,” noting that “the tax law will reconsider the issue of tax in Iraq and draw up a new policy and a new law.”

And the Minister of Finance indicated that “the energy sector costs the state $25 billion annually, and we get only 7% of the dues from citizens,” explaining that “reconsidering the state’s financial structure is one of the most important challenges ahead.”

Allawi pointed out that “the cost of managing the state increased by 30% between the two years: 2018 and 2020″.

The minister added, “The sums of the smuggled former regime and property do not exceed several palaces or houses,” noting that “the property of the former regime is not equal to 5% of the other assets that were taken from Iraq.”

And he indicated that “nearly 200 billion dollars were smuggled out of Iraq due to corruption operations,” explaining that “it is not easy to recover these funds and we have started dialogue with the neighboring countries that received our money.”

He stressed that “about 20 billion dollars evaporated from the smuggled Iraqi money in the banks of the countries.”

He added that “the insurance sector in Iraq is really profitable and we want to move it,” noting that “the 30% increase in state costs is caused by the increase in the number of employees, their salaries and incentives.”

And he indicated that “the foreign debt is about 50 billion dollars,” noting that “the debts of the Paris Club have become few after Iraq paid a lot of them.”

Allawi warned, “against entering into any external obligations related to debt,” stressing, “We are in the process of issuing bonds and the Iraqis will not buy them without guaranteeing the payment of interests to them, and this is their right.”

The Minister of Finance explained that “there are about 6.5 million citizens who receive financial dues from the state.”

Regarding compulsory conscription, Allawi stated that “the conscription law has not yet been discussed in the Council of Ministers,” noting that “the Ministry of Defense expects conscription to include 10,000 people, which costs the budget 150 billion dinars.”