Shabibi: Iraq has not yet become a safe place brings investment and the central problems due to loss of independence

2015/6/16 17:42


{Baghdad: Euphrates News} Former central bank governor Sinan al-Shabibi said Iraq had not yet become a safe place brings investment, and problems due to loss of central bank independence.

He Shabibi in a press statement that "the Iraqi money market live in the present time of instability was the collapse of the market rate of the dinar, which amounted to 1340 dinars to the US dollar, while the official price of about 1190 dinars to the dollar, although the size of the reserve is still great, which It is considered a key factor in the stability of the currency. "

"And the reason for this difference between the two prices to enter ministries {financial} and other parties {House}, and Amlaihm policies and conditions do not has to monetary policy onion, in addition to the lack of central bank adviser's ability to defend the bank by law".

He noted that "the problem at present is that the student transfer it to pay secretariat draw a certain percentage of taxes and customs when buying the dollar, and at the request of the Ministry of Finance, and this is an important factor in the rise in the dollar, these conditions served the Ministry of Finance, but the principle that the purchase of foreign currency and selling it must be done quickly and smoothly without any obstacles {except banking conditions and a commitment to capital}; because the rapid movement of cash, and if there is a need for the central bank to take advantage of foreign currency sale for development, was better That is used in the development of the banking credit process, if given preference in the auction of the bank, who leads in the banking its credit. "

He continued, "So there is intervention from the Ministry of Finance in the work of the central bank, said that this intervention is aimed at the collection of the Ministry of Finance resources nothing to do with monetary policy, although the central bank is that the collection of these resources, in other words that the central bank is the one who collects these resources to account Ministry of Finance, also included the budget the central bank buys bonds and treasury remittances to $ 6 billion and reduce the percentage of legal reserve held by banks at the Central Bank in half to provide budget resources, that the seriousness of these measures GOES to reduce the effectiveness of monetary policy in the fight against inflation; therefore, the fiscal and monetary authorities to assess what you get compared to inflation of resources and instability, which can be a cause for the collapse in the real rate of the dinar. "

He went on, "that also restrict the sale by the House of Representatives means enter Parliament in the work of the central bank, common among among economists and parliamentarians that the central bank continued to the House of Representatives, and this is a big mistake Central official Bank is in front of the House of Representatives and not subordinate to him, and here the Central Bank is no different from the rest ministries, but this responsibility {} responsibility of the central bank explicitly mentioned in the Constitution. "

He went on saying, "Thus, the central bank has lost its independence and became a bow to the decisions of the government and parliament, the proper method is to put forward ideas as proposals in the House of Representatives, and then be voted on."

He said the "policies of the government and parliament, and particularly in determining sales, led to a duplication of the exchange rate deceived black market enriched some of them, and used by others in other funding terrorism may be one of them."

He went on that "autonomy loss of his caveats several, the most important that the central bank will be subject to the instructions of the government, which will be reflected in the Bank's policies, so the central bank will not be able to adopt an inflation target reduction seriously, and make matters worse, that government spending is inherently inflationary result of the delay in the the implementation of projects, and the loss of independence will lead to the creditors to look to the central bank's money as government funds, becomes a target for creditors, and this is an important issue should be discussed with creditors and lawyers Iraq. "

It was to be "loss of autonomy means that the central bank to adopt monetary policies in line with the policy of the government, but the government's policies may not fit with the Central Bank Law, in other words it does not focus on the fight against inflation does not give due importance to the goal of economic stability."

He pointed out that "the imposition of a financial nature policies on the central bank should be the subject of coordination and study by government and parliamentary bodies, the Central Bank has weakened administratively from the government, and often tried to governments to impose its policies on the central bank, including the former prime minister tried to borrow from the central bank, which was rejected by the bank; because the law prevents him from it, and ended up the attack on the central bank and the arrest of many of the finest of its staff. "

The former central bank governor Sinan al-Shabibi "One manifestation of overtaking on independence is a matter relating to waive the central bank reserves, and some echoes that this may be justified; because the reserve exceeds the currency trading banks and in the one and a half times, that these justifications for the government; to gradually dominate the Central Bank resources, the economy, such as the Iraqi economy largely open to the outside world needs significant resources to compensate for the results of any crisis, and if they are borrowing from the central bank. When would respond this money? What is the capacity owned by the bank towards the government to recover this money? ".

He Shabibi that "the bubble and the high price of the dollar is a result of the policy of the government and the House of Representatives, and it ought to be to remove obstacles for the foreign exchange market, where you should not be given greater importance of fiscal policy, monetary policy is determine the exchange rate and help to money management and functions."

He said the "central bank lends to the government but it helps the economy as a whole through price stability, and the organization of credit and supervision of the banking and financial sector and the organization of payments and maintaining the country's reserve, either speak much echoed by the government and the Finance Committee in the House of Representatives about {auction of foreign currency}, the This auction is a monetary policy which pulls dinars from the market and bought by foreign currency, and here Thread ends for the central bank, we have a cash discharge process direct, simple, and if there is no import of the auction, for parliamentarians to inquire about the reasons for this in the customs or the Ministry of Trade The process of import are not included in cash process, the central bank must meet all the demand for the dollar, and this is one of the fundamentals of price stability, as the demand which was full by the bank will go and creates another market and prices again, which is contrary to the central bank law and creates a state of economic instability. "

He added, "the Finance Committee has chosen to put an upper limit on the sale of foreign currency {75 million dollars a day}, thereby contributing to this instability and the creation of multiple rates for the exchange because the real demand was higher, and in any case, this request does not ask about the central bank, but ask for all sectors of the economy, so why not go the Finance Committee in the Parliament and practiced legislation and supervision question to sectors of the economy which are supervised by and to the private sector, especially as it is supposed to all corners of the economy converge, we do not doubt that there are irregularities, which requires follow-up with commercial banks relationship, but we stress that the central bank is in front of the discharge process, but not cash, either by the imports. It is outside the scope of work of the Central Bank "

He noted that "on the other hand that the money go abroad; because the state did not provide the right opportunities at home to invest, as that part of them is a kind of external savings {concept within the national accounts of any country} will return to Iraq in appropriate circumstances that must be provided State, either in respect of moneys emerging must be sure of the legitimacy of sources and sinks and the circles in which anti-money laundering that should be strengthened, the majority of sources may be derived from money laundering or simply that the subject is big operations out of capital. "

"We must not forget that Iraq falls within the group of countries which are in transition from totalitarian regimes to open democratic systems provide the free economy, this group of countries undergoing many changes in the economy opens up {as states the former Soviet Union}, but a lot of these countries was characterized by its economy, the transfer of capital abroad, and in the case of Iraq encourage this transition also because of the conditions of violence and instability experienced by the country, this situation may explain the large sums of money being transferred abroad, it's going to save abroad, then we are in front of the case of capital flight and not smuggled , the situation in Iraq with the present encourage capital flight, and if it does not allow capital to move the dollar exchange rate in the market will rise significantly, thereby inhibiting economic decision-making. "

He concluded by former central bank governor Sinan al-Shabibi said, "Iraq has not yet become a safe place brings investment, we need large national efforts to ensure stability and to attract investment."


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