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Mowafaq Hassan Mahmoud * lights on Article 50 of the general budget for 2015 Law
- Published on 02.21.2015
Download PDF publication of Dr. Ali Mirza on Iraqi economists network site in the February 1, 2015 in search of valuable effective treatment of the potential consequences of the application of Article 50 of the general budget for the law ...
Publication of Dr. Ali Mirza on Iraqi economists network site in the February 1, 2015 in search of valuable effective treatment of the potential consequences of the application of Article 50 of the general budget for 2015, the controversial and for the imposition of daily dollar sales ceiling by the central bank and then concluded among other proposals that to address the law consequences and Saadz search to brief him had not seen for then moved to his proposals to address the potential consequences.
The first is referred to Dr. Ali is to restrict dollar sales of a certain amount is something inconsistent with the principle of independence of the Central Bank, which guaranteed his article (2) of law No. (56) for the year 2004 and contrasts with Msoalath for foreign exchange reserves management (Article 27 of the Law ) But the study Taatmhorottercz mainly on economic, financial and monetary consequences sees the cap sales would be referring to the lack of commitment to fiscal and monetary monetary stability the two policies and thus failing to maintain a stable level of prices, a policy that DAP central bank to follow for many years since 2003, as it is the cornerstone of in his duties. There is no doubt that it would impose a ceiling of this expansion gap between the official exchange rate and the market price of the dollar, which would be its outcome growing parallel market of the coin, which will move inevitably to import prices and thus a sharp inflationary surge in prices, and limited the use of the official exchange rate on the transaction and government markets with deal Family and private sectors prevailing in the parallel market rate. The inevitable result of this system, the two prices is to restrict the central bank's ability to accomplish one of the main goals as previously stated in the envelope is characterized by limited effectiveness of monetary policy instruments as it was to satisfy the demand for foreign currency is the means relying on them to maintain the stability of the exchange rate and thus stabilize prices.
He adds Dr. Ali that adherence to the roof of the sales will give the opportunity for many importers and some financial intermediaries such as banks and companies remittance procuring dollars to dispose of such purchases in exchange for documents to import proven facts easily made available genuine were or "vexatious" as he put it, and thus provide an opportunity to exploit the situation and make a profit higher than the margin set at the time the central bank, as he remembered what happened valuable wake of the US military withdrawal in late 2011 as it resulted in increased demand for the dollar without displaying matched to the widening gap between the official exchange rate and the market price of more than 8%, as happened valuable April 2012 Knowing that he did not, then there is a cap on the dollar sales, how will be the case with the ceiling.
With all the possible consequences, the researcher supports that it is not possible to launch the sale of foreign currency without balance this currency reserves at the central control and the possibility of deterioration in the level and then exposing the economic Site
Iraq any susceptibility to fulfill its obligations to foreign danger and decides the need to maintain a secure
A minimum of foreign currencies and secure the greatest possible stability in the exchange rate and in the prices of goods and services.
But how to get it opines :
(A) avoid imposing ceiling on sales with the Central declare his readiness to satisfy the demand for the dollar as far as demand commitment to basic needs being identified with high professionalism and periodically as needed and to take into account in determining the amount of daily sales level of the balance of the reserve
(B) monitor the purchasing banks of dollars to secure their commitment to financing imports involvement of regulators involved in the control of the Ministry of Commerce and other devices
(C) improving institutional care infrastructure for the distribution of ration
(D) formation of a cabinet economic policy teams of experts from the financial, trade and Altql and oil and central bank and ministries to coordinate their work to Mracbhalaswaq and orientations of demand and supply of goods and services and on the dollar and stock condition staples and propose efficient solutions to break bottlenecks and fight corruption wherever it was found
Dr. Ali believes that if you are unable to Mlavah drain reserves in spite of all the extra funding attempts of the proposed rationalization and control policies ... etc any coming at a critical limit can not go down below it, it becomes a refuge to reduce the exchange rate, with follow strict fiscal policy is less harmful than imposing restrictions uneconomical Calcagaf on the dollar sales in the auction currency, for example
Can be considered three detailed presentations represented Dr. Ali responses to comments raised by some economists to study an integral part of his studies. I have posted all of us in the comments fields under study in the Iraqi economists network site. I have been where Dr. Ali to a number of details and additional issues related to the so-called auction currency and the exchange rate mechanism and the relationship of reduction in the exchange rate financing the budget deficit, as well as matters relating to the constitutionality of the imposition of the ceiling on dollar sales. Also discussed the possibility of strengthening the negative inflationary consequences of the imposition of the ceiling on the auction sales with what was nominated in the media about the central bank is prepared to lend to the government indirectly interaction ... etc issues.
