The Minister of Finance stresses the necessity of reviewing the exchange rate of the dinar and reveals the size of the external debt

240 Policy 09/08/2020 19:00

Baghdad today – Baghdad 

The Minister of Finance, Ali Allawi, revealed today, Tuesday, the size of the external debts owed by Iraq, while confirming that carrying out concrete economic reforms needs 5 years by finding new alternatives for revenues, during his hosting of the House of Representatives today.

The Media Department of the House of Representatives published the proceedings of the parliament session held today, and quoted the Minister of Finance as saying that “the economic reform program needs a long time to be presented because the economic situation in Iraq is going through a critical situation due to the repercussions of previous cumulative economic policies that the Iraqi state passed since the 1950s in The last century and so far, especially the legislation of the law on agricultural reform and the decisions of the socialist package, in addition to the loss of the economic vision that weakened the private sector and made all resources in the hands of governments. ”

The Minister of Finance added, “The current government suffers from a scarcity of funds that forced it to borrow internally and externally and cannot implement the presentation of the paper within the period specified by the law voted upon, noting that a specialized team has been formed with a cadre of 40 employees working continuously to work on preparing and presenting the required paper. Despite the current health conditions, “indicating that” the reasons for delaying its submission are technical and historical, setting the ceiling for the government’s submission of the first negotiable reform paper at the end of this month, while the reforms paper is presented in its final form in the middle of next month.

In turn, the Minister of Planning indicated during the session, “The presence of 6,250 projects under construction that needs to provide 126 trillion dinars to complete them, and this large number of projects causes the failure to include any new project in the new budget law,” explaining that “the delay in completing projects led to the failure to provide services.” For citizens, including the existence of 42 unfinished housing complexes that need to be accurately recounted in order to begin their implementation, in addition to the necessity of developing a real reform plan to address the delay in implementing projects.

Commenting on the two ministers ’answer, MP Muhammad al-Darraji stressed“ the need to fully and not partially implement the legislated law, ”questioning“ the value of internal and external borrowing and the size of what is allocated to pay salaries or in the investment sector, as well as knowing the value of the exchange rate specified in the next budget. ” .

Minister Allawi pointed out that “there are three types of loans, including commercial that the Iraqi government has moved away from, borrowing from governments and the third by borrowing from international development institutions such as the World Bank and the Arab Fund for the purpose of investment, especially those related to the requirements of improving the electricity sector by activating previous economic agreements with Siemens and General Electric Company, “stressing” the importance of reviewing the exchange rate so that the Iraqi economy enters the circle of competition with the interest of the International Monetary Fund in the issue of the exