The Iraqi Central bank announces the adjustment of the foreign currency exchange rate

Shafaq News / The Central Bank of Iraq announced that the foreign currency exchange rate will be adjusted to 145 thousand dinars for every 100 dollars.

The bank said in a statement, "during the last months of this year, intensive discussions took place with the Prime Minister, the Minister of Finance and the Legislative Authority, regarding the economic situation in general and the financial crisis that the public finances are going through due to the decline in oil prices and production, economic and health challenges."

The statement added, "The structural distortions in the Iraqi economy impoverished the public finances and restricted the ability of reform sought by the government and the Ministry of Finance. It is not a coincidence that the financial situation is this bad, nor is it the result of the current year or the previous year. However, unfortunately, rooted for more than a decade and a half because of Leading politics to the economy and prioritizing politicians' priorities over economic thinking and development, the rules of the relationship between economic policy on one hand and fiscal monetary policy on the other hand; Fiscal policy lagged in performing its roles."

The bank pointed out, "the subordination of the economic and financial policy to the aspirations and concerns of politicians, resulted in the last acceptable models of financial management in Iraq, and the role of that administration was limited to the distribution of oil resources to life-sustaining requirements such as salaries and operational requirements. The Ministry of Finance did not address its roles and leading position in economic affairs, because it lacked much economical and financial information. This calls for an effective approach to building economic and financial databases that facilitate decision-making and serve forecasts."

He continued, "Because of all these conditions, the central bank had no choice but to intervene on more than one occasion to support public finances and save critical public spending requirements. However, this does not mean that these interventions remain open without restrictions or endings."

"The Central Bank understands the difficulties facing the government's reform intentions, but this does not prevent it from mortgaging any steps that the monetary authority can take with effective steps to carry out reforms that affect the institutions of the financial authority, especially the effective collection institutions, customs and taxes, other public taxation institutions, and for spending to be leaned and rationalized, all of which depends on the political will of the supreme state institutions that support the direction of the financial authority to achieve this, and the government needs to support vulnerable groups that will inevitably be directly affected."

As by the statement, this change in the value of the Iraqi dinar will be one-time only and will not be repeated, and the Central Bank will defend this price and its stability with the support of its foreign reserves, which are still at solid levels, adding that the financial crisis that Iraq was exposed to due to the COVID-19 and the deterioration in oil prices and the decline in oil revenues, which led to a large deficit in the general budget and forcing the Ministry of Finance to borrow from banks and re-deduct them with the Central Bank in large sums, in order to pay Salaries and meeting other spending needs related to services provided to citizens Thee continuation of the current exchange rate has become a major obstacle to conducting real development and enhancing competitiveness for local production, which prompted the Central Bank to think about responding to the requirements of Funding the budget at an exchange rate that allows the provision of adequate resources to cover these needs and ensure the payment of salaries and critical requirements for government spending.

Based on the preceding, the Central Bank of Iraq decided to amend the foreign currency exchange rate to reach:

1450 dinars per dollar/ the purchase price of foreign currency from the Ministry of Finance

1460 dinars per dollar / selling price of foreign currency to banks

1470  dinars per dollar / the selling price of foreign currency to the public