The effectiveness of monetary policy in Iraq

by **claud39** Mon Apr 15, 2019 12:27 pm

The effectiveness of monetary policy in Iraq

04/15/2019

The effectiveness of monetary policy in Iraq 14519

Ahmed Hazal

Monetary policy is one of the most important tools used by countries to deal with economic problems, whether at the level of growth, unemployment, poverty, inflation and monetary stability. There is no distinction between economic and monetary stability. Economic stability is linked to economic policy as a whole, This is different from the monetary stability, which aims to achieve balance in the exchange rate and safe levels of inflation rate and increase economic growth rates through monetary policy instruments, which naturally leads to economic stability if the response of the sectors The Central Bank of Iraq Law No. (56) of 2004 affirmed that one of the central objectives of the Central Bank is to achieve monetary stability. As a result of the non-response of the real sector to the variables of monetary policy, this reflects the structural imbalances in the Iraqi economy.

After 2003, the Iraqi economy exercised the tools of transition to a market economy, which has certain principles and rules committed by countries. Monetary policy has used the most influential tools in the exchange rate, which is the currency's window in balancing demand and supply. This depends on oil revenues. Public finance relies on (89%) of public revenues as in the budget of 2019 and more in previous budgets. The oil sector accounts for more than (60%) of GDP, and notes the structural imbalances in public finances first, in the economic sectors Second.

These imbalances result in instability at the economic and monetary level. Thus, money supply is an internal variable of fiscal policy (as we always confirm) as long as the Ministry of Finance is responsible for selling the dollar to the central bank. By reducing or increasing public spending, as well as that every rise in the budget deficit leads to an increase in money supply because public finances resort to the instrument of public debt (internal and external) to meet the needs of the budget, which leads to the occurrence of inflationary waves pushing monetary policy to fill them through Window Currency is the most influential instrument because of the low interest rate flexibility in the banking system as a result of the separation between the real and monetary sector.

The monetary policy practiced the type of exchange rate nominally valid for monetary stability due to imbalances experienced by the economy. Statistical data issued by the Statistics and Research Department of the Central Bank show that the exchange rate for the years 2015-2018 reached a maximum of 1190 dinars (1180) dinars per dollar. As for the parallel market price, the maximum limit reached (1281) dinars per dollar, while the minimum reached (1215) dinars per dollar.

The foreign exchange reserve is a cover for the local currency and this ensures its stability and achieves development if it remains within the normative limits. The data indicate that the reserves index is moving towards safety according to international standards and covers more than 6 months of imports in case of lack of oil revenues. Including the so-called double shock in 2014, namely, the sharp drop in oil prices on the one hand, and the military strike against the organization calling on the terrorist on the other. This necessitated the intervention of the Central Bank to achieve stability and to meet the funding needs to face the financial and military shock Indirectly through the marketing of public bonds.

The reserves are not frozen, but are used in the management of currency and foreign cash investments, in addition to providing security for the national currency. If the demand for the dollar does not meet an equal offer, it means that it is one of the indicators of the collapse of the currency. Therefore, we note that the central bank is keen to cover domestic demand and demand for Import, and after 2015, I used a package of measures aimed at reducing the gap between my official and parallel prices.

When the central bank sells the dollar, it aims to preserve the value of the currency, so it does not practice a commercial process as much as it activates its tools to achieve stability. The international standards stipulate that the difference between the official bank price and the parallel price (2%) should not be noticed. More than (8%) This is a serious indicator that threatened the value of the currency at the time, but now we note that the monetary policy was able to achieve convergence between the official and parallel exchange rates and a difference acceptable globally and according to the agreement signed by Iraq, which stipulates that the difference (2%), The official exchange rate for this year (1190) dinars per d This means the reduction of the gap to less than 2%. This also means the monetary authority's affirmation of the need to reduce the gap as a result of its commitment to the Central Bank's law to achieve stability first and to raise the value of the local currency. It is possible for the citizen to benefit when buying goods

* Economic Researcher

http://economy-news.net/content.php?id=16273

by **claud39** Sat Apr 20, 2019 1:45 pm

The official exchange rate for this year (1190) dinars

This also means the monetary authority's affirmation of the need to reduce the gap as a result of its commitment to the Central Bank's law to achieve stability first and to raise the value of the local currency.

http://economy-news.net/content.php?id=16273

Schedule of UN Operational Rates of Exchange for 2019

The Operational Rates of Exchange were last updated for the effective date in accordance with the schedule below and thereafter until further notice.

The effectiveness of monetary policy in Iraq Bg-li

[th]Publishing Date[/th][th][/th][th]Effective Date[/th]

11 Apr 2019	if applicable	15 Apr 2019
29 Apr 2019		01 May 2019
13 May 2019	if applicable	15 May 2019
30 May 2019		01 Jun 2019
12 Jun 2019	if applicable	14 Jun 2019
27 Jun 2019		30 Jun 2019
11 Jul 2019	if applicable	15 Jul 2019
30 Jul 2019		01 Aug 2019
13 Aug 2019	if applicable	15 Aug 2019
29 Aug 2019		01 Sep 2019
11 Sep 2019	if applicable	13 Sep 2019
27 Sep 2019		01 Oct 2019
11 Oct 2019	if applicable	15 Oct 2019
30 Oct 2019		01 Nov 2019
13 Nov 2019	if applicable	15 Nov 2019
27 Nov 2019		01 Dec 2019
11 Dec 2019	if applicable	13 Dec 2019
27 Dec 2019		31 Dec 2019

https://treasury.un.org/operationalrates/default.php

Parliamentary Finance: Vote on the law of early May obliges the government to submit final accounts

BAGHDAD / The obelisk: The Finance Committee of the parliamentary, Saturday, April 20, 2019, the end of the recent amendments to the Financial Management Act and voting on it early May next, indicating that the law obliges the government to submit final accounts for previous years.
"The committee has completed all amendments to the Financial Management Law and the first and second readings by the council," said Siham al-Aqili, a member of the committee.
"The Presidency of Parliament gave the Committee a deadline to complete all amendments until the end of this month," adding that "the law will be submitted to the vote early May next."
She explained that "the law in the event of adoption requires the government to submit all the final accounts of previous years that were not submitted to parliament by previous governments," noting that "one of the paragraphs of the law obliges the government to submit accounts for the coming years in January of each

The effectiveness of monetary policy in Iraq 124586.jpg.3b2b367f831cda853031913b8b5e4f85

http://almasalah.com/ar/news/169254/%D8%A7%D9%84%D9%85%D8%A7%D9%84%D9%8A%D8%A9-%D8%A7%D9%84%D9%86%D9%8A%D8%A7%D8%A8%D9%8A%D8%A9-%D8%A7%D9%84%D8%AA%D8%B5%D9%88%D9%8A%D8%AA-%D8%B9%D9%84%D9%89-%D9%82%D8%A7%D9%86%D9%88%D9%86-%D9%85%D8%B7%D9%84%D8%B9-%D8%A3%D9%8A%D8%A7%D8%B1-%D9%8A%D9%84%D8%B2%D9%85-%D8%A7%D9%84%D8%AD%D9%83%D9%88%D9%85%D8%A9-%D8%A8%D8%AA%D9%82%D8%AF%D9%8A%D9%85-%D8%A7%D9%84%D8%AD%D8%B3%D8%A7%D8%A8%D8%A7%D8%AA-%D8%A7%D9%84%D8%AE%D8%AA%D8%A7%D9%85%D9%8A%D8%A9

The effectiveness of monetary policy in Iraq

The effectiveness of monetary policy in Iraq

Parliamentary Finance: Vote on the law of early May obliges the government to submit final accounts

Schedule of UN Operational Rates of Exchange for 2019

29 Apr 2019

01 May 2019