An economist warns via NINA against devaluing the dinar against the dollar ... and stresses: The reduction will increase the poverty rate

Wednesday 21, October 2020 11:19
 
Baghdad / NINA / The expert in economic affairs, Safwan Qusay, warned of the process of reducing the value of the Iraqi dinar against the US dollar, stressing that it is a step that will negatively affect the private sector and increase the rate of poverty in Iraqi society.

Qusay said in a statement to the Iraqi National News Agency / NINA / that "the Central Bank tried to reclassify private banks within new standards related to international accountant standards mainly, as well as the existence of capital and submitting invoices that are subject to international examination standards, indicating that and within the policy of the World Bank is the process of returning these banks." This led to a decrease in dollar sales to these banks that are committed to providing hard currency, which prompted banks to withdraw hard currency from outside the currency auction and to increase the dollar exchange rate against the dinar, and the central bank soon realized this issue. "

He pointed out that "the financial policy through the borrowing law and the reform paper refers to the possibility of reviewing the exchange rate in order to finance the deficit through the devaluation of the currency, but the Iraqi parliament has so far not approved the borrowing law, which is 41 trillion, and the process of proceeding with this law means weakening the reserves of the Central Bank and thus reducing The value of the Iraqi currency is what we do not want to happen. "

He added, "The central bank's monetary policy is trying to defend the exchange rate, but if the government continues to finance the deficit through borrowing and not through developing and revitalizing economic life, this will lead to pressure on the value of the dinar and its decline to the dollar."

He stressed that "the reduction in the value of the dinar will affect the lives of the employees directly because the value of the real income will decrease and will negatively affect the private sector as it is an importer of foreign goods that are currently sold. The process of not having a fixed price will lead to confusion and the poverty rate will increase because the value of the dinar will decrease when the chances of obtaining access will become scarce." Work, unemployment and poverty are rife. "

The economic expert called on "the Ministry of Finance to think about solutions away from reducing the value of the Iraqi dinar and to have a flexible price in the market,

and for there to be a price for imported consumer goods that encourages the process of competition and a price that remains constant in the budget to maintain the exchange rate of the dinar against the dollar."

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