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On the road to reform (4) Central bank: review and Solutions

Sunday November 29, 2015 - 09:33

Iyad al-Samarrai

Secretary General of the Iraqi Islamic Party

Conference held recently, Dr. Ali Keywords Governor of the Central Bank followed the agency and I was disappointed because I did not find what reassure him, and I saw the danger signs are clear as to whether the policies pursued by the central bank on what they are.

Lasted First, we had to ask the Central Bank to issue an official document shows where his policies and his plan, especially as the crisis experienced by Iraq will continue to the end of the age of the current government, at least, we do not want this government through the wrong policies to migrate its financial problems and its inability to address them to the next government and doubly.

Second, prove not to the House of Representatives the ability of the central bank accountable for his lack of experts independent professionals in this area, found expert was linked to the political Bactlth makes him incapable of commitment to professional position just.

And thirdly: to be the House of Representatives to hold a meeting calls him a number of financial experts to discuss the central bank policy, and there are many pieces are ready for that, then the bank is required to amend the its policies in the light of the results of this meeting.

The central bank headed by Shabibi has succeeded in strengthening the confidence of the Iraqi dinar due to strict policies on the one hand, and an increase in oil revenues on the other hand, and this was born the confidence of a relative of the Iraqi economy, which is the weak economy originally to its dependence on a single commodity is oil, and because the state neglected the development of industry and agriculture sectors over the past ten years.

The countries depend on a single commodity wobbling price can not build accurate forecasts around you'll need to very large reserve to stabilize and face surprises, and can not be compared to Iraq and other countries vary their sources of income and its trade balance balanced .

Had we reviewed the majority of oil-producing countries, we find its economy and its ability to withstand surprises much better than Iraq, for example, it was the Algerian Central Bank reserves exceed $ 230 billion, and in spite of that it imposed the Algerian government to reduce import to maintain the balance of payments policy.

Therefore I am appalled by what I found from apathy decline in hard currency reserves, and if he is Hin, I would therefore like to recall four things:

First: that Iraq has from the reserve more than twenty billion dollars since the crisis began falling oil prices.

Second: The debts of Iraq, oil companies and other convergence and perhaps exceed the central bank's reserves current, thank Kuwait for the state which decided to postpone the deduction of 5% for 2015 and possibly Stagelha as well as for 2016.

Third: that Iraq's imports exceed its revenues, and there on the horizon any action to address it.

Fourth: The loans that the government is seeking to obtain it will exacerbate the problem and increase the risk .

In short, the central bank should commit to amend its policies, and is keen to maintain the reserves and selling of the dollar, but as far as revenue, and the austerity policy imposed by the government on the government apparatus and projects must be accompanied by other austerity comprehensive policy through which to adjust imports in order to encourage national production for goods and services must be bold policies to achieve these objectives.

The government has refused to impose a tariff Kmarkip under the pretext of lack of control over all border crossing points, and in spite of the merits of the cause, but a sign of the government's inability to address the issue of financial problems with the Kurdistan region. It is possible for the government and a substitute for customs tariff imposition of sales tax that went part of it to support local production and thereby achieve: increase domestic production, and the reduction of import, and relieve pressure on the cash reserves of the Central Bank, and run more of the workforce, and to keep the business competition as a pressure to improve product quality, and provide domestically produced commodities at a reasonable price for citizens. The economic file is still apparently far from the serious attention, and deep understanding of the seriousness of Malath if the gradient levels remain as they are now.