The world countries have become certain as a result of its long experience at the management of its overhaul economy that there is no exit of the cycle of poverty, and the advancement of joints of the national economy and make the economic and social development plans and programs into practice only through the expansion of public revenue collection by the development of traditional sources of revenue, and find new sources to the supplement of treasury .
But the economic situation in Iraq is going in the opposite direction of development; it is suffering a great danger, due to the lack of diversity of sources of revenue, and lower cash reserves with the central bank ‘s foreign currency to levels low, as it was in the month of September 2016 about $ 52 billion, while amounted the total 68 billion dollars in the same month of 2015, a decline of $ 16 billion, representing a decrease of 23.5% over the year.
Sources said that the decline of this year reached to $ 50 billion indicating that among the reasons of the continuity of the dangerous economic situation in Iraq is the protection of the corruption covered by the corrupted class of the politicians and rulers and those who are linked to them from their officials , parties and control systems and competent commissions of integrity and inspection ,judiciary or the courts that belong to the influential political class and their followers who are under their pressure and interventions .
Economists said the size of the reserve is an expression of the sovereign credit of the state and cover the local currency and a decreasing which means the lower of the value of local currency, and that the operation of the sale of the foreign currency by the Iraqi Central Bank caused a drain and a waste of the wealth of Iraq, as the low cash reserve of currency reached to the low levels threatened for the serious disasters in the long and the short term , and threatens Iraq to the bankruptcy , and sinking with the foreign debt , and economic dependency.
the national coalition led by Iyad Allawi, criticized the auction of the currency, saying: ” The management of prices of dollar exchange in the domestic market are the window of the corrupts who are living on the difference between the official exchange rate with the parallel markets.”
He said that the so – called “currency auction” is: ” the practice does not exist in the countries that adopt a market economy, and proved experimentally that they lead to a waste of money without supervision.”
This is because the difference between the price adopted in the local market with the price in central bank allows the spoilers, and their supporters from depriving the government of tax and customs , in addition to depriving the Iraqi people to take advantage of the real exchange rate.
At the opposite context ,the politicians, and the IMF says: “The inventories (central bank reserves) is assured at the moment because it covers imports”, but the economic reality is that if the declining of reserves continue with a low level of oil prices, the situation would not be assuring; because Iraqi dinar exchange price is low for its association with the political and security stability.
Regarding the security situation , the state and military and security forces and the popular crowed are still fighting against Daesh with all its power and managed to retake a large distances from the occupied territories that demands a continuous spending for the battle and in addition the impact of internal displacement noting that works and workshops of a lot of Iraqis have been stopped and forced to the internal and external immigration and transfer the assets to the foreign currency with a limitation of $ 10 thousand , and this limitation amount is allowed according to the Anti-money laundering law and this is in turn will increase the demand on dollar in the black market.
According to a finance ministry official , “the Central Bank and the presidency of the Iraqi Council of Ministers are keen not to disclose official reports, during the recent period, because of the disturbing and large decline in Iraq ‘s reserves of hard currency”, noting that it amounting to 52 billion dollars currently, after the government ‘s borrowing large amounts from the international Monetary Fund , World Bank without return it , and the loans were aimed at financing the purchase of weapons and ammunition deals for the Army , and pay staff salaries and members of the armed forces and militias popular crowd.
And the auction of the daily sale of currency by the central bank was not carried out without suspicions of price manipulation , which sells it with the price in the market and this has been proved by official documents uncovered by the RawabetCenter for Research and Strategic Studies in previous studies.
The Governor of the Central Bank: “Iraq reserves from currency is low , but in line with international standards and regulations of the International Monetary Fund, demonstrating the adequacy of the reserve in accordance with the international standard of the existence of the amount of foreign exchange to cover of the size of local currency of dinar ,” At the same time the governor of the Central Bank said that the House of Representatives and the government responsible for the low reserve because their approval on the financial budget with deficit, as the size of the reserve is an expression of the sovereign credit of the state and cover the local currency and a decreasing mean lower value of local currency.
The Central Bank of Iraq refused on 13 / January / 2016, the government endeavor to withdraw from the financial reserve; because the law “does not allow” the government of this, calling for the issuance of bonds and sell them to banks.
The bank warned that the cover of the general budget deficit with vouchers or bonds without a enough cover from the foreign currency is negatively affects the Iraqi economy.
The International Monetary Fund approved at the same time on the Iraqi special government programs to fund the federal budget deficit from its reserves of hard currency as a precondition for lending the government, noting that it will lead to a reduction of these reserves to less than $ 43 billion, down from three years was to exceed by $ 80 billion .
The ongoing Iraq face of lower oil prices and the budget deficit due to falling oil revenues. Which leads to a decline in foreign exchange reserves, has led to the economic and financial crisis is difficult.
Specialists in Iraqi economic and financial affairs said that the reason of financial crisis n and the continuation of the decline of oil prices in the global markets and dependence on the cash reserves to cover the the financial deficit occurred in the general balance of the state and funding the operating expenses will affect directly on the general situation of the country causing a permanent deficit in the budget and the austerity exhausted of the citizen and id the position continues in this way , it will lead to inability the government to pay salaries of its staff in future and this is a an economic disaster .
The decline in reserves at the Central Bank of Iraq led to a decline in the value of the dinar against the dollar in the trading of Iraqi stocks of banking and financial arrived at 1331 dinars to the dollar after it was over more than a year between the stable (1230-1290) dinars to the dollar.
The parliamentary Finance Committee acknowledged with a decline in the size of the cash reserve to Iraq of hard currency after the depletion of $ 30 billion by the economic crisis, and slow , corruption and routine administrative procedures of government agencies and corruption in the collection of those revenues and deposit it in the state treasury that impacted negatively on the economy of Iraq.
To counter the decline in reserves at the Central Bank of Iraq , the State must take serious steps to maximize resources and reduce its dependence on oil revenues only, and the development of the productive sectors (agricultural, industrial and tourism); as the fluctuating oil prices led to a worsening of the financial crisis in Iraq.
Statics say that the revenues of Iraq from oil amount by 95% while it amount by 5% of internal revenues and this is unbalanced state economically as the usual state of the balanced economy can be achieved by the equality of internal and external revenues .
The government also needs to develop a clear and comprehensive and sustainable plan to reform its finances, and Iraqi Prime Minister Haider al – Abadi, Minister of Finance and the Governor of the Central Bank realize that they need to take difficult decisions and the big loan will come from the IMF on conditions related to economic policy , including the steps taken by Baghdad to cut energy subsidies and reform the companies owned by the State , steps which may be politically difficult.
As Iraq can succeed also as succeeded in conditions experienced and overcome it and these are harder than what is going on to day, if there is a good will and proper management .
Shatha Khalil
Translated by : Mudhaffar Alkusairi
Unit Economic Studies
links Centre for Research and Strategic Studies
Sources
https://www.alaraby.co.uk/economy/2016/9/6
extent Press / Baghdad
Arab new September 6, 2016
Reuters 2016
the morning
Rawabet Center for Research and Strategic Studies