Al-Kazemi’s Financial Advisor Talks About Changing The Exchange Rate
The Financial Advisor To The Prime Minister, Mazhar Muhammad Salih, Confirmed Today, Monday, That The Financial Surplus From The Rise In Oil Prices Will Cover Three Important Axes, Including Filling The Expected Deficit In The Current Year’s Budget.
Saleh Said, “The Financial Surpluses Achieved From The Rise In Oil Prices And Their Reaching $75 Per Barrel Will Cover At Least Three Axes,” Noting That “The First Axis Is Covering The Planned Deficit In The General Budget For The Year 2021, Which Amounts To 29 Trillion Dinars, While The Second Axis Is Related To Covering The Real Additional Deficit Gap Of Less Than 10 Trillion Dinars, Which Is Caused By The Failure To Estimate Non-Oil Revenues, Which Achieve Only 40% Of Their Estimated Or Planned Estimates In The Budget, Which Unfortunately Causes Pressure On The Planned Annual Spending And Its Ceilings, Which Is Caused By The Failure Of The Financial Collection Institutions In The Country
He Added, “The Third Axis Goes Towards Supporting Faltering Projects Whose Operation Is Intended To Continue, And For Which Many Business Contractors Demand An Amendment Of Implementation Costs (Spare Parts) Due To The Exchange Rate Change Before The Initial Contract Or Other Changes In The Operating Costs Of Ongoing Projects,” Noting That “The Disposition Of With Financial Surpluses, It Is Not Easy Due To The Many Restrictions And Obligations Within The General Budget Itself, Including Postponing The Payment Of Many Of The Expenses That Are Payable And Were Not Spent In Previous Years.”
He Pointed Out That “There Are Dozens Of Laws That Carry Financial Burdens That The Public Finances Are Unable To Implement The Resulting Increases, Even According To The Hypothesis Of Achieving An Annual Average Price Of A Barrel Of Oil Of $75 Compared To The Price Fixed In The Federal General Budget For The Year 2021 Of $45 A Barrel.”
On The Extent Of The Possibility Of Adjusting The Exchange Rate Of The Dollar Against The Iraqi Dinar, Saleh Said, “Adjusting The Exchange Rate Is One Of The Actions Of Monetary Policy In Achieving Stability, Targeting Inflation And Limiting Its Heights Under The Effective Central Bank Law,” Noting That “This Is A Matter That Takes Into Account Monetary Balance Considerations, Two Restrictions, The First The Coverage In Foreign Currency Of The Local Liquidity, Which Has Increased Significantly, Due To Financing The Deficit In Government Expenditures, Which Led To The Expansion Of The Monetary Base, Or What Is Sometimes Called In The Literature The (Domestic) Cash Reserve, And If The Foreign Reserves Outweigh The (Domestic) Cash Reserve In A Way That Does Not Threaten The Country’s Foreign Reserve Wealth Or Its Depletion And Maintains Its Stability, Accumulation And General Stability In Prices.
He Pointed Out That “The Second Limitation Is That The Effects Of The Adjustment In The Exchange Rate Should Be Fully Consistent With The Objectives Of The Country’s Fiscal Policy And Its Level Of Stability, Meaning That It Should Not Threaten The Sustainability Of The Budget Or Cause Sudden Stumbles In Public Revenues Due To The Change In Monetary Values And The Entry Into Failures (Compensatory Value Deficit) In The General Budget, I.e. Itself, Due To The Fluctuation Of Monetary Policy,” He Explained, “This Requires Always High And Accurate Coordination Within The Country’s Supreme Economic Policy Operations.”