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Article 50 first place it under the law of federal authority over monetary policy
April 29th, 2015
Starting, I would like to thank Dr. Ali Mirza on in-depth analysis of the potential consequences for the application of Article 50 of the federal budget law on the national economy and fiscal policy. I have some comments on this story ...
starting, I would like to thank Dr. Ali Mirza on in-depth analysis of the potential consequences for the application of Article 50 of the federal budget law on the national economy and fiscal policy, and I have some comments for this article included them in the values below.
1. Article (50) and the independence of monetary policy
is Article (50) was the first place it under the law of federal authority over monetary policy since the enactment of the Central Bank of Iraq Law a number (56) for the year 2004. In the opinion d. Mirza that article (50) inconsistent with the independence of the Central Bank stipulated by Article 2 of the law referred to above. Article (2-2) of the Central Bank Law «Iraqi Central Bank is independent in on his efforts in order to achieve its objectives and carry out its tasks, and be held accountable as provided for by this law. Central Bank of Iraq and does not receive any instructions from any person or entity, including government agencies, except for the provision of the law stated otherwise in this law ... ».
In principle, Article 103 of the Constitution provides as follows:
First - The Central Bank of Iraq, and the Office of Financial Supervision, and the media and communications and the Endowment, independent bodies, financially and administratively, and law regulates the work of each of them.
Secondly - the Central Bank of Iraq is responsible before the House of Representatives ...
In this regard, I believe that the central bank can not be independent of independence never unconditionally. Article 103 of the Constitution to make it «liable to the House of Representatives», and the Constitution is superior to any law. The fall of monetary policy within this responsibility, especially since the «lower balance of foreign exchange reserves in particular and the fear of« drained »and then the desire to take action to reduce this decline is expected in this balance or slow down the decline rate incentive to add Article (50), also concluded Dr. . Mirza, who also pointed to the decline in reserves of the Central Bank of 76 billion dollars in late 2013 to 67 billion dollars in November 2014, that the reserves of the Central Bank exhausted at a rate of (818) million dollars a month, or the equivalent of about 12% in 11 months, and this is worrying. In other words, the central bank, entity and policies, subject to legislative oversight Federal, State if all state institutions, which, as I see it, is entitled to intervene and impose limitations or restrictions, especially when it comes to the interests of the national high.
Also, I see what you mean Article (2-2) of the Central Bank Law b «government agencies» the executive branch, not the legislative branch, which specializes in legislation and Alrkabhvqt.
2. Dollar sales ceiling
was based oblige the central bank in the article (50) ceiling for sales of the dollar in currency auction does not exceed 75 million dollars a day to rational justifications. This ceiling, which has a (19.6) billion dollars a year (based on 260 working days per year) accounts for about one-third of the expected oil revenue after deducting the share of the Kurdistan region. This enormous amount of import fill most needs the private sector if the best use and was directed towards the priorities, especially productive uses, and if the Central Bank stressed the anti-money smuggling under the procedures of import cover. This case imposed on the Iraqi government and the central bank controls and determine priorities for the use of cash Alogni sold and not leave it to the decisions taken individually or on the principle of «every case basis»
3. Economic consequences
fully agree with the analysis d. Mirza economic consequences for the application of Article 50, in particular the imbalance markets and increase the rate of inflation and the cost of economic transactions and increasing corruption. But the rising cost of imports will stimulate national industrial production, which relies on local ingredients and limit competition from imported agricultural products for domestic agricultural production, which is almost wipe out any hope for the development of national agriculture. This will reduce the trend to import and demand for the dollar.
Finally, I would like to comment on what he said d. Mirza «Perhaps what happened in 2012, in the wake of Alomerreqi army withdrawal in late 2011, the case worthy of analysis. Since early 2012, it resulted in an increased demand for the dollar in the face of the display did not Aoazh to increase to a widening gap between the official exchange rate and the market exchange until the rate has reached more than 8% in April 2012, with the knowledge that there was no roof advertiser sales of the dollar » . Maybe there was a slight effect of the withdrawal of US troops on the exchange rate, but the greatest influence was, in my estimation, to another factor. The imposition of international sanctions on Syria and its emphasis on Iran has led to the Iraqi market to become the only source available for these two countries to get on the dollar. The sudden increase in demand to the scarcity of the dollar in the Iraqi market and the increasing gap between the official exchange rate and the exchange rate in the market.
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