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An Economist Reveals The Reasons For The Increase In Central Bank Sales Of The Dollar And Raises Exciting Questions
09/04/2022 68
Earth News/ The economic expert, Manar Al-Obaidi, revealed today, Sunday, the
reasons for the increase in the Central Bank's sales of the dollar,
while asking questions to several government agencies. Al-Obaidi said in a statement received by Earth News,
“In order to clarify the picture, it is necessary first to understand the
mechanism of the foreign currency sale window,” noting that
“most of Iraq’s revenues are in US dollars, given that 92% of the Iraqi government’s revenues are from oil sales, and the
Iraqi government’s expenses are mostly From the dinar, given that 90% of government expenses are operational expenses (salaries + subsidies + other service expenses). Al-Obaidi added that
“on the basis of these two rules, the
government needs to sell the dollar and buy the dinar through the Central Bank, as the
Ministry of Finance sold during this year to the Central Bank an amount of 33 billion US dollars to the Central Bank, which has
to provide local cash to cover the value of dollar purchases. From the Ministry of Finance in order to cover the needs of the Iraqi government.” He pointed out that "the
sources of the dinar at the Central Bank are:
“in the event that the first and second points are not sufficiently available to the Central Bank, the bank is forced either to
Central Bank’s sales of dollars through the currency sale window. Since the beginning of the year, it has reached nearly 28 billion dollars, meaning that
the difference is about 5 billion dollars in favor of the Central Bank, in which the value of cash in dollars increased at the expense of the dinar. He explained that "the
Central Bank is forced to increase its sales of dollars with the increasing demand for the local currency from the Ministry of Finance and in order not to increase its issuance of a new monetary mass that may lead to an increase in inflation as a result of the rise in the monetary mass." Al-Obaidi pointed out that
“the question is not directed to the Central Bank exclusively about the reasons for the rise in dollar sales through the window, but rather the questions are directed to:
Ministry of Finance: What is the need for the increasing demand for the dinar, which means an increase in the Iraqi government's expenditures in the absence of a budget?
The Ministry of Commerce: It was noticed that the import licenses granted by you increased, and in light of them, the demand for buying dollars increased. Does Iraq actually need these imports, in light of which the licenses are granted?
Ministry of Finance, General Customs Authority: With the increase in the value of remittances related to imports and the increase in import licenses granted by the Ministry of Commerce, no significant increase in the Authority’s revenues was observed despite these rises,
which means that a large part of the imports enter through unofficial ways and not through your authority,
An Economist Reveals The Reasons For The Increase In Central Bank Sales Of The Dollar And Raises Exciting Questions
09/04/2022 68
Earth News/ The economic expert, Manar Al-Obaidi, revealed today, Sunday, the
reasons for the increase in the Central Bank's sales of the dollar,
while asking questions to several government agencies. Al-Obaidi said in a statement received by Earth News,
“In order to clarify the picture, it is necessary first to understand the
mechanism of the foreign currency sale window,” noting that
“most of Iraq’s revenues are in US dollars, given that 92% of the Iraqi government’s revenues are from oil sales, and the
Iraqi government’s expenses are mostly From the dinar, given that 90% of government expenses are operational expenses (salaries + subsidies + other service expenses). Al-Obaidi added that
“on the basis of these two rules, the
government needs to sell the dollar and buy the dinar through the Central Bank, as the
Ministry of Finance sold during this year to the Central Bank an amount of 33 billion US dollars to the Central Bank, which has
to provide local cash to cover the value of dollar purchases. From the Ministry of Finance in order to cover the needs of the Iraqi government.” He pointed out that "the
sources of the dinar at the Central Bank are:
- Local bank deposits of Iraqi dinar
Depositing government institutions from the Iraqi dinar
Dollar sales to the local market through the foreign exchange window, which is the largest part
Issuing and printing additional cash And he indicated that
“in the event that the first and second points are not sufficiently available to the Central Bank, the bank is forced either to
- increase dollar sales through the window to cover the dinar, or to
print new cash to cover the need of the Iraqi government
Central Bank’s sales of dollars through the currency sale window. Since the beginning of the year, it has reached nearly 28 billion dollars, meaning that
the difference is about 5 billion dollars in favor of the Central Bank, in which the value of cash in dollars increased at the expense of the dinar. He explained that "the
Central Bank is forced to increase its sales of dollars with the increasing demand for the local currency from the Ministry of Finance and in order not to increase its issuance of a new monetary mass that may lead to an increase in inflation as a result of the rise in the monetary mass." Al-Obaidi pointed out that
“the question is not directed to the Central Bank exclusively about the reasons for the rise in dollar sales through the window, but rather the questions are directed to:
Ministry of Finance: What is the need for the increasing demand for the dinar, which means an increase in the Iraqi government's expenditures in the absence of a budget?
The Ministry of Commerce: It was noticed that the import licenses granted by you increased, and in light of them, the demand for buying dollars increased. Does Iraq actually need these imports, in light of which the licenses are granted?
Ministry of Finance, General Customs Authority: With the increase in the value of remittances related to imports and the increase in import licenses granted by the Ministry of Commerce, no significant increase in the Authority’s revenues was observed despite these rises,
which means that a large part of the imports enter through unofficial ways and not through your authority,
