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D. Superficial inch (*): Is monetary policy in Iraq has lost its credibility and transparency? **
06/25/2015
Over the past few days, the leadership of the Central Bank of Iraq backed away from a number of actions that had been taken during the past four months, which almost led to the collapse of the national currency, at a time when supposed to be independent by the Economic Corporation maintain and balance the national currency with the currency foreign key to the bank as a job, as defined by the Constitution in articles (103 and 110) and the law of the Central Bank for the year 2004. These actions are:
The sharp reduction of the supply of custom sell the dollar, and not to satisfy the request of the private and family on the dollar sector after passing the General Budget Law for the year 2015 that Article 50 thereof guarantees stir a lot of controversy, and imposed on the monetary policy restrictions amount to sell the dollar was set at $ 75 million a day, while demand was more than double the ceiling and arrived on some days at the beginning of this year to more than three times the ceiling ($ 250 million on 5 December 2015).
Collection of 8% of the value of remittances as collateral for customs duties and income tax, are kept in the absence of import by traders remittances owners. The central bank announced on 06.20.2015 stop collection. Noting that the move did not represent a factor on the exchange rate.
Directing banks under uncles dated 25/05/2015 to reject the requests of citizens clouds dollar of dollar deposits in their accounts at the banks, but handed over the Iraqi dinar according to the official exchange rate, which was at least about 15% on the parallel market rate. The central bank did not publish this on his uncles, but it was published uncles dated 06/11/2015 which eliminates the first uncles!
It came Reactions to this differentiated decline, between negative by some politicians and members of the House of Representatives who expressed criticism of the meek and the waiver to what they called the "corrupt and mafia"; and positive by the private sector on importation, and banks, and a large segment of economists. But the question remains on the table salt, which is: Do you reach the central Iraqi After these successive declines to stabilize the national currency and balance with foreign currency in the long term?
A few days pass the General Budget Law for the year 2015 after the economic researcher warned fellow d. Mirza Ali, in his research published on the web site of Iraqi economists values, since February 1, 2015 of the expected negative effects of the material (50) on the stability of the national currency and set a ceiling on dollar sales. The warning followed in banking expert veteran conciliator Hassan Mahmoud published his article marked "lights on Article 50 of the general budget for 2015 Law" and published on the same site since 02.21.2015. Will politicians and decision-makers at the central bank experts and listen to their advice free warnings?
We learned two days ago (23/06/2015) of the Governor acting in his statement to free Iraq satellite channel that the central bank had been stabbed to Article (50) in the 2015 budget law, but I and through watching the daily dollar sales posted on the central bank website I can say for sure that the Central Bank found itself in the unenviable predicament, the political pressure for the implementation of this article and the pressures of market forces to meet the strong demand for the dollar, and was trying to satisfy Monday at the same time, but failed to reconcile the contradictions. The numbers indicate a diagnosis of the state of swings in monetary policy health. It is worth mentioning a few examples that show consistency with the provisions of Article (50), and Astakitha figures from the central bank data published on its website:
February 1, 2015 in the Iraqi Central Bank sold $ 75 million only while the demand for the dollar from banks participating in the auction about $ 246 million. Official data were excluded remember that the amount of $ 171 million
February 4, 2015 in the purchase of dollar demand from banks $ 251 million, but that the central bank did not sell more than $ 70 million were excluded more than $ 181 million from banks requests.
February 5, 2015 in the central Iraqi sold less than the ceiling set in accordance with Article (50) and by only $ 72 million, while demand was about $ 211 million were excluded $ 139 million.
On February 8, 2015 Central sales fell to $ 69 million only, while demand for the dollar was $ 196 million were excluded $ 124 million.
On 06/02/2015 the central Iraqi sold about $ 44 million only did not disclose the demand to buy the dollar size nor the unlikely amount of the auction, where the bank has stopped publishing this information in their daily schedules since February 19, 2015 (see the central bank published tables its position in the PDF file under the title "The banks participating in the excluded section window sale and purchase of foreign process for the year 2015")
On the other hand it should be noted some examples adverse to the provisions of Article (50):
On 04/26/2015 the Central Bank sold amounted to $ 199 million without the announcement of the real demand for the dollar size.
05.03.2015 In the central Iraqi sold $ 199 million.
In 26.05.2015 about $ 233 million.
On 05/30/2015 central bank sales rose to $ 393 million in a single researcher and economic analyst day do not know whether this amount has met aggregate demand to buy the dollar or not, for the reason referred to earlier, which is withholding demand data since February 19, 2015 and this contrary to the principle of transparency in monetary policy.
