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A financial expert answers the question: Why are Iraq's financial reserves not increasing?
June 21, 2024
Baghdad/Iraq Observer
Today, Friday, financial expert Mahmoud Dagher explained the reasons for not increasing Iraq’s financial reserves despite the rise in oil prices, in a blog he published in the “Iraq Observer” group on “WhatsApp,” in which
he stressed that Iraq’s financial reserves are not measured by their absolute size, but rather by their adequacy according to... For two basic indicators.
The first is the adequacy of reserves to cover imports without any exports, as
it is estimated that Iraq has sufficient reserves to cover its imports for up to 12 months, which is an excellent level.
The second is the coverage of foreign reserves of exported cash, which shows that the ratio is more than one, which is also considered good.
He added that although Iraq's financial reserves exceeded the $100 billion barrier,
these reserves are not increasing significantly due to two main factors.
The first is the rise in the central bank's daily sales to about $300 million to cover imports.
The second is the increase in public spending, especially the salary bill, which includes retirement, subsidies, and social care, which is approaching 100 trillion dinars.
Dagher stressed that the adequacy of reserves is good, but
relying on the oil economy alone poses a risk due to the possibility of a decline in oil prices.
He pointed out that the only solution for Iraq lies in diversifying sources of income and reducing spending, especially operational spending.
Without these reforms, Iraq cannot achieve sustainable economic stability that depends on employment, subsidies, and permanent support.
It is worth noting that Dagher is a distinguished financial expert who previously held the position of Director General at the Central Bank of Iraq.
https://observeriraq.net/خبير-مالي-يجيب-على-تساؤل-لماذا-لا-ترتفع/
June 21, 2024
Baghdad/Iraq Observer
Today, Friday, financial expert Mahmoud Dagher explained the reasons for not increasing Iraq’s financial reserves despite the rise in oil prices, in a blog he published in the “Iraq Observer” group on “WhatsApp,” in which
he stressed that Iraq’s financial reserves are not measured by their absolute size, but rather by their adequacy according to... For two basic indicators.
The first is the adequacy of reserves to cover imports without any exports, as
it is estimated that Iraq has sufficient reserves to cover its imports for up to 12 months, which is an excellent level.
The second is the coverage of foreign reserves of exported cash, which shows that the ratio is more than one, which is also considered good.
He added that although Iraq's financial reserves exceeded the $100 billion barrier,
these reserves are not increasing significantly due to two main factors.
The first is the rise in the central bank's daily sales to about $300 million to cover imports.
The second is the increase in public spending, especially the salary bill, which includes retirement, subsidies, and social care, which is approaching 100 trillion dinars.
Dagher stressed that the adequacy of reserves is good, but
relying on the oil economy alone poses a risk due to the possibility of a decline in oil prices.
He pointed out that the only solution for Iraq lies in diversifying sources of income and reducing spending, especially operational spending.
Without these reforms, Iraq cannot achieve sustainable economic stability that depends on employment, subsidies, and permanent support.
It is worth noting that Dagher is a distinguished financial expert who previously held the position of Director General at the Central Bank of Iraq.
https://observeriraq.net/خبير-مالي-يجيب-على-تساؤل-لماذا-لا-ترتفع/
