Finance Minister: The currency devaluation was necessary and helped protect the central bank's reserves

Wednesday 24 November 2021 15:23
 
Baghdad / NINA / - Minister of Finance Ali Abdul-Amir Allawi confirmed: "The devaluation of the currency was necessary to allow a more gradual fiscal adjustment and thus avoid major disruptions in the main public services."

And a statement of the Ministry of Finance quoted Allawi as saying in press statements: “The change in the exchange rate prevented the layoffs of thousands of employees, and that changing the exchange rate helped protect the reserves of the Central Bank and provided job opportunities in the market,” noting: “The international community supported the exchange rate adjustment in Iraq".

He added, "The positive effects of the currency adjustment began to appear., by encouraging domestic consumption and avoiding imports. The devaluation of the dinar also helped protect the Central Bank of Iraq's foreign exchange reserves and gave Iraqi producers an opportunity to create jobs and income through better competition in the market." local".

And the Minister of Finance stated: “The devaluation of the exchange rate in December 2020, came after the collapse of oil revenues last year, as the Iraqi government was facing enormous financing pressures while it was struggling to meet its basic internal and external obligations, and the foreign exchange reserves of the Central Bank were on a rapid decline path, It was expected to run out within a year, Iraq's teetering on the brink of a full-blown crisis was a symptom of prolonged weakness in the face of low oil prices, and government efforts to put off all non-priority spending and focus on timely payment of salaries, pensions and social benefits were not enough. ".

He continued, "The closing of the very large fiscal deficit without currency devaluation would have required deep and painful cuts in social expenditures and layoffs of thousands of employees, but devaluation is necessary to allow more gradual fiscal adjustment and thus avoid major disruptions in key public services, by encouraging domestic consumption. To stay away from imports," noting that "the devaluation of the dinar also helped protect the Central Bank of Iraq's foreign exchange reserves and gave Iraqi producers an opportunity to create jobs and income through better competition in the local market."

Regarding the possibility of raising the value of the dinar after the rise in oil prices, Allawi stressed that: “Although the devaluation of the currency last year and the restoration of oil prices helped improve the financial situation of Iraq, it is important to take into account that the country is still very weak, and it can That the current surpluses turn into deficits with the return of oil prices to normal in the medium term, and another contraction in the oil market may easily lead the country back to the brink of crisis,” explaining that “for the Iraqi economy to regain its full strength and be sustainable, economic policies must be directed Towards improving flexibility in the face of fluctuations in oil prices by building financial buffers and diversifying the economy.”/ End 7

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