Expert warns of limiting financial transactions in USD for Iraqi traders

Shafaq News / Renowned economist, Shawan Al-Zanganeh, issued a cautionary statement on Friday, warning against restricting financial transactions for traders in hard currency, particularly the US dollar, through the electronic platforms of the Central Bank of Iraq. Al-Zanganeh emphasized that this move could lead to a halt in the entry of imported goods into the country's markets.

In response to the statement issued by CBI on Thursday regarding the handling of the dollar and the exchange rate, the expert told Shafaq News agency that it contains a highly dangerous and sensitive paragraph. According to him, the Central Bank, in its attempt to address the dollar crisis, will require traders to prove their transactions through the platform when their goods enter Iraq's customs. This implies that traders will only be able to import their goods using the platform, as they would have to present the transfer document through the platform for all customs clearances.

Al-Zanganeh further added that if this decision is implemented without facilitating the transfer operations through the platform for all traders, supply chains through customs and the entry of goods will come to a halt until the procedures are adjusted. This will result in the cessation of imports, scarcity of goods in the local markets, price hikes, escalating inflation, and substantial losses for many traders, impacting citizens' purchasing power.

The expert also urged the federal government and the Central Bank of Iraq not to immediately enforce this decision without preparing the groundwork and enabling all traders to use the platform correctly and smoothly. He suggested delaying the submission of the transfer document until after the goods have been imported within a specified time frame.

Furthermore, Al-Zanganeh called on all chambers of commerce, business associations, civil organizations, research institutions, and economists to organize seminars on this matter and actively contribute to solving the monetary crisis. He suggested proposing plans and recommendations that contribute to regulating transactions in hard currency and ending the practices of speculation and smuggling.

CBI stated on Thursday that the exchange rate of the dollar against the dinar circulating in the markets, as traded by speculators, is considered "illegitimate." The bank called for joint efforts to achieve stability in the exchange rate, especially considering that Iraq has sufficient foreign reserves to meet legitimate needs.

The bank's management explained that the implementation of the system of foreign transfers, documentary credits, and cash sales of foreign currency serves various economic, regulatory, and legal objectives, including strengthening measures against money laundering and terrorist financing, avoiding the risks of local and international sanctions on all related parties.

It also aims to ensure that Iraq's imports are conducted through channels that ensure the integrity and transparency of the processes while providing essential data and information for planning, organizing, and monitoring purposes. Additionally, it aims to generate additional state revenues by subjecting all imports to comprehensive registration procedures and associated fees.

Moreover, this system would enhance the confidence of recognized international banks, thereby expanding the network of relationships between the local and international banking sectors and increasing the number of correspondents for Iraqi banks.

To address the aforementioned phenomena and curb the prevalence of an unofficial market rate, the government and relevant authorities are cooperating to implement the following measures:

1. Encouraging traders to use the designated channel, the electronic platform, to fulfill the objectives of the system and prevent the use of cash dollars in the market for purposes other than their intended use. This requires obliging traders to provide evidence of their import transactions according to the official rate when their goods enter Iraq through official border crossings.

2. Supporting and facilitating the entry of traders into the electronic platform by simplifying the procedures, especially the tax-related ones, setting predefined ceilings based on categories, and depositing them into the General Tax Authority's account through their banks.

3. Tightening control over official border crossings and closing unofficial ones while coordinating between the federal and regional governments to regulate entry procedures, imposed fees, and unifying them, as well as preventing the entry of prohibited and illegal materials by law.

4. Enforcing the strict implementation of Cabinet Resolution No. (23026) for the year 2023, which restricts buying and selling goods and services within Iraq to the Iraqi dinar.