Some analysts pointed out that the central bank regardless of commitment to article (50) and by reference to the average daily sales of the Central Bank of the dollar the ceiling exceeded (75 million dollars a day) rose from $ 86 million in February to $ 134 million in April and to $ 165 million in the first half of the month of May, according to the colleague Dr. accounts. Ali Mirza in his article marked "the follow-up exchange market in Iraq since the adoption of the budget in 2015" and published on the web site of Iraqi economists on 05/18/2015. In the first half of June, the average daily dollar sales totaled $ 140 million, according to central bank data daily and published on its website.
It is clear that this kind of "blind eye" was not firm enough to satisfy the demand for the dollar, as the researcher d. Ali Mirza in his research referred to above. This can be explained by the continuing gap between the official price to sell the dollar and its price in the market to rise from an average of 6.3% in February to 18.3% on June 15, according to figures d. Mirza, and despite this lackluster kind of "blind eye" on the implementation of Article (50). Colleague d. Ali Mirza justify this to continue in his article referred to above there are other factors beside not satisfy the demand by the Central Bank, including a sharp drop in crude oil export revenues to about half and fears the central bank's foreign currency reserves into force. But fellow d. Mirza did not give the actual weights for each of these other factors, while the recent developments demonstrate the fact that market mechanisms represent a decisive factor in determining the exchange rate at the end.
The conciliator banking consultant Mahmoud Fischer in an exclusive interview with him to some of the important factors that led to the high demand for the dollar, including:
Central instructions to banks to exchange dollar deposits in Iraqi dinars and accepted by remittances from abroad and not the Iraqi dinar exchange instructions Bamladthaalasalih
Low confidence in the banking system because of the failure of a number of banks for exchange instruments dinar and the dollar both (banks, the Middle East, the economy, Babylon, North, and accepted by the Warka and banks and other not Thzerna), which pays the public (commercial and household sector) to keep their money under the pillow and the dollar primarily to maintain its values, and this index seriously reduced the credibility of the central bank
Recovery expectations for a rise of the dollar against the dinar in the future, which leads to the recovery of speculation and thereby increase demand for the dollar
And Astnj so that brute market forces ignored by policy-makers and the leadership of the Central Bank of frequency in the positive interaction with it, does not work, but over matters worse. Here I must stress the futility of withholding data demand for the dollar, because the reality of the market imposes his will in all circumstances.
This does not mean that I am claiming to let market mechanisms work how what you want without supervision and correction by the State institutions concerned, as some Bathamme Actinoulibralah wish, but, on the contrary, I call on the central bank to take effective action to achieve stability and balance of the national currency in the long term, particularly the refusal of political interference and return to the transparency and confidence-building among the prisoners and the private sector, and to restore credibility lost during the past five months. It should be emphasized the need to return to publish the real demand for the dollar by the domestic private sector, and on a daily basis data, to enable researchers and analysts study demand patterns and diagnosis of driving his powers in order to devise long-term strategies to manage this demand customized and other economic variables.
We have proven experience of Iraq before 2003 and the experiences of many economies centrally directed that the coercive measures of no avail. And certainly the central bank does not assume alone the responsibility of the latest crisis, but many ministries that failed to carry out its functions. Special mention of the Ministry of Finance, which failed in controlling public spending, and tax collection, and the collection of customs duties, in addition to the Ministry of Commerce which has failed to adjust imports of goods and accounting manipulators quantities and prices, as well as the Ministry of Planning, which failed to document the foreign trade statistics, and last but not least authorities on Money Laundering and utter failure to distinguish between smuggling money and escape the Grand National Capital arab out of Iraq external Kedjar, in search of safety and financial stability.
I am confident that Iraq's economic cadres of professional and independent able to successfully pursue a rational monetary policy and the stability of the national currency, as other countries in the Arab region, such as Jordan and Lebanon, which lacks oil resources has succeeded, not to mention the Gulf oil states, which has huge reserves of foreign currency. So should the political decision-makers make way for the national technocrats to carry out this delicate task, which determine the future of economic development in Iraq.
(*) An international economist and general coordinator of the Network of Iraqi economists
(**) I thank all colleagues conciliator Hasan Mahmud Kamal and lamp on observations Value
Copyright network of Iraqi economists. Permission to quote and re-publication, provided that the source. June 25, 2015
The opinions expressed in all material published on the Web site do not reflect necessarily the opinion of the editorial board, but it is the opinion of the author who bears the scientific and legal responsibility alone
[You must be registered and logged in to see this link.]
