Declining cash reserves raises concerns about the national economy and the financial situation of the state


02/22/2017 (0:01 pm) - The number of readings: 293 - Issue (3859)

Baghdad / Zahra al - Jassem

Again the Iraqi Central Bank announced a new drop in reserves of hard currency, sparking weather the financial and economic circles to the overall public opinion, which is feared to come a day when the National Reserve infected emptiness like the one suffered by the state budget in recent years concern, which forced the government a large debt from international institutions request. Warns Financial experts and economists from Awafb is benign, the central bank does not seem worried.

The bank has finally revealed the decline in its reserves of hard currencies to $ 49 billion as a result of the continuing decline in oil prices in global markets, noting that the bank balance of these currencies arrived in one of the past 88 billion dollars and was in the range of $ 70 billion at the end of 2012, the day after the feet former Prime Minister Nuri al-Maliki on the removal of the then Bank Governor Dr Sinan Shabibi because of its adherence to the provisions of the Bank Act and refusing to lend to the government of the bank's reserves.

The economic and investment commission parliamentary saw the low level of cash reserves of hard currency to the low levels portends serious disasters, has been threatening bankruptcy in Iraq and drown him in foreign debt. While Governor of the Bank describes the current situation as a natural decline linked to lower oil prices and a decline in the value of oil revenues, economists stressed the need to invest part of the reserve in development projects.

Says a member of the Committee on Economy and Investment parliamentary Salam al-Maliki in an interview (range), said that the sale of foreign currency window of concern to many, within the Committee on Economy, due to the depletion of cash reserves by dragging them to feed sell the currency window, and it did nothing for the Iraqi economy, both Ataromam where low dollar exchange rate or economic development.

He stressed: the existence of certain information to indicate a low level of cash reserves of hard currency to low levels, which threatens serious disasters in the short and long term, but has been threatening bankruptcy in Iraq and sank in the external debt. "

He continues, al-Maliki, there is a big difference between the current price in the local market accredited to the central bank and the price, which allowed the corrupt to deprive the government of revenues from various fees and taxes, and eventually deprive the Iraqi citizen of his or her own resources. "

For his part, Governor of the Central Bank does not see the agency Ali Mohsen Ismail Keywords risk of decline in reserve, The fall in foreign currency reserves is a natural phenomenon in the oil-producing countries that make up the oil revenues main source of foreign currency, such as Iraq, where revenue dollar decreases as oil prices fell and therefore reserves the source of decline.

He adds Keywords in an interview (range), "revenues from the dollar has fallen from $ 90 billion annually in the years before and during the 2015 to 44 billion and 34 billion dollars in 2016, was offset by a decrease in the state budget expenses," he adds, "This It means that the demand for the dollar (derived from the budget expenditures) than dollar-denominated revenues and clearly demonstrates it in a real deficit and is not a policy in the budgets of the years 2015 and 2016 ".

The voyager Keywords saying: "the deficit in 2016 of $ 24 trillion dinars was planned to be financed by loans and bonds of external and internal $ 17 trillion dinars and 7 trillion of remittances Treasury bought by the central bank. Afterthought: but he did not come from this amount, only a small percentage, forcing the government to increase remittances purchased by the central bank from 7 to 16 trillion dinars, and without it the government in front of a serious financial crisis which can not even pay salaries.

Illustrates the Governor of the Central Bey, the deficit through central bank financing means the non-receipt of dollars from the bank and the Finance Ministry against the dinar ever received from him, and that the dinar when the government spends turn into a demand for the dollar, and therefore the reserve is reduced accordingly.

Keywords that he sees with the decline, the level of the reserve is still sufficiently required in accordance with international standards, where the remains of foreign currency coverage beyond what the source of the local currency. Pointing out that the review of the International Monetary Fund for our reserves last month showed its efficiency, and fears about him on in accordance with the Fund's estimates for the next five years, adding: We will not be forced to buy remittances treasury in 2017 or beyond, due to improved oil prices and external funding of $ 15 billion over three years starting from 2017.

It sees Keywords that the central bank "has succeeded in the face in 2016 and is the most difficult, after 2003, and was able to achieve a balance between foreign and local currency through the control of liquidity, through a window of foreign currency sale and maintain the lowest level of inflation in order to achieve price and economic stability."

The size of the current year budget of more than 100 trillion dinars, while the deficit ratio of the 21%.

On the other hand, indicates a financial expert and member of the Economic Reform Institute Majid Aziz said in an interview (to the extent), said that the Iraqi Central Bank reserves declined during the last ten years of the highest level which is $ 88 billion to $ 67 billion, and this year reached $ 49 billion, a decline of up to about $ 35 billion and the rate of decline is equivalent to nine billion dollars annually.

He adds: Aziz "is supposed to increase the cash reserves of hard currency by investing part of it in development projects, not operating expenses as it gets right now," adding that the reserve is a cover of the national currency and a safe haven for them, as well as that of a sovereign credit of the state can not to any party even manipulated by the government, except in cases of necessity or investment. "

For his part, says financial expert Atallah Marzouk in Speaking (term), "The cash reserves of the Central Bank directly affected by the sales of oil of Iraq and the fall certainly lead to a decline in reserve, but that was in control of it before, but now we do not know the extent of the possibility of that." he said, adding that "what is important today is the absence of any problem with the staff and the salaries of retirees and covered by social protection in the budget of 2017, they are fully insured and fear more than the possibility of being blocked or not delivered to recipients, where the government has put in priority the issue of payment of salaries."