$$$#### Reduce inflation He called visual in his speech to the need to adopt radical solutions to long-term by reviewing the financial policy of the state and reduce inflation in spending, operational and need to speed up plans for banking reform in orde

22/05/2013 12:00 AM

Exchange rate fluctuations accounted for expert attention
Baghdad - شكران the Fatlawi

Select
an economist many reasons behind the fluctuations in the value of the
Iraqi currency and economic imbalances structural considering that the
exchange rate holds an pivotal role in monetary policy in terms of its
use as a target or a tool and as an indicator of the competitiveness of
the state through its effect on the components of economic growth, such
as investment and the degree of openness to international trade and
capital flows and the evolution of the financial sector.

The parallel market

He
d. Kamal Al-Basri's "morning" that the increased demand for foreign
currencies and the weakness of the business environment of economic and
fiscal policy and weak productive capacities of local and growing
presence remittance companies and financial brokerage firms (parallel
market) and the emergence of areas of trade at border crossing points
all of which led to volatility in
the Iraqi currency. noted that the Iraqi currency optical recovering
derived from the content of the economy and it can not be to stabilize
the value of the currency away from economic reality.

GDP

And
Asharalbbar to that the reality of the Iraqi economy suffers from a
weakness in the effervescence basic Through meditate in the components
of GDP for the year 2011 we will see that different sectors are for GDP
oil, 54.74 percent and agriculture 4.15 percent and the industry is
about 1.83 percent, noting that the Iraqi economy depends on
the oil sector, saying that the problem when oil revenues are much
bigger than the financial returns obtained from taxes reasoned that
finding a state asset financially significant disposal easy gain (not
achieved at the expense of the financial resources of citizens), noting
that all of this will result in economic policies sterile represented an
increase of salaries and
wages away from labor productivity accounts and the creation of
employment for non-productive purposes useful that all this will result
in inflation Balasarklah on policy support is an updated economic
distortion in the structure of the economy.

Uneconomic spending

He
also will result in spending policies represented by non-economic
activities have no justification and كالمنح economic aid and open the
external circuits and cultural diplomacy does not add real value to the
economy for the citizens and not be at the expense of pressing economic
areas relating to the lives of citizens.

He
attributed the optical reasons behind the fact that the private sector
in developing countries, marginal and weak it to ايتمتع support as is
the case in the public sector, but rather concentrated support in the
areas of economic commercial and service noting that the absence of the
real role of the private sector means the absence of creativity and
speed adjustment with market needs and provide employment outside part
of the public sector, pointing out that the uniqueness of the public
sector production and the absence of his rival for the private sector
will inevitably lead to the continued deterioration of the efficiency of
the production of the public sector, he said.
Government intervention

He
pointed out that this matter requires government intervention and
protection of the public sector through financial support and customs
protection policy (currently support the annual $ 3 billion). Thus,
the government is working to protect the institutions of productivity
inert at the expense of the citizen who finds unchanged compelled to buy
goods or services at a higher price and the quality is poor useful that
this sacrifice is usually also emphasizes global experiences to not
lead in the short term and not run into improved performance and
efficiency of the production of the public sector.

Central action

He
optic that exchange rate Atatheraola measures the central bank, which
represents management major in the state to identify and manage monetary
policy so as to contribute to the achievement of economic goals that
are looking her state, and secondly commercial banks and remittance
companies financial terms intervene in the market to execute the orders
of their clients or for its own account, where you These
centers collect orders customers and they Palmqasat banking, and
thirdly brokerage firms are intermediaries militants who collects orders
purchase or sale of hard currency for the benefit of several banks or
dealers others away from transparency. drew visual to it, and over the
past few months, decreased the value of the Iraqi dinar against foreign
currencies until
he was sometimes 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 and this indicates to the high demand for dollar in the domestic market.

External factors

He
attributed this to several factors in the forefront of external factors
which formed the political and economic crises in neighboring countries
(Syria and Iran) and embodied in need of these countries to the dollar
coin and foreign currency, which he got a drop of the local currency in
those countries and reflected down the price of exports to Iraq, and the
creation of windows to
attract the dollar from Iraq to those countries during trading
attractive to the Iraqis and the same time a source of hard currency to
the Iranians and the Syrians. On
the other hand there is interdependence of social and family with these
countries may also be an outlet for the exit of the dollar but it is
difficult predict Bmekdarh.

Investors retreat

The
other factor is 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. 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 limiting activities to some businessmen and commercial projects
yielding quick profit, but is no doubt that the proportion of it turning
to other countries suffering from scarcity of liquidity implications of
the impact of the financial crisis that began in late 2008.

Fiscal policy

In
addition to other factors, including fiscal policy, where previous
years have seen high levels of government spending at a greater rate
than any other country in the world (public spending rose from 34.6
trillion dinars in 2004 to 117.1 trillion dinars in 2012) and most
Pictures Consumer spending is leading to the rise spending
outside world, as well as 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 37.3027 billion dollars
in 2010 to 40.6325 billion dollars in 2011 at a rate of change stood at
8.9 percent. as
well as the weakness of tax policies and lack of political and economic
stability and the weakness of the local productive capacities.

Cancel Profit

For
the purpose of finding a solution to the fluctuation in the value of
the Iraqi currency sees visual need to reduce pumping hard currency
(cash sales) in the central bank auction 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 because of the
difference between the two rates ..

The
proposed mechanism of buying and selling foreign currency for
remittance companies and financial companies to mediate done by banks
licensed in Iraq in order to reduce transaction is eligible and
procedures adopted and compel traders and dealers in the areas of trade
exchange between Iraq and neighboring countries to deal transfer
financial and letters of guarantee, rather than buying cash.

In
addition to the commitment to a transparent auction information and
cash transfers and development of an electronic information system.


Reduce inflation

He
called visual in his speech to the need to adopt radical solutions to
long-term by reviewing the financial policy of the state and reduce
inflation in spending, operational and need to speed up plans for
banking reform in order to facilitate the procedures for exchange the
cash and improve the tax code and work to expand horizontally while
reducing tax evasion.
Deletion of zeros

He
also called for activating the law of customs tariff because of its
important role in providing incentives for producers with feature
economic, leading to a reduction in the volume of imports as well as
improved revenue workforce and improve the business environment, the
economic order to raise the efficiency of production for companies and
institutions of local productive that will reduce imports and increase intake
of foreign exchange through export, as well as to attract foreign
investment and the use of modern electronic mechanisms in the
distribution of salaries and the use of bank instruments and encourage
saving.

He
pointed to the possibility that be to issue a new currency or deletion
of zeros from the current currency positive psychological effects on the
local currency dealers.

http://www.alsabaah.iq/ArticleShow.aspx?ID=47049