Is Iraq resorting to printing currency to overcome its financial crisis?

Adel Fakher - Baghdad

The appearance of Muhammed Salih, advisor to the Iraqi Prime Minister, confirmed that the options to face the financial situation are heading towards pressure of expenditures, and that the issue of printing the currency is just a proposal that is not consistent with the Central Bank Law, which confirms that the printing of banknotes is a routine technical procedure practiced by the bank according to the requirements of cash circulation, and that the printing Completely separate from the cash issue process.

Saleh said that the government has financial procedures that will not lead to stumbling the salaries of employees, as it is one of the priorities of the government, indicating that their options for facing the financial situation are heading towards pressure expenditures, noting that there is a team working with the Ministerial Council to restructure state expenditures, and that the issue of printing the currency is just a proposal that does not Consistent with the Central Bank Law.

And the Central Bank of Iraq issued an explanation regarding what is being circulated of news about the possibility of printing an Iraqi currency to avoid economic problems, in which he emphasized that any party cannot withdraw banknotes from the central bank unless there are balances in their accounts that cover the amount to be withdrawn, and therefore, does not mean to say Of course, the dinar has no meaning other than to strengthen the treasury of the central bank in accordance with the monetary policy, and not for any other purpose or purpose. The law of the central bank and monetary policy do not allow the issuance of cash in favor of an account without a balance.

The bank said in a statement that when the Ministry of Finance wishes to finance spending on different spending units and salaries, it requests the central bank to strengthen its account in Iraqi dinars in exchange for withdrawing from its account in dollars, so no amount is deposited into the finance account in dinars unless a withdrawal from its dollar account is offset.

Noting that the Central Bank Law does not allow him to lend to the government, whether by printing the currency or any other method, direct or indirect, and he is entitled to deducting treasury transfers, if they are in the secondary trading market, as it is one of the tools of monetary policy, as he saw this based on data Precise objectivity serving the objectives of monetary policy.

Economic balance deficit
The economist, Salam Smaism, asked about the nature of the cash issue and whether it was in the normal form issued by the government in exchange for coverage of a quantity of cash and a quantity of gold, and the state’s commitment to the international community, the international economy and the International Monetary Fund, and all this is measured by the state’s economic standing and the amount of wealth.

Sumaisem told Al Jazeera Net that the state now hints at the printing of the coin to coincide with the talk about the cash crisis and the existence of a deficit, and this means that there is a deficit in the economic balances represented by the general budget, the trade balance and the balance of payments, and this requires more money, so how can the state pay this deficit with the increasing expenses represented by salaries Wages and social benefits.

She also asked, "Will the printing of the currency be free of charge, and if it is, it will adversely affect the reality of the Iraqi economy through the collapse of the Iraqi dinar, which will lead to significant monetary inflation, and here the risk is possible because it will affect the classes with limited income, in the sense that the amount of goods and services that it gets The individual as a result of his use of this income will decrease, and with it the living standards of the individual represented by the most important files such as food and medicine will decrease. "

The value of remittances
In a related context, the Central Bank issued instructions pertaining to the cash withdrawal commission for the dollar, according to which it will spend 25% of the value of transfers in dollars that come to Iraqi banks in Iraqi dinars, as a measure to overcome financial and economic crises.

In this regard, economic analyst Dhargham Muhammad Ali explained to Al-Jazeera Net that this measure is caused by a lack of foreign currency caused by the decline in the price of crude oil in global markets, which is a temporary measure to cross the current crisis, indicating that it is a procedure followed in many countries that suffer from a shortage of currencies Foreign, as for the printing of the currency, it is not possible because it will harm the economic and financial position of Iraq and float the price of the currency and create greater economic problems, he said.

And on the ways to support the federal budget to cover the deficit, Muhammad Ali explained that this is done by giving away all unnecessary forms of spending, reducing the salaries of special grades and stopping the statements completely.

The Iraqi currency went through several phases, the royal edition bearing the image of King Faisal and continued until 1958, the edition bearing the Republican emblem until 1978, and the international edition, called the Swiss edition, which was printed at the British company Delaw and Soviet Exports until 1990.

Then, as a result of the circumstances of the economic blockade that Iraq went through, the Central Bank of Iraq printed the banknotes at Dar Al-Nahrain for printing, and in the beginning of 2003 the central bank withdrew all local and international banknotes named Swiss edition and put the new series of Iraqi dinars consisting of seven categories that were printed with specifications High security, while continuing to develop these specifications, which prevents the ability to counterfeit or counterfeit them.