Central Bank of Iraq and the budget deficit

Date: December 7, 2016


Writer / Ihab Ali Representatives

The manifestations of any economic crisis, can heal their features and their results through access to the state budget, the figures received by the express and clearly about whether the economy is suffering from the deterioration in the economic situation, by knowing if a patchwork budget contractionary or expansionary, deficit or from the surplus, if patchwork deficit is it a short - term temporary disability controlled, or a long - term structural deficit.

And Iraq 's budget for 2017, amounting to 100 trillion dinars , or approximately $ 95 billion, and the deficit of the scheme of 21 trillion dinars , or approximately $ 19 billion, and the deficit is expected to reach more than that.

We are not going to discuss the budget for this year put, as far as Maehmna is to know the mechanisms by which they can reduce this deficit, and he knows a lot that the government has sought for the past few days to realize that, especially after the decline in global oil prices, and by finding the revenues of oil alternatives, through diversification of sources revenue, which was mostly caters ambition or plugging a thing of the deficit, forcing it to borrow money from abroad.

And what might you comes to mind, is where the role of the Central Bank of Iraq than that? Vsmam safety economy and monetary policy - maker in the country, did not appear to him that the active role which imposed through which to contribute to easing the deficit suffered by the Iraqi economy.

And he objected to Dr. Shabibi Governor of the Central Bank of Iraq , the former on the idea of resorting to external borrowing, because that would increase the severity of the debt crisis in Iraq, as it was unlikely that Iraq is able to attract significant external financial resources and is in a state of war and live in a state of instability.

There is no doubt that the economy , which has many internal or external surpluses have great flexibility to address the crisis, and the government can use internal surpluses by borrowing them, but they can not borrow from the central bank, because of backups specific purpose is the currency protection, this reserve is not used unless the economy has stopped generating financial resources, which it mainly relies on imports.

The call for the use of the reserve imagine that the reserve is a type of savings, and this is not true, Valahtaati balance of savings is a financial flow, and with the central bank to Aakarz government, but it can be managed by government borrowing from commercial banks by regulating the issuance of treasury transfers.

And so that the Iraqi Central Bank 's role in the activation of monetary policy and influence economic policy, they need to get out of trouble and financial domination of the rentier, central bank is positioned like Babav whose mission is to transform the revenue derived from oil from the dollar to the dinar, in order to provide public Altvqat State in local currency.

Since the interest rate spiritless forces in Iraq in light of the weakness of the banking sector and seriously the impact for the investment and business trends, it did not keep him , but the exchange rate tool by which they can influence the rest of the economic variables.

In the opinion of Dr. Ahmed Berhe Ali , Vice Governor of the Central Bank of Iraq earlier, the central bank 's operations in the foreign exchange market as the foreign currency conversion of the oil source to the private sector to fully meet the demand for all purposes at the applicable exchange rate, while the impact on the money supply close to its association with government spending and procurement sector Special foreign currency.

As for the open market securities, and private purchases and sales of stocks and bonds, Iraq still does not have the financial market that would impact on the Iraqi economy or in some monetary and financial variables.

Here , it may seem that the central bank is unable to come up with by or that have an active role in resolving the crisis or processed or influence, especially in light of the lack of coordination between fiscal policy and monetary policy.

In order to be the central bank actively in economic activity, and steer monetary policy and independent and transparent, it requires more than the issue of independence paper form, as there is an urgent need to strengthen the financial and banking sector in the country, and that the issue of economic diversification has become very necessary and through the private sector and this port Emasineks future in the effectiveness of the central bank through its impact on investment channels and through the gate of the interest rate and exchange rate.

Source / network news Informatics

http://neniraq.com/البنك-المركزي-العراقي-وعجز-الموازنة/