Optical: the need to review the fiscal policy and banking reform

18/04/2013 12:00 AM

Select the reasons for the high demand for the dollar
BAGHDAD - Hussein ثغب of Tamimi



Economic expert stressed that the financial sector is suffering from weakness and imbalances in more than one side for some time, pointing to the need to work on activating scientific solutions to the problems of monetary policy, which is now affecting the overall operation of economic development are the most important ports in the country.

Economic expert, Dr. Kamal Al-Basri said: what is happening deformation in the structure of the Iraqi economy as a result of the reality of the economic policy which is based on the rentier economy, is not expected to control this deformation near extent.

Pointing out that the work requires the application of institutional governance vocabulary of the adoption of the competencies and strategic vision and a sense of responsibility as well as the adoption of transparency and ensuring the rule of law and to ensure participation and acceptance unanimously and achieve the goals of equality also can not be achieved in the near term.

He added that the solutions in the monetary policy requires a long time to achieve the desired results, based on the factors affecting the local currency in Iraq find it necessary to divide solutions and procedures into two parts first is quick solutions (short-term), which include reducing pumping hard currency (cash sales) at auction Central Bank and the adoption of increased foreign remittances, and increase the price of cash sales at the central bank auction for the equivalent selling price in the auction of foreign remittances in order to cancel the profit realized due to the difference between the two prices, as well as the cancellation of the sale and purchase of foreign currency by remittance companies and financial companies to mediate and transferred through banks licensed in Iraq in order to reduce the non-compliant transactions to the terms and procedures adopted, forcing traders and dealers in the areas of trade exchange between Iraq and neighboring countries to deal financial transfer and letters of credit instead of cash purchase and commitment to information transparency auction and cash transfers and development of an electronic information system.

The radical solutions (long-term) they include reviewing the financial policy of the state and reduce inflation in spending and operational speed up plans to reform banking in order to facilitate the procedures for exchange the cash in addition to improve the tax code and work to expand horizontally while reducing tax evasion and activating the law of customs tariff because of its important role in provide incentives for producers with feature of economic leading to a reduction in the size of imports and improve revenue labor as well as improving the business environment of economic in order to raise the efficiency of production for companies and institutions of local productive that will reduce imports and increase the intake of foreign exchange through export, as well as to attract foreign investment to Besides using the mechanisms of modern electronic distribution of salaries and the use of instruments, banking and encourage Aledjarbma can issue a new currency or deletion of zeros from the current currency Alikun have positive effects psychic dealers in local currency.

continued optical saying: The past few months have seen devaluation of the Iraqi dinar against foreign currencies, reaching in some cases the market Parallel 1300 dinars per dollar, after it was stable on the rate of 1185 dinars per dollar, despite the stability of the selling price of the Central Bank's 1166 dinars with a commission of 13 dinars of remittances any 1179 dinars and 1171 dinars to the sale of cash, indicating that This indicates the high demand for the dollar in the domestic market so as to several factors, the most important external factors, where it formed the political and economic crises in neighboring countries (Syria and Iran) and embodied in the need for these countries to the dollar currency and foreign currencies.

Explaining that you received is a decline in domestic currency in those countries and reflected down the price of exports to Iraq, and create windows to attract the dollar from Iraq to those countries through the stock attractive for the Iraqis and the same time a source of hard currency to the Iranians and the Syrians.

On the other hand sees visual There is a social coherence and prisoners with those countries may also be an outlet for the exit of the dollar but it is difficult predict Bmekdarh. In addition to the business environment, represented by economic factors, which result lead to a flight of domestic capital and the decline of foreign investors, including political instability and the absence of the rule of law in economic transactions.

He said: There is no doubt that the time period that followed the 2008 has seen an improvement in the security situation and then in the rate of inflation and the exchange rate. However, the economic environment is still repulsive acts do not encourage project planning medium or long-term.

Which led to limited activities on some business and commercial projects yielding profit fast, but I doubt that the percentage of it turning to other countries suffering from scarcity of liquidity arising from the impact of the financial crisis that began in late 2008 (reaching rank Iraq 165 of 183 countries in 2012)

He pointed out that fiscal policy has seen over the past years high rates of government spending at rates greater than any other country in the world (increased public spending of 34.6 trillion dinars in 2004 to 117.1 trillion dinars in 2012) and most images spending is consumer lead to a rise in spending the outside world (travel, medical services and seminars, and import of goods and investments in real estate projects, etc.), and also led to a rise in net Iraqi currency traded amounting to 36 trillion dinars in 2013, bringing the demand for foreign currency, where the value of imports of Iraqi 37302.7 million dollars in 2010 to $ 40632.5 million in 2011 at a rate of change of 8.9 percent.

He optic to the weakness of tax policy of not applying the law of customs tariff and of course the consequent flooding the market with goods and services payable in dollars often also twice as efficient collection of dues tax ensures achieved additional profits may find their way because of poor credit Iraqi banking abroad Authority dollars.

Indicating that Iraq is a country described as undergoing transition and political instability, economic, and this led to the proportion of individuals maintain accounts in foreign banks abroad, and getting these conversions directly proportional to the height of the oil revenues.

He said the improvement in Iraq's per capita income of 1670 dollars to 5400 dollars makes looking for more consumption in terms of quantity and quality.

This factor is reflected in the market through external spending on the import of machinery and new materials or by increasing spending on foreign consumer goods.

As the weak governance and the rule of law embodied Bagr public money and corruption, and an example of the determination of speculation for projects with more than its real value, this situation leads naturally to raise the frequency conversion of the Iraqi dinar dollar and went on saying either remittances family from abroad In previous years there have been a significant proportion of family remittances from abroad are to the inside and on the impact of improvement in the rate of income individual Iraqi far these remittances have fallen to large ranges.

He pointed out that the presence of remittance companies and financial brokerage firms (parallel market) led to the promotion of practicing foreign remittances of cash put pressure on asset of the dollar and was the first adoption of transfers of credit, and pointed to the low incomes of foreign currency non-oil due to lower grants and international aid for reconstruction and reverse In the U.S. presence in Iraq in particular.

As for the areas of trade at border crossing points, the presence of these areas encouraged to pay cash in dollars directly at the border points of contact, which thus lead to a direct increase in demand for the dollar.


http://www.alsabaah.iq/ArticleShow.aspx?ID=45019