************* Head of the Fund's mission to (term) the benefit of pegging the dinar to the dollar instead of a significant reduction of the Iraqi economy

2017/04/11 (00:01 PM)



 Baghdad / Zahraa al-Jassim

There is talk at length between the economic circles, whether legislative or specialized about what the IMF's loans to Iraq and its usefulness out of the current financial crisis in light of the repercussions of the decline in oil prices globally, sometimes talk about it will be open to us to obtain facilities and loans and support international financial organizations and countries

According to an international financial umbrella obtained by Iraq amounting to nearly 20 billion dollars, with what others see as borrowing from the Fund is very important for Iraq and even strengthen its position externally in terms of financial transactions, and sometimes others question this proposal, noting that, the loans would not But burdens the borrower state financial obligations and bear the debt for many years, with facts can not be overlooked due to the repercussions of the occupation of a number of Iraqi cities and the huge numbers of displaced and destruction of the infrastructure of those areas, which requires reconstruction after liberation, not to mention the costs of these the war that no one can yet appreciated.

In-depth discussions and discussions over the past two years to complete Iraq's $ 5.3 billion IMF loan at a low annual interest rate of one and a half percent, accompanied by requests, policies and procedures recommended by the IMF with regard to its credit preparation program with Iraq, And the activation of the economic sectors and financial reform, which according to officials, is in the interest of the Iraqi economy, to remain the most important opinion of the International Monetary Fund in this regard, where the head of the mission of the Fund in Iraq, Christian Goose, some questions Q The interview (range), via e-mail.



[Asharq Al-Awsat] What is the future of the credit program with the International Monetary Fund, if the oil prices are significantly improved to eliminate the deficit?

- In light of current oil price projections, we believe that a fiscal adjustment approach that combines ambition and applicability should be followed in order to bridge the deficit by the end of this decade (2020). If oil prices rise to a point where the need for international financial support from the International Monetary Fund and other donors is lacking, the decision leaves the Iraqi government with the continued implementation of the credit arrangement with the IMF.



[Asharq Al-Awsat] Has the Fund taken into account, in its program, how Iraq will be able to repay its accumulated debts and borrow for reconstruction if oil prices continue at current levels?


- Yes, if the Iraqi government implements the fiscal adjustment program provided by the Credit Standby Agreement, it will be able to repay its debts.

[Asharq Al-Awsat] What are the means available to Iraq to establish economic partnership with the world to operate the economy and raise the rates of growth and development in it and reduce the levels of unemployment to a real one-tenth to be 40% instead of 24%?



- The Iraqi government should implement the following growth strategy: First, maintain macroeconomic stability by freezing public spending in nominal terms for two years, until the fiscal deficit is gradually bridged and the Iraqi dinar is kept pegged to the US dollar.
Second, creating fiscal space by increasing non-oil revenues and reducing current expenditures, using this space to promote human capital and rebuild physical capital in Iraq. Thirdly, improving the business climate, while reducing the role of the state in the economy in the context of ongoing fiscal discipline, increases incentives for private sector development, particularly with the start of reconstruction work. Finally, reform and restructuring in the financial sector will strengthen its capacity to support the private sector over the medium term during reconstruction.

* Everyone believes that the economy is in a severe recession or recession and the nominal dinar exchange rate is unrealistic and overvalued, compared to the current account deficit of the balance of payments, but it is time to devalue the dinar and its exchange rate against the dollar and bear little inflation in order to rationalize the overall state expenditure ? What is your guidance in this regard?



- The central bank still maintains a comfortable level of foreign exchange reserves

We feel that it is appropriate to maintain the linking of the Iraqi dinar in US dollars. It will not achieve the devaluation of great benefit to the economy and would cause a sharp increase in inflation.



[Asharq Al-Awsat] The Iraqi central bank's cash reserves have recently fallen to 49 billion dollars. How do you view this decline? Do you have recommendations for the Iraqi side?



- The central bank still retains a comfortable level of total foreign exchange reserves. As is the case in all oil-exporting countries, can not avoid the decline in these reserves when oil prices fall. We recommend the implementation of the financial adjustment agreed under the credit standoff agreement to keep this decrease within the limits that correspond to the peg of the Iraqi dinar to the US dollar.



[Asharq Al-Awsat] What are your directives to Iraq on the reconstruction process in the liberated areas, and what do you think of US President Donald Trump's contribution to the reconstruction of these areas for Iraqi oil?

- We recommend, first, to assess reconstruction needs with the assistance of the World Bank and then to raise the resources needed to implement them, including Iraq's oil resources and international financial support.



Iraq can assume its debts to conduct the agreed fiscal adjustment



[Asharq Al-Awsat] Everyone is apprehensive in Iraq about the size of the Iraqi government's internal and external debt, how do you look at this issue, and what are your recommendations?

- it can carry Iraq's debts if the authorities carried out the agreed financial correction with the IMF under the standby credit agreement.

The International Monetary Fund (IMF), a specialized United Nations Bretton Woods system established under an international treaty in 1945 to promote global economic safety, is based in Washington, DC, and is managed by its members, covering almost all the world's countries, with 188 countries.

The International Monetary Fund (IMF), the central institution of the international monetary system, is the system of international payments and exchange rates, which allows commercial transactions between different countries. It aims to prevent crises in the international system by encouraging different countries to adopt sound economic policies, The Fund's legal objectives include facilitating balanced expansion and growth in international trade, stabilizing exchange rates, avoiding the competitive devaluation of currency values, and a systematic correction of the imbalance S balance of payments experienced by different countries.



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