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Fiscal and monetary policy in Iraq
July 1st, 2015
In order to achieve sustainable development in any country of the developing countries to be of a blurred vision of the objectives to be accessible, it reflected in the economic and social strategies, taking into consideration the goals ...
in order to achieve sustainable development in any country of the developing countries to be of a blurred vision of the goals which meant access to it, reflected in the economic and social strategies, taking into account the objectives to be achieved, and then are placed in plans linked to specified a time, and indicators related to the components of economic and social activities, and the role of these activities in the gross domestic product, and the impact on the operating ratio and improve citizens' living standards, and the extent of the requirements of the development of the labor market response, and other other indicators. All this must be subject to follow-up, monitoring and evaluation and accountability. The purpose foundation of economic policy is to reach a state of balance in the use and operation of all economic resources, financial, material and human productivity.
Among the means available to any country to achieve economic policy and for the best results in terms of economic and social indicators are the rational use of fiscal and monetary two policies.
Fiscal policy
means fiscal policy determining the financial resources of the state and the aspects of spending and the use of the mechanisms available: the general budget, the tax system, the banking system and the insurance system in order to achieve them. The purpose foundation of fiscal policy is to promote economic and social development and influence positive on the national economy movement, and to achieve social justice in the distribution of wealth and income.
is still organizing the general budget in Iraq primitive, the distribution of the money on the basis of items, and are not linked to development plans and indicators economic and social. Although the Constitution and the law of state funds and public debt management, emphasize the necessary foundations for the way the preparation of the budget and the allocation of resources and control over the implementation, and the need to link the budget development plan, and prepare statements required the use of the money, whether through the preparation of final accounts, or through cash flow detection, but All this is not being applied, not by the executive branch, and at all levels, not by regulators, led by the Iraqi parliament, despite confirmation of Supreme Audit on it reports since the fall of the idol until now.
The financial sources basic available the Iraqi state are imports oil, which constitute 92 to 96% of the imports of the general budget, and the rest from taxes and fees and profits of the public sector and the sale of state property. So far, the general budget did not include other imports of loans and grants and international aid, it has not been disclosed until after receiving and spending. Oil resources of about $ 8 million in 2003 has risen to more than $ 94 billion in 2012 and reached the general budget numbers to the high peaks, reaching $ 80.5 billion in 2011, and rose to $ 100 billion in 2012, and to more than $ 118 billion a year 2013. The increased investment expenditure ratio of about 14% in the first years after the fall of the idol to 40% in the budget of 2013 and reached a total state revenues from oil, duties and taxes, loans, grants received recovered and the money from the former regime, to more than $ 600 billion, a significant digits if it compared with earnings of a lot of oil and non-oil-producing countries. But Iraq still suffers from a lot of economic and societal problems, as a result of mismanagement of the money and poor management mechanisms available. Despite the GDP figures doubled, mainly due to developments in the oil revenue increases, and rising Iraqi per capita of $ 800 per year in 2003 to more than $ 4000 in 2012, we see a significant decline in the share of economic activities productivity Other (industry, agriculture), where reached 1.5-3%, unemployment is still high, with an estimated number of unemployed b 4- 4.5 million unemployed, and poverty continues to be a high proportion of the population, and the deterioration of the situation for the class is a few of them, as the number of threatened famine about 2 million human being or the equivalent of 6% of the population, and more than 12% of the population with an income of less than $ 2.5 per day. Iraq continues to suffer from significant problems in the services and infrastructure, electricity and potable water, sanitation and housing, illiteracy and others. Despite the spend about $ 37 billion to the electricity sector, including 21 billion to invest in the production, transmission and distribution, but the Iraqis were not able to get electricity at about constant and production capacity available is still not more than 8700 MW of which about 4,500 were already present, despite promises Repeated solve this problem for the individual citizen, Vlasal more than 25% of the population earn less than 12 hours of electricity a day, and some of them not getting electricity final. So far, did not enter in the Ministry of Electricity plans processing sectors of the economy, agriculture, industry and services. With a mortality of children under five age years 37%, while the illiteracy rate of 23% of the population, or about 7.36 million man.
All this confirms the ill Aeraaq money management and mismanagement of financial instruments, and the failure of monetary policy in achieving economic and societal goals desired after the fall of the idol. Ignored because of the application of strategies and plans, drawn up by some government agencies in cooperation with international institutions, which used the expertise of outside Iraqi state institutions, and in cooperation with foreign expertise. All because of the absence of state institutions caused by partisan conflicts, which categorized into about sectarian slogans and ethnic, do not take into consideration the supreme national interests and the interests of citizens, and that led to the quota system and the exclusion of the professional and the principle of equal opportunities for all state institutions.
Iraqi budget has moved away from the goals of development and harmony between the two policies financial, monetary and worked to emphasize the consumer orientation, affecting large about monetary policy.
Monetary Policy
The primary objective of monetary policy, is to achieve economic stability through the promotion of confidence in Iraqi dinars, and work on price stability, and the fight against inflation. And then use the mechanics of this policy, in cooperation with the fiscal policy in order to reach a state of economic balance. This requires, above all, the existence of a well-defined and linked economic strategy targets national development.
monetary policy in Iraq has been able to achieve the most important goals of achieving exchange rate stability and increased confidence in Iraqi dinars, where the dollar exchange rate has fallen from about 3,000 dinars to the dollar before the change in 2003, to 1166 dinars to the dollar in the last two years. Monetary policy was also able to mitigate inflation, which fell from 60-70% in the first years after the fall of the idol to 3-6% in the last three years. Monetary policy has been able also to build a sovereign cash reserves and global gold currencies, as a cover for the local currency, and a guarantee of economic stability, in the case of low oil imports, or in case the Iraqi economy, God forbid, to other shocks caused by natural disasters, rising from less $ 2 billion in 2003 to $ 70 billion in the last two years. The central bank has directed since 2009 to study the possibility of restructuring the Iraqi currency by deleting three zeros, and the issuance of currencies of larger and smaller than rolling currently nominal values in order to reach:
the money supply in circulation reduction in order to reduce the cost of Altdaol.adavh to facilitate the deal Currency arithmetic with numbers. And to improve the payments system. And to facilitate the process of drawing the price policy and reduce inflationary jumps in Alasar.ala that interference by the executive authorities has led to the postponement of this vital project indefinitely. But can the monetary policy alone reduce inflation and increase the support and confidence of the Iraqi currency process, and to achieve economic stability? Can the restructuring process that the Iraqi currency be enough alone to promote this stability?
The strength of any currency stems from the strength of its economy, the dollar did not take its international status, but the strength of the economy Alamerreqi. The euro and the yen did not take, and finally the yuan global count, but most of the power of the European Union, Japan, China and the countries economy. However, these currencies go up and down according to the internal and external economic developments, improvement or decline. Will not come with something new if we stressed that the basic aspects of the Iraqi economy:
Iraq's dependence on the production and export of crude oil and the revenues derived from that which is in dollars. In addition to the significant deterioration in the real productive sectors, industry and agriculture, and the weakness of all economic activities except for trade and activities Alhamsheeh.vdila great trend towards government and individual consumption sectors is small of Iraqi society, and the large distortion in the distribution and redistribution of income. As well as the great imbalance in Iraq's international relations, especially with Ajawar.adavh countries large to move towards import, great and orientation towards foreign to the implementation of local government contracts, particularly companies, mg absence of the required requirements for the preparation and control of Altniv.adavh many other phenomena emphasizes the economic chaos afflicting Iraq and confusion in the development of solutions, making it the solutions improvisational prosthesis is radical.
All these factors make the Iraqi currency and inflation under internal and external to the effects of a big negative, despite the best efforts of monetary policy.
The continuation of Iraq's dependence on oil revenues, and direct most of its resources towards the importation of goods consumer, make the Iraqi currency and inflation process in Iraq, prone to large negative impact on the stability of the currency and prices of external factors. Iraq's economy and put her arms in a stressful pliers Alqoatin. Since any rise or fall in oil prices, will lead to the rise or fall of Iraqi oil revenues, and high or low world prices and consumer production and service materials.
The rise in global oil prices works to increase the oil revenues of the state, Alnh at the same time draining more money to import Goods to meet the growing needs of Iraq. Usually the rise in global prices of consumer goods paces over the rise in oil prices due to many factors indicated by various economic indicators. But if oil prices fell and dropped Iraq's oil resources, it would result in the inability of Iraq to carry out basic financial obligations, internal and external. And when it will be forced monetary policy to drain the sovereign reserves required to maintain the currency cover in order to cover the expenses of the government and market needs of the foreign currency.
It is necessary to stress once again that Iraq needs a national development plans can be implemented and follow-up and control through specific Fterah, and associated indicators economic, social and clear, entrusted with defining roles in government and economic sector and the role of the private sector the right climate for its work and its development and the provision. The realization of economic and social development and the achievement of economic and social stability could only be the existence of such policies and the use of their tools and the basic harmony of both fiscal and monetary policy is achieved.
* Financial and economic expert
[You must be registered and logged in to see this link.]
July 1st, 2015
In order to achieve sustainable development in any country of the developing countries to be of a blurred vision of the objectives to be accessible, it reflected in the economic and social strategies, taking into consideration the goals ...
in order to achieve sustainable development in any country of the developing countries to be of a blurred vision of the goals which meant access to it, reflected in the economic and social strategies, taking into account the objectives to be achieved, and then are placed in plans linked to specified a time, and indicators related to the components of economic and social activities, and the role of these activities in the gross domestic product, and the impact on the operating ratio and improve citizens' living standards, and the extent of the requirements of the development of the labor market response, and other other indicators. All this must be subject to follow-up, monitoring and evaluation and accountability. The purpose foundation of economic policy is to reach a state of balance in the use and operation of all economic resources, financial, material and human productivity.
Among the means available to any country to achieve economic policy and for the best results in terms of economic and social indicators are the rational use of fiscal and monetary two policies.
Fiscal policy
means fiscal policy determining the financial resources of the state and the aspects of spending and the use of the mechanisms available: the general budget, the tax system, the banking system and the insurance system in order to achieve them. The purpose foundation of fiscal policy is to promote economic and social development and influence positive on the national economy movement, and to achieve social justice in the distribution of wealth and income.
is still organizing the general budget in Iraq primitive, the distribution of the money on the basis of items, and are not linked to development plans and indicators economic and social. Although the Constitution and the law of state funds and public debt management, emphasize the necessary foundations for the way the preparation of the budget and the allocation of resources and control over the implementation, and the need to link the budget development plan, and prepare statements required the use of the money, whether through the preparation of final accounts, or through cash flow detection, but All this is not being applied, not by the executive branch, and at all levels, not by regulators, led by the Iraqi parliament, despite confirmation of Supreme Audit on it reports since the fall of the idol until now.
The financial sources basic available the Iraqi state are imports oil, which constitute 92 to 96% of the imports of the general budget, and the rest from taxes and fees and profits of the public sector and the sale of state property. So far, the general budget did not include other imports of loans and grants and international aid, it has not been disclosed until after receiving and spending. Oil resources of about $ 8 million in 2003 has risen to more than $ 94 billion in 2012 and reached the general budget numbers to the high peaks, reaching $ 80.5 billion in 2011, and rose to $ 100 billion in 2012, and to more than $ 118 billion a year 2013. The increased investment expenditure ratio of about 14% in the first years after the fall of the idol to 40% in the budget of 2013 and reached a total state revenues from oil, duties and taxes, loans, grants received recovered and the money from the former regime, to more than $ 600 billion, a significant digits if it compared with earnings of a lot of oil and non-oil-producing countries. But Iraq still suffers from a lot of economic and societal problems, as a result of mismanagement of the money and poor management mechanisms available. Despite the GDP figures doubled, mainly due to developments in the oil revenue increases, and rising Iraqi per capita of $ 800 per year in 2003 to more than $ 4000 in 2012, we see a significant decline in the share of economic activities productivity Other (industry, agriculture), where reached 1.5-3%, unemployment is still high, with an estimated number of unemployed b 4- 4.5 million unemployed, and poverty continues to be a high proportion of the population, and the deterioration of the situation for the class is a few of them, as the number of threatened famine about 2 million human being or the equivalent of 6% of the population, and more than 12% of the population with an income of less than $ 2.5 per day. Iraq continues to suffer from significant problems in the services and infrastructure, electricity and potable water, sanitation and housing, illiteracy and others. Despite the spend about $ 37 billion to the electricity sector, including 21 billion to invest in the production, transmission and distribution, but the Iraqis were not able to get electricity at about constant and production capacity available is still not more than 8700 MW of which about 4,500 were already present, despite promises Repeated solve this problem for the individual citizen, Vlasal more than 25% of the population earn less than 12 hours of electricity a day, and some of them not getting electricity final. So far, did not enter in the Ministry of Electricity plans processing sectors of the economy, agriculture, industry and services. With a mortality of children under five age years 37%, while the illiteracy rate of 23% of the population, or about 7.36 million man.
All this confirms the ill Aeraaq money management and mismanagement of financial instruments, and the failure of monetary policy in achieving economic and societal goals desired after the fall of the idol. Ignored because of the application of strategies and plans, drawn up by some government agencies in cooperation with international institutions, which used the expertise of outside Iraqi state institutions, and in cooperation with foreign expertise. All because of the absence of state institutions caused by partisan conflicts, which categorized into about sectarian slogans and ethnic, do not take into consideration the supreme national interests and the interests of citizens, and that led to the quota system and the exclusion of the professional and the principle of equal opportunities for all state institutions.
Iraqi budget has moved away from the goals of development and harmony between the two policies financial, monetary and worked to emphasize the consumer orientation, affecting large about monetary policy.
Monetary Policy
The primary objective of monetary policy, is to achieve economic stability through the promotion of confidence in Iraqi dinars, and work on price stability, and the fight against inflation. And then use the mechanics of this policy, in cooperation with the fiscal policy in order to reach a state of economic balance. This requires, above all, the existence of a well-defined and linked economic strategy targets national development.
monetary policy in Iraq has been able to achieve the most important goals of achieving exchange rate stability and increased confidence in Iraqi dinars, where the dollar exchange rate has fallen from about 3,000 dinars to the dollar before the change in 2003, to 1166 dinars to the dollar in the last two years. Monetary policy was also able to mitigate inflation, which fell from 60-70% in the first years after the fall of the idol to 3-6% in the last three years. Monetary policy has been able also to build a sovereign cash reserves and global gold currencies, as a cover for the local currency, and a guarantee of economic stability, in the case of low oil imports, or in case the Iraqi economy, God forbid, to other shocks caused by natural disasters, rising from less $ 2 billion in 2003 to $ 70 billion in the last two years. The central bank has directed since 2009 to study the possibility of restructuring the Iraqi currency by deleting three zeros, and the issuance of currencies of larger and smaller than rolling currently nominal values in order to reach:
the money supply in circulation reduction in order to reduce the cost of Altdaol.adavh to facilitate the deal Currency arithmetic with numbers. And to improve the payments system. And to facilitate the process of drawing the price policy and reduce inflationary jumps in Alasar.ala that interference by the executive authorities has led to the postponement of this vital project indefinitely. But can the monetary policy alone reduce inflation and increase the support and confidence of the Iraqi currency process, and to achieve economic stability? Can the restructuring process that the Iraqi currency be enough alone to promote this stability?
The strength of any currency stems from the strength of its economy, the dollar did not take its international status, but the strength of the economy Alamerreqi. The euro and the yen did not take, and finally the yuan global count, but most of the power of the European Union, Japan, China and the countries economy. However, these currencies go up and down according to the internal and external economic developments, improvement or decline. Will not come with something new if we stressed that the basic aspects of the Iraqi economy:
Iraq's dependence on the production and export of crude oil and the revenues derived from that which is in dollars. In addition to the significant deterioration in the real productive sectors, industry and agriculture, and the weakness of all economic activities except for trade and activities Alhamsheeh.vdila great trend towards government and individual consumption sectors is small of Iraqi society, and the large distortion in the distribution and redistribution of income. As well as the great imbalance in Iraq's international relations, especially with Ajawar.adavh countries large to move towards import, great and orientation towards foreign to the implementation of local government contracts, particularly companies, mg absence of the required requirements for the preparation and control of Altniv.adavh many other phenomena emphasizes the economic chaos afflicting Iraq and confusion in the development of solutions, making it the solutions improvisational prosthesis is radical.
All these factors make the Iraqi currency and inflation under internal and external to the effects of a big negative, despite the best efforts of monetary policy.
The continuation of Iraq's dependence on oil revenues, and direct most of its resources towards the importation of goods consumer, make the Iraqi currency and inflation process in Iraq, prone to large negative impact on the stability of the currency and prices of external factors. Iraq's economy and put her arms in a stressful pliers Alqoatin. Since any rise or fall in oil prices, will lead to the rise or fall of Iraqi oil revenues, and high or low world prices and consumer production and service materials.
The rise in global oil prices works to increase the oil revenues of the state, Alnh at the same time draining more money to import Goods to meet the growing needs of Iraq. Usually the rise in global prices of consumer goods paces over the rise in oil prices due to many factors indicated by various economic indicators. But if oil prices fell and dropped Iraq's oil resources, it would result in the inability of Iraq to carry out basic financial obligations, internal and external. And when it will be forced monetary policy to drain the sovereign reserves required to maintain the currency cover in order to cover the expenses of the government and market needs of the foreign currency.
It is necessary to stress once again that Iraq needs a national development plans can be implemented and follow-up and control through specific Fterah, and associated indicators economic, social and clear, entrusted with defining roles in government and economic sector and the role of the private sector the right climate for its work and its development and the provision. The realization of economic and social development and the achievement of economic and social stability could only be the existence of such policies and the use of their tools and the basic harmony of both fiscal and monetary policy is achieved.
* Financial and economic expert
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