Shill so much of the study, Dr. Ali to say that Dr. Ali has someone consequences imposed ceiling on dollar sales diagnosis comprehensive and thorough look no further it Vllsagv adverse impacts on Astaqrarsar dinar exchange and then the difficulty of maintaining a stable level of prices, a job of principal of the Central Bank as well as other repercussions Perhaps we will see a bi-if not the plurality of the dinar exchange rate markets parallel to the official market.
There is no doubt first be duplicated Aotaddah exchange rates would deprive the central bank of the tool is the most important of his tools to maintain monetary stability in light of the weakness of other monetary policy legal Kalaanaati deposits traditional tools Legal Reserve Requirement and open market operations Open Market Operations and other tools available to central banks in the markets advanced no shade in the Iraqi market.
There is no doubt that the fear of a second continuing drain balance of foreign exchange reserves of the Finance Committee of the House of Representatives may be charged to resort to the ceiling on dollar sales mode. But we have to say that the experiments have proved that the development of quantitative restrictions on any variable is is useless and will only lead to corruption and breakthroughs here or there and perhaps the clearest evidence of what I say is a quantitative import who has worked in earlier periods and corruption that accompanied the import licenses program then.
I must again say that it is difficult to keep the balance reserves of foreign gold coins without prejudice on the one hand and to maintain monetary stability, any exchange rate stability Dinarmen second hand meaning it is not possible to achieve two contradictory at once Conflict of Targets and the owner of the decision that determines what he wants If you decided that the priority is to stabilize the exchange rate, he must understand the consequences on the balance of foreign exchange reserves and gold Lama if he chooses to maintain the reserves, he should turn a blind eye to the stability of the exchange rate and the consequences of him and he has to take responsibility, I say this not to Ttakerrmohna charges against the bank Central in the near yesterday that he wasted money and burned the nation billions of dollars for forgetting monetary stability accomplished by the monetary authority for years, charges that claimed the lives of some of the finest Central Bank officials. In saying this does not mean leaving things to sit back, but it is possible to set controls and limits here and there Checks and balances as it is not reasonable to neglect one of two goals for the benefit of the other, but can seek to achieve greater Kdrmemkn of monetary stability and control the balance of foreign exchange reserves to limit the damage in the least, as you can and if It requests a reduction of the rate of the dinar after every effort to avoid it so be as pointed out by Dr. Ali Mirza in his value.
The cap on the dollar sales by 75 million dollars a day means between 19-20 billion annually, compared to an annual rate of around 50 billion a year, as in 2014, slightly higher than the one-third of the annual average. There is no doubt that the prevailing opinion among the select ceiling that goes from the dollar window for imports by the private sector goods and services represents only a very small proportion of the total central bank sales may not exceed a total of $ 10-12 billion, and here I can only agree with this opinion and based on this to my personal observations and to Mdolaty with a number of colleagues bankers of the way things work in most of the banks with respect to the dollar vouchers and the quality and credibility of the documents submitted to the Central Bank in this regard.
In order to highlight the contrast between reality and official statistics and found it useful to Ord here timetable of Iraq's imports of goods worth billions of dollars CIF for the years 2011- 2013 are derived from the annual statistical Central Bank for the years 2011 and 2013 releases, the latest offer what we have.
