Is the government looking to extract revenue from citizens’ pockets? Leaked information about raising the exchange rate is fueling speculation!
While Iraqi citizens await a package of economic measures and reforms aimed at improving living conditions and curbing the decline in purchasing power, unofficial sources and leaks are circulating news of a potential move within the government to raise the exchange rate of the Iraqi dinar against the dollar in an attempt to contain the escalating financial crisis.
According to these leaks, this move comes amid increasing financial pressures on the country, resulting from a sharp decline in public revenues following a nearly 90% drop or cessation of oil exports, which constitute the primary source of revenue for Iraq’s general budget. This contraction in revenues has directly impacted the government’s ability to finance operational and investment expenditures, most notably salaries and essential services.
In contrast, a number of MPs and economic experts warned of the danger of proceeding with such a measure at the present stage, considering that any change in the exchange rate may lead to additional negative repercussions on the living conditions of citizens, in light of the continued rise in prices of goods and food, and the decline in purchasing power. They pointed out that the local market is already suffering from accumulated economic pressures, most notably the high rates of unemployment, the increasing number of graduates looking for job opportunities, in addition to the widening scope of demands for appointment in the government sector, which makes any ill-considered economic step an additional factor in deepening the crisis instead of addressing it.
In this context, MP Duha al-Bahadli, from the National Approach bloc, commented to Al-Maalomah on the leaks circulating regarding government efforts to devalue the Iraqi dinar against the US dollar. She emphasized that “any such step necessitates parliamentary oversight and close monitoring due to its direct impact on citizens’ living conditions.” Al-Bahadli pointed out that “Parliament is currently suspended due to the legislative recess, but this does not negate the need to monitor new government decisions, especially those related to the economy and the exchange rate, through the relevant parliamentary committees and members concerned with oversight.”
She explained that “Iraq is facing a number of accumulated challenges and crises, at a time when the Iraqi public is exhausted by the measures and reforms that negatively affect their daily lives and future livelihoods.”
For his part, economist Diaa al-Muhsin warned, in a statement to Al-Maalomah, He stated that “any government move to raise the exchange rate of the dollar against the Iraqi dinar will have direct economic repercussions on local markets,” emphasizing that “citizens will be the first to suffer from these measures.”
Al-Muhsin added that “raising the exchange rate will lead to a decrease in citizens’ purchasing power and weaken the real value of employees’ salaries,” in addition to causing “a rise in the prices of goods and foodstuffs, which will negatively impact the standard of living of Iraqi families.”
The Iraqi public is experiencing a state of anxiety and apprehension amidst rapidly evolving regional developments and the accompanying instability, which has directly impacted oil exports, particularly those through the Strait of Hormuz. This comes at a time when estimates indicate a continued absence of effective economic alternatives, which should have been included in contingency plans by previous governments.
These alternatives were intended to reduce Iraq’s near-total dependence on oil as the sole source of public revenue, leaving the Iraqi economy facing recurring challenges with every regional crisis or fluctuation in energy markets. Given these circumstances, concerns are mounting that the government may resort to difficult financial measures, including adjustments to the Iraqi dinar’s exchange rate against the US dollar, in an attempt to address part of the liquidity and revenue crisis. However, observers warn that such a move could directly impact local markets through a new wave of price hikes for goods and services, threatening to exacerbate the cost of living crisis for citizens and further intensify inflation across the country.
Almaalomah.me