06/25/2015
Over the past few days, the leadership of the Central Bank of Iraq backed away from a number of actions that had been taken during the past four months, which almost led to the collapse of the national currency, at a time when supposed to be independent by the Economic Corporation maintain and balance the national currency with the currency foreign key to the bank as a job, as defined by the Constitution in articles (103 and 110) and the law of the Central Bank for the year 2004. These actions are:
The sharp reduction of the supply of custom sell the dollar, and not to satisfy the request of the private and family on the dollar sector after passing the General Budget Law for the year 2015 that Article 50 thereof guarantees stir a lot of controversy, and imposed on the monetary policy restrictions amount to sell the dollar was set at $ 75 million a day, while demand was more than double the ceiling and arrived on some days at the beginning of this year to more than three times the ceiling ($ 250 million on 5 December 2015).
Collection of 8% of the value of remittances as collateral for customs duties and income tax, are kept in the absence of import by traders remittances owners. The central bank announced on 06.20.2015 stop collection. Noting that the move did not represent a factor on the exchange rate.
Directing banks under uncles dated 25/05/2015 to reject the requests of citizens clouds dollar of dollar deposits in their accounts at the banks, but handed over the Iraqi dinar according to the official exchange rate, which was at least about 15% on the parallel market rate. The central bank did not publish this on his uncles, but it was published uncles dated 06/11/2015 which eliminates the first uncles!
It came Reactions to this differentiated decline, between negative by some politicians and members of the House of Representatives who expressed criticism of the meek and the waiver to what they called the "corrupt and mafia"; and positive by the private sector on importation, and banks, and a large segment of economists. But the question remains on the table salt, which is: Do you reach the central Iraqi After these successive declines to stabilize the national currency and balance with foreign currency in the long term?
A few days pass the General Budget Law for the year 2015 after the economic researcher warned fellow d. Mirza Ali, in his research published on the web site of Iraqi economists values, since February 1, 2015 of the expected negative effects of the material (50) on the stability of the national currency and set a ceiling on dollar sales. The warning followed in banking expert veteran conciliator Hassan Mahmoud published his article marked "lights on Article 50 of the general budget for 2015 Law" and published on the same site since 02.21.2015. Will politicians and decision-makers at the central bank experts and listen to their advice free warnings?
We learned two days ago (23/06/2015) of the Governor acting in his statement to free Iraq satellite channel that the central bank had been stabbed to Article (50) in the 2015 budget law, but I and through watching the daily dollar sales posted on the central bank website I can say for sure that the Central Bank found itself in the unenviable predicament, the political pressure for the implementation of this article and the pressures of market forces to meet the strong demand for the dollar, and was trying to satisfy Monday at the same time, but failed to reconcile the contradictions. The numbers indicate a diagnosis of the state of swings in monetary policy health. It is worth mentioning a few examples that show consistency with the provisions of Article (50), and Astakitha figures from the central bank data published on its website:
February 1, 2015 in the Iraqi Central Bank sold $ 75 million only while the demand for the dollar from banks participating in the auction about $ 246 million. Official data were excluded remember that the amount of $ 171 million
February 4, 2015 in the purchase of dollar demand from banks $ 251 million, but that the central bank did not sell more than $ 70 million were excluded more than $ 181 million from banks requests.
February 5, 2015 in the central Iraqi sold less than the ceiling set in accordance with Article (50) and by only $ 72 million, while demand was about $ 211 million were excluded $ 139 million.
On February 8, 2015 Central sales fell to $ 69 million only, while demand for the dollar was $ 196 million were excluded $ 124 million.
On 06/02/2015 the central Iraqi sold about $ 44 million only did not disclose the demand to buy the dollar size nor the unlikely amount of the auction, where the bank has stopped publishing this information in their daily schedules since February 19, 2015 (see the central bank published tables its position in the PDF file under the title "The banks participating in the excluded section window sale and purchase of foreign process for the year 2015")
On the other hand it should be noted some examples adverse to the provisions of Article (50):
On 04/26/2015 the Central Bank sold amounted to $ 199 million without the announcement of the real demand for the dollar size.
05.03.2015 In the central Iraqi sold $ 199 million.
In 26.05.2015 about $ 233 million.
On 05/30/2015 central bank sales rose to $ 393 million in a single researcher and economic analyst day do not know whether this amount has met aggregate demand to buy the dollar or not, for the reason referred to earlier, which is withholding demand data since February 19, 2015 and this contrary to the principle of transparency in monetary policy.
Some analysts pointed out that the central bank regardless of commitment to article (50) and by reference to the average daily sales of the Central Bank of the dollar the ceiling exceeded (75 million dollars a day) rose from $ 86 million in February to $ 134 million in April and to $ 165 million in the first half of the month of May, according to the colleague Dr. accounts. Ali Mirza in his article marked "the follow-up exchange market in Iraq since the adoption of the budget in 2015" and published on the web site of Iraqi economists on 05/18/2015. In the first half of June, the average daily dollar sales totaled $ 140 million, according to central bank data daily and published on its website.
It is clear that this kind of "blind eye" was not firm enough to satisfy the demand for the dollar, as the researcher d. Ali Mirza in his research referred to above. This can be explained by the continuing gap between the official price to sell the dollar and its price in the market to rise from an average of 6.3% in February to 18.3% on June 15, according to figures d. Mirza, and despite this lackluster kind of "blind eye" on the implementation of Article (50). Colleague d. Ali Mirza justify this to continue in his article referred to above there are other factors beside not satisfy the demand by the Central Bank, including a sharp drop in crude oil export revenues to about half and fears the central bank's foreign currency reserves into force. But fellow d. Mirza did not give the actual weights for each of these other factors, while the recent developments demonstrate the fact that market mechanisms represent a decisive factor in determining the exchange rate at the end.
The conciliator banking consultant Mahmoud Fischer in an exclusive interview with him to some of the important factors that led to the high demand for the dollar, including:
Central instructions to banks to exchange dollar deposits in Iraqi dinars and accepted by remittances from abroad and not the Iraqi dinar exchange instructions Bamladthaalasalih
Low confidence in the banking system because of the failure of a number of banks for exchange instruments dinar and the dollar both (banks, the Middle East, the economy, Babylon, North, and accepted by the Warka and banks and other not Thzerna), which pays the public (commercial and household sector) to keep their money under the pillow and the dollar primarily to maintain its values, and this index seriously reduced the credibility of the central bank
Recovery expectations for a rise of the dollar against the dinar in the future, which leads to the recovery of speculation and thereby increase demand for the dollar
And Astnj so that brute market forces ignored by policy-makers and the leadership of the Central Bank of frequency in the positive interaction with it, does not work, but over matters worse. Here I must stress the futility of withholding data demand for the dollar, because the reality of the market imposes his will in all circumstances.
This does not mean that I am claiming to let market mechanisms work how what you want without supervision and correction by the State institutions concerned, as some Bathamme Actinoulibralah wish, but, on the contrary, I call on the central bank to take effective action to achieve stability and balance of the national currency in the long term, particularly the refusal of political interference and return to the transparency and confidence-building among the prisoners and the private sector, and to restore credibility lost during the past five months. It should be emphasized the need to return to publish the real demand for the dollar by the domestic private sector, and on a daily basis data, to enable researchers and analysts study demand patterns and diagnosis of driving his powers in order to devise long-term strategies to manage this demand customized and other economic variables.
We have proven experience of Iraq before 2003 and the experiences of many economies centrally directed that the coercive measures of no avail. And certainly the central bank does not assume alone the responsibility of the latest crisis, but many ministries that failed to carry out its functions. Special mention of the Ministry of Finance, which failed in controlling public spending, and tax collection, and the collection of customs duties, in addition to the Ministry of Commerce which has failed to adjust imports of goods and accounting manipulators quantities and prices, as well as the Ministry of Planning, which failed to document the foreign trade statistics, and last but not least authorities on Money Laundering and utter failure to distinguish between smuggling money and escape the Grand National Capital arab out of Iraq external Kedjar, in search of safety and financial stability.
I am confident that Iraq's economic cadres of professional and independent able to successfully pursue a rational monetary policy and the stability of the national currency, as other countries in the Arab region, such as Jordan and Lebanon, which lacks oil resources has succeeded, not to mention the Gulf oil states, which has huge reserves of foreign currency. So should the political decision-makers make way for the national technocrats to carry out this delicate task, which determine the future of economic development in Iraq.
(*) An international economist and general coordinator of the Network of Iraqi economists
(**) I thank all colleagues conciliator Hasan Mahmud Kamal and lamp on observations Value
Copyright network of Iraqi economists. Permission to quote and re-publication, provided that the source. June 25, 2015
The opinions expressed in all material published on the Web site do not reflect necessarily the opinion of the editorial board, but it is the opinion of the author who bears the scientific and legal responsibility alone
[You must be registered and logged in to see this link.]
