Currency auction burden on the Iraqi economy

by **Ponee** Wed Oct 26, 2016 12:24 pm

In the midst of political and economic crisis of Iraq today faces challenges of its economy is the largest in its history, From the structure of the structural, rentier nature and that was the main focus of successive crises and especially during the past two years because of the collapse in oil prices and slumping later, not to mention the political and security reasons that accompanied the occupation of the territory and vital cities in the north of the country.
Rentier economy in Iraq will depend entirely on oil revenues, which constitute more than 90% of its imports, and as a result of crisis, oil prices, the Iraqi economy has received numerous tremors internally and externally was toppled by making credit rating to "negative" by the agency "Fitch" global.

We discussed in previous articles the issue of the currency auction in Iraq, and Pena size of the enormous waste that gets under the currency auction, and how the currency auction exceeded imports of oil, which made us shed light on the foreign reserves, and that this auction may exceed to sell some of the foreign reserves of the Bank Central where he arrived in the first quarter of this year, oil revenue to 3 billion and 269 million dollars, while the total central bank sales of the currency in the same period amounted to 5 billion and 821 million dollars, and of course this difference is too large, and raises doubts about the figures where this amount was not for spending on imports because the latter were not the size of the revenue, and some also wondered who was to buy at this auction and for whom?
According to the achievement of the committees of the House of Representatives of Iraq and international reports has been wasted and looted the amount of 312billion dollars over the past years, the proceeds of oil pumped Central Bank of Iraq to the market, most of which had been transferred abroad.

The day after the persistently high exchange rate of the US dollar against the Iraqi dinar in the local markets and the absence of the real role of the Central Bank to address this problem, it seems the Iraqi dinar is in danger of collapse , thus rising inflation and entering into a severe economic crisis. Therefore, the continuation of the central bank sold the dollar inlarger quantities from Iraq 's income from foreign currency as a result of the export ofcrude oil is a service of corrupt and called the term "whales" and cost Iraq losses ofhundreds of billions of dollars, in addition to the billions that were stolen over thepast years.

According to private information obtained links Research and Strategic Studies Center for a meeting between the number of banks and banking owners in Baghdad in Jadriya The theme of the meeting about the dollar and the need to reduce its price on the black market has a number of whales threatened to auction the issuance of the decision to limit the auction a limited number of banks , some of whom said they were able to in all aspects of the state control, and the price of the dollar and they are refusing to sell the asset in their accounts abroad, the dollar, and of one who attended the meeting $ 350 million exists only when five people only, or five banks, according to sources, links the center of the Mr. Prime Minister Haider al-Abadi, is following this issue carefully and that he considers issuing important decisions which exempt officials at the central bank from office and openness of some state officials and political parties of links to some of the private banks and the prime minister in waiting completes the picture has, and follow-up if the sale for the benefit of reliable banking operations or not, to take a very critical decisions, including the number of stop banks from entering the auction for pending lawsuits filed against it.

It is expected that there will be a reduction of the dollar to avoid penalties that may be imposed by the Prime Minister on the banks and those violators.

Once again, we will address the subject of an auction Eulma in the Iraqi Central Bank to have done this file are important for the Iraqi economy, where the central bank sells in daily auction of dollar amounts sometimes exceeding 130 million, mostly in remittances and is priced at 1182 dinars to the dollar.
The thorny issue here, is the difference between the selling price in the market who arrives in the market to 1300 dinars to the dollar, while the exchange rate is sold to partisan views and influential up to 1182 per dollar, according to quotas, which in turn sell it at the prevailing market. Here we refer again to the currency and operations auction is a big burden on the Central Bank of Iraq and the economy in general, which of course is a window to support specific destinations As mentioned, thus it is considered a real blight on the central bank, and cash reserves. The data suggest that Iraq's debt is today 77% of GDP, while safety is the ratio of public debt to GDP between 60-70%. The estimated loss of Iraq, hundreds of millions of dollars because of the control of mafias and whales market through the monopoly of the currency auction for certain destinations, and dominate them. He indicated that the US dollar exchange rate in the Iraqi market price of 1310 dinars selling price while the purchase price of 1,300 dinars per one dollar.

As is known, the dollar is the engine of commodity markets in Iraq, as the country imports most of its overseas markets president. The US dollar was trading in the Iraqi market this week at 1310 dinars, compared to about 1129 dinars to the dollar before the outbreak of war in Mosul, which experts see as a sign of the weakness of the central bank's policy.
This increase is the result of the opinion of the experts of the Central Bank's policy, and the decline of the dinar exchange rate against the dollar caused by the adoption of the central bank of some private banks and not others in an auction sale of the currency and the weakness in monitoring the performance of these banks. "

Over the past 13 years, Iraq has become an arena for the corrupt, has a group of influential Iraqis led the looting of public money is very large operations, and Iraq's coffers are empty, and this flaw revealed the collapse of oil prices two years ago.Large and enormous challenges facing Iraq economically and politically, and the excesses of the money Iraq and its potential to the benefit of influential figures without supervision or follow-up, which is cast on the Iraqi government responsible for legislation, strict law along the lines of other countries, and monitor the work of the central bank auction of the currency, which has become today as a destructive element of the economy Iraq, as well as accounting for the corrupt agent of the Iraqi economy up to a dead-end tunnel can not return it.
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