Table (1) of Iraq's imports of goods CIF billions of dollars (2011-2013)
Private sector Government and public sector Total merchandise imports Year
34.9 12.9 47.8 2011
37.6 21.4 59.0 2012
37.2 21.6 58.8 2013
Source: Annual Statistical Bulletin of the Central Bank of Iraq for the years 2011 - 2013
I go back to Dr. Ali proposals "to resolve the occasion," as he called it in his study, and I shall paragraph after
It also came with other cognitive levels of functional corruption in the state apparatus in general, which may reduce the success rate of these proposals, but this reservation applies to any legislation, regulations or instructions issued by state agencies as long as the implementation is, however, human beings: -
In paragraph (a) call Dr. Ali to avoid the imposition of the ceiling on dollar sales, but not to the central declaration of willingness to satisfy demand as long as this was linked to the basic needs being identified with high professionalism.
I can not help here only endorse the view of Dr. Ali, but I see the need to return to the foreign exchange regulations issued by the central bank and set conditions and controls to respond to requests for transfers and legitimate but on the condition that this return will be for their specific end at the demise of the justifications Iraq is in a state of war and preserve the unity of the country's integrity and advancing to the others.
In paragraph (b) invite the researcher to avoid reducing the dinar's exchange rate, but if it becomes unavoidable. Taking with him agreed on the need to avoid the formal reduction, I think that it would be a reality De-facto, but I see that accept a reduction deliberate dinar and on sound economic fundamentals bring him closer than the price the tie instead of leaving an opportunity for speculators and people of influence to enrich illegal, but I think that such a reduction that makes imports more expensive than it was in the hope that this will improve the competitive advantage of local products, although the level of the lowest quality.
Centered paragraph (c) received the banks control of the dollar and its commitment to the financing of imports set out in the documents, but I must to show here that the banks, under the international norms for Documentary Credits UCP 600, does not deal with goods, but the documents submitted as seem on the face of sound, either Why containing boxes and containers The bank is not part of the thing, and may not be downloaded from the responsibility to verify the imported goods This is the responsibility of Customs departments, which have a responsibility to examine the contents of the boxes, containers and their conformity with the description of the goods and quantities according to shipping documents and business listings.
Since it was impossible to banks accounting for goods covered by letters of credit and its contents funds, I invite here to subject merchandise for inspection in the export and airports ports in countries of origin, and this is not a fad, and God forbid fads, they are well-known and common practice, and there are many companies that examination Before shipping the goods and issue a certificate of Bmtabguetha description appearing in the documentary credit and will result here on customs departments for greater efforts to address the gaps that accompany an audit contents of the boxes, containers and tallying the commercial lists attached documents. In order to be proposed in practice must be a minimum amount of credit that is subject to the condition examination Let this be a hundred thousand dollars or more to reduce, for example.
Another the responsibility we request and strongly engaged in banks documentary credits to the private sector which should make responsible effort to examine the credibility of the preliminary list Pro-forma Invoice any nature and quantity of goods to be imported and the credibility of the importer and this can be achieved style "moral persuasion" that the central bank can be exercised by the banks Since he has the means and methods known by its expert.
In paragraph (E) call Dr. Ali to the formation of economic policy of the professional teams of experts and representatives of relevant ministries monitors the markets and trends demand and the state of the stock of goods, and here will be on the circuit intensive care by choosing from a hard on corruption for this purpose, a daunting task without a doubt.
Once again, I see that we must accept a reduction or a calculated reduction of the rate of the dinar exchange rate and must accept the unacceptable rate of inflation on the one hand and work on the other hand to mitigate the negative effects of the declining purchasing power of low-income public and the poor, and here I agree with Dr. Ali calling in paragraph ( d) to care by improving the institutional and logistical infrastructure for the distribution of ration and management and the elimination of corruption that is in them.
(*) Banking expert is currently working as a consultant for the province Commercial Bank for Investment and Finance
Copyright network Iraqi economists. Permission to quote and re-publication, provided that the source
February 21, 2014
[You must be registered and logged in to see this link.]
- Published on 02.21.2015
Download PDF publication of Dr. Ali Mirza on Iraqi economists network site in the February 1, 2015 in search of valuable effective treatment of the potential consequences of the application of Article 50 of the general budget for the law ...
Publication of Dr. Ali Mirza on Iraqi economists network site in the February 1, 2015 in search of valuable effective treatment of the potential consequences of the application of Article 50 of the general budget for 2015, the controversial and for the imposition of daily dollar sales ceiling by the central bank and then concluded among other proposals that to address the law consequences and Saadz search to brief him had not seen for then moved to his proposals to address the potential consequences.
The first is referred to Dr. Ali is to restrict dollar sales of a certain amount is something inconsistent with the principle of independence of the Central Bank, which guaranteed his article (2) of law No. (56) for the year 2004 and contrasts with Msoalath for foreign exchange reserves management (Article 27 of the Law ) But the study Taatmhorottercz mainly on economic, financial and monetary consequences sees the cap sales would be referring to the lack of commitment to fiscal and monetary monetary stability the two policies and thus failing to maintain a stable level of prices, a policy that DAP central bank to follow for many years since 2003, as it is the cornerstone of in his duties. There is no doubt that it would impose a ceiling of this expansion gap between the official exchange rate and the market price of the dollar, which would be its outcome growing parallel market of the coin, which will move inevitably to import prices and thus a sharp inflationary surge in prices, and limited the use of the official exchange rate on the transaction and government markets with deal Family and private sectors prevailing in the parallel market rate. The inevitable result of this system, the two prices is to restrict the central bank's ability to accomplish one of the main goals as previously stated in the envelope is characterized by limited effectiveness of monetary policy instruments as it was to satisfy the demand for foreign currency is the means relying on them to maintain the stability of the exchange rate and thus stabilize prices.
He adds Dr. Ali that adherence to the roof of the sales will give the opportunity for many importers and some financial intermediaries such as banks and companies remittance procuring dollars to dispose of such purchases in exchange for documents to import proven facts easily made available genuine were or "vexatious" as he put it, and thus provide an opportunity to exploit the situation and make a profit higher than the margin set at the time the central bank, as he remembered what happened valuable wake of the US military withdrawal in late 2011 as it resulted in increased demand for the dollar without displaying matched to the widening gap between the official exchange rate and the market price of more than 8%, as happened valuable April 2012 Knowing that he did not, then there is a cap on the dollar sales, how will be the case with the ceiling.
With all the possible consequences, the researcher supports that it is not possible to launch the sale of foreign currency without balance this currency reserves at the central control and the possibility of deterioration in the level and then exposing the economic Site
Iraq any susceptibility to fulfill its obligations to foreign danger and decides the need to maintain a secure
A minimum of foreign currencies and secure the greatest possible stability in the exchange rate and in the prices of goods and services.
But how to get it opines :
(A) avoid imposing ceiling on sales with the Central declare his readiness to satisfy the demand for the dollar as far as demand commitment to basic needs being identified with high professionalism and periodically as needed and to take into account in determining the amount of daily sales level of the balance of the reserve
(B) monitor the purchasing banks of dollars to secure their commitment to financing imports involvement of regulators involved in the control of the Ministry of Commerce and other devices
(C) improving institutional care infrastructure for the distribution of ration
(D) formation of a cabinet economic policy teams of experts from the financial, trade and Altql and oil and central bank and ministries to coordinate their work to Mracbhalaswaq and orientations of demand and supply of goods and services and on the dollar and stock condition staples and propose efficient solutions to break bottlenecks and fight corruption wherever it was found
Dr. Ali believes that if you are unable to Mlavah drain reserves in spite of all the extra funding attempts of the proposed rationalization and control policies ... etc any coming at a critical limit can not go down below it, it becomes a refuge to reduce the exchange rate, with follow strict fiscal policy is less harmful than imposing restrictions uneconomical Calcagaf on the dollar sales in the auction currency, for example
Can be considered three detailed presentations represented Dr. Ali responses to comments raised by some economists to study an integral part of his studies. I have posted all of us in the comments fields under study in the Iraqi economists network site. I have been where Dr. Ali to a number of details and additional issues related to the so-called auction currency and the exchange rate mechanism and the relationship of reduction in the exchange rate financing the budget deficit, as well as matters relating to the constitutionality of the imposition of the ceiling on dollar sales. Also discussed the possibility of strengthening the negative inflationary consequences of the imposition of the ceiling on the auction sales with what was nominated in the media about the central bank is prepared to lend to the government indirectly interaction ... etc issues.
Shill so much of the study, Dr. Ali to say that Dr. Ali has someone consequences imposed ceiling on dollar sales diagnosis comprehensive and thorough look no further it Vllsagv adverse impacts on Astaqrarsar dinar exchange and then the difficulty of maintaining a stable level of prices, a job of principal of the Central Bank as well as other repercussions Perhaps we will see a bi-if not the plurality of the dinar exchange rate markets parallel to the official market.
There is no doubt first be duplicated Aotaddah exchange rates would deprive the central bank of the tool is the most important of his tools to maintain monetary stability in light of the weakness of other monetary policy legal Kalaanaati deposits traditional tools Legal Reserve Requirement and open market operations Open Market Operations and other tools available to central banks in the markets advanced no shade in the Iraqi market.
There is no doubt that the fear of a second continuing drain balance of foreign exchange reserves of the Finance Committee of the House of Representatives may be charged to resort to the ceiling on dollar sales mode. But we have to say that the experiments have proved that the development of quantitative restrictions on any variable is is useless and will only lead to corruption and breakthroughs here or there and perhaps the clearest evidence of what I say is a quantitative import who has worked in earlier periods and corruption that accompanied the import licenses program then.
I must again say that it is difficult to keep the balance reserves of foreign gold coins without prejudice on the one hand and to maintain monetary stability, any exchange rate stability Dinarmen second hand meaning it is not possible to achieve two contradictory at once Conflict of Targets and the owner of the decision that determines what he wants If you decided that the priority is to stabilize the exchange rate, he must understand the consequences on the balance of foreign exchange reserves and gold Lama if he chooses to maintain the reserves, he should turn a blind eye to the stability of the exchange rate and the consequences of him and he has to take responsibility, I say this not to Ttakerrmohna charges against the bank Central in the near yesterday that he wasted money and burned the nation billions of dollars for forgetting monetary stability accomplished by the monetary authority for years, charges that claimed the lives of some of the finest Central Bank officials. In saying this does not mean leaving things to sit back, but it is possible to set controls and limits here and there Checks and balances as it is not reasonable to neglect one of two goals for the benefit of the other, but can seek to achieve greater Kdrmemkn of monetary stability and control the balance of foreign exchange reserves to limit the damage in the least, as you can and if It requests a reduction of the rate of the dinar after every effort to avoid it so be as pointed out by Dr. Ali Mirza in his value.
The cap on the dollar sales by 75 million dollars a day means between 19-20 billion annually, compared to an annual rate of around 50 billion a year, as in 2014, slightly higher than the one-third of the annual average. There is no doubt that the prevailing opinion among the select ceiling that goes from the dollar window for imports by the private sector goods and services represents only a very small proportion of the total central bank sales may not exceed a total of $ 10-12 billion, and here I can only agree with this opinion and based on this to my personal observations and to Mdolaty with a number of colleagues bankers of the way things work in most of the banks with respect to the dollar vouchers and the quality and credibility of the documents submitted to the Central Bank in this regard.
In order to highlight the contrast between reality and official statistics and found it useful to Ord here timetable of Iraq's imports of goods worth billions of dollars CIF for the years 2011- 2013 are derived from the annual statistical Central Bank for the years 2011 and 2013 releases, the latest offer what we have.
Table (1) of Iraq's imports of goods CIF billions of dollars (2011-2013)
Private sector Government and public sector Total merchandise imports Year
34.9 12.9 47.8 2011
37.6 21.4 59.0 2012
37.2 21.6 58.8 2013
Source: Annual Statistical Bulletin of the Central Bank of Iraq for the years 2011 - 2013
I go back to Dr. Ali proposals "to resolve the occasion," as he called it in his study, and I shall paragraph after
It also came with other cognitive levels of functional corruption in the state apparatus in general, which may reduce the success rate of these proposals, but this reservation applies to any legislation, regulations or instructions issued by state agencies as long as the implementation is, however, human beings: -
In paragraph (a) call Dr. Ali to avoid the imposition of the ceiling on dollar sales, but not to the central declaration of willingness to satisfy demand as long as this was linked to the basic needs being identified with high professionalism.
I can not help here only endorse the view of Dr. Ali, but I see the need to return to the foreign exchange regulations issued by the central bank and set conditions and controls to respond to requests for transfers and legitimate but on the condition that this return will be for their specific end at the demise of the justifications Iraq is in a state of war and preserve the unity of the country's integrity and advancing to the others.
In paragraph (b) invite the researcher to avoid reducing the dinar's exchange rate, but if it becomes unavoidable. Taking with him agreed on the need to avoid the formal reduction, I think that it would be a reality De-facto, but I see that accept a reduction deliberate dinar and on sound economic fundamentals bring him closer than the price the tie instead of leaving an opportunity for speculators and people of influence to enrich illegal, but I think that such a reduction that makes imports more expensive than it was in the hope that this will improve the competitive advantage of local products, although the level of the lowest quality.
Centered paragraph (c) received the banks control of the dollar and its commitment to the financing of imports set out in the documents, but I must to show here that the banks, under the international norms for Documentary Credits UCP 600, does not deal with goods, but the documents submitted as seem on the face of sound, either Why containing boxes and containers The bank is not part of the thing, and may not be downloaded from the responsibility to verify the imported goods This is the responsibility of Customs departments, which have a responsibility to examine the contents of the boxes, containers and their conformity with the description of the goods and quantities according to shipping documents and business listings.
Since it was impossible to banks accounting for goods covered by letters of credit and its contents funds, I invite here to subject merchandise for inspection in the export and airports ports in countries of origin, and this is not a fad, and God forbid fads, they are well-known and common practice, and there are many companies that examination Before shipping the goods and issue a certificate of Bmtabguetha description appearing in the documentary credit and will result here on customs departments for greater efforts to address the gaps that accompany an audit contents of the boxes, containers and tallying the commercial lists attached documents. In order to be proposed in practice must be a minimum amount of credit that is subject to the condition examination Let this be a hundred thousand dollars or more to reduce, for example.
Another the responsibility we request and strongly engaged in banks documentary credits to the private sector which should make responsible effort to examine the credibility of the preliminary list Pro-forma Invoice any nature and quantity of goods to be imported and the credibility of the importer and this can be achieved style "moral persuasion" that the central bank can be exercised by the banks Since he has the means and methods known by its expert.
In paragraph (E) call Dr. Ali to the formation of economic policy of the professional teams of experts and representatives of relevant ministries monitors the markets and trends demand and the state of the stock of goods, and here will be on the circuit intensive care by choosing from a hard on corruption for this purpose, a daunting task without a doubt.
Once again, I see that we must accept a reduction or a calculated reduction of the rate of the dinar exchange rate and must accept the unacceptable rate of inflation on the one hand and work on the other hand to mitigate the negative effects of the declining purchasing power of low-income public and the poor, and here I agree with Dr. Ali calling in paragraph ( d) to care by improving the institutional and logistical infrastructure for the distribution of ration and management and the elimination of corruption that is in them.
(*) Banking expert is currently working as a consultant for the province Commercial Bank for Investment and Finance
Copyright network Iraqi economists. Permission to quote and re-publication, provided that the source
February 21, 2014
[You must be registered and logged in to see this link.]
