IRAQ DINAR & DONG VIETNAM UPDATE: "THE VALUE OF THE DINAR", 4 JUNE

by **Ponee** Fri Jun 05, 2020 9:22 pm

THE VALUE OF THE DINAR!

A study was conducted and a statement issued by the Central Bank of Iraq a few days ago, entitled "Reducing the exchange of the Iraqi dinar. It was as follows:
Determinants and Alternatives: ruled out the government resorting to such a measure, at least for the time being.

The study referred to eight related factors, including the impact of the supposed reduction in the consumer, the increase in economic growth, and then the expected impact on social groups that adopt government support, and then questioned the ability of financial and monetary politicians to cope with the inflationary effects, before concluding that the government, by resorting to this measure to cover the budget deficit, would earn nothing according to the study, because what it earns by reducing it returns to losing by compensating for inflation.

Instead, THE CENTRAL BANK'S STUDY RECOMMENDED PRACTICAL STEPS TO REPLACE THE REDUCTION, AND URGED THE GOVERNMENT TO ADDRESS THE WASTE OF STATE RESOURCES, BECAUSE A PROCESS LIKE THIS, IF IT DID, COULD PROVIDE THE GOVERNMENT WITH MANY TIMES AS MUCH MONEY AS IT COULD GET FROM DEVALUATION OF THE DINAR.

The study cited, for example, $20 billion in annual electricity expenditures, while only less than 10% receive less than 10% of the expenditure.

While our imports are worth about $50 billion a year, the government only makes 50 billion dollars in customs and other fees!

Similarly, the central bank's study suggested that the government should resort to saving money BY REDUCING EXPENDITURES IN THESE RESOURCES AND RATIONALIZING THEM, because in their view it is more useful in covering the budget deficit and the consequences of the current crisis, arising from the fall in oil prices and corona together.

Rest assured that THE GENERAL DIRECTION OF GOVERNMENT POLICY SO FAR IS NOT TO COMPROMISE THE VALUE OF THE IRAQI DINAR, so I have heard directly from the Governor of the Central Bank that the Bank is ready to ensure that the EXCHANGE RATE REMAINS AT CURRENT LEVELS FOR THE NEXT FIVE YEARS.

But I wondered with him frankly, is it in the interest of the country to keep the exchange rate at its current value, especially considering that the oil dollar makes up more than 90% of our sources of income?

Naturally, this is not a call to flotation, but it is a general idea to deliberate, and the right decisions in such serious cases remain those that depend on competent studies, successful experiences, and more about us!

This is opinion from an Iraq economist. It is noteworthy they are still debating in public what to do with the dinar.

Why would they be debating about the value of the dinar is raising the value was not also an option?

06.05.2020