PM's economic advisor attributes the dinar depreciation to slow adaptation to new financial regulation
Shafaq News/ Iraq's financial system needs some time to adapt to the new regulations and stabilize the forex market , prime minister's advisor for economic affairs, Muddher Saleh, said.
"The new measures related to Forex transactions that fund the payment balance from current accounts, and I exclusively mean the trade of goods and services, have caused major change that some banks, customers, and importers need time to adapt to," Salih told Shafaq News Agency, "they need time to get used to the platform regulations and new high-governance mechanisms on external transfers after nearly twenty years of liberal administration of external transfers."
"The method of financing cross-border trade with cash dollars, which many small cross-border trades have been accustomed to, has also been subjected to the same constraints. Cash dollar sales -which used to fuel cross-border trade in a cash-based, primitive, yet quick, way to import goods from neighboring countries- must also be done via the platform."
"Many transactions, particularly with countries under sanctions or involved in regional disputes, are halted per the new regulations. This places huge pressure on the parallel exchange market," he said.
"The procedures related to the outflow of capital from Iraq are yet to be clarified. Some transactions are informally rejected, albeit Article 28 of the Iraqi Central Bank Law No. 56 of 2004 allows unrestricted external transfers," Saleh explained.
"This rejection prompted 'capital flight' from the country over the past 20 years via two forms of violations: the first is over-pricing imported goods, and the second is integrating unauthorized capital account requests with authorized current account transactions, but without disclosing the ultimate beneficiary of the external transfer."
"Such integration has caused problems with international bodies inquiring about the fate of the transferred money and the parties benefiting from it," the prime minister's advisor continues.
