An Economist Warns Against Relying On Reducing The Dinar Against The Dollar To Face Budget Deficit

Baghdad  Economic expert Safwan Qusay warned against relying on cash issuance without cover at a rate of 12%, meaning that the official Iraqi dinar price will be 1340 per 100 dollars / the reduction of the dinar against the dollar / in the face of the budget deficit, stressing that it will negatively affect the poor citizen .

He said in a statement to the National Iraqi News Agency / NINA / In light of the apparent weakness in financing the federal budget deficit for the next fiscal year 2021, some suggest relying on monetary policy to face this deficit by undertaking the monetary issuance without cover at a rate of 12%, meaning that the official Iraqi dinar price will be 1340 per 100 dollars, and this procedure, despite its ease, means direct damage to the real income of the employees and thus will reflect on the already high poverty rate and will confuse the financial and economic sector due to the presence of large commitments in foreign currencies in the Iraqi market.

Qusay stressed, “the need to move away from this proposal and activate the role of the Central Bank of Iraq in maintaining the official rate of 1200 without change, and for the government to rationalize public spending in all ways and increase oil and non-oil revenues to finance the deficit that can be financed without damaging the value of the currency, at least under the current circumstances, which is witnessing an increase in oil prices due to the possibility of eliminating the impact of the Coronavirus. ”

Al-Kifah Central Stock Exchange in Baghdad recorded 127050 dinars against 100 dollars, while Al-Harithiya Stock Exchange in Baghdad recorded 127100 dinars against 100 dollars.

 

Source: National Iraqi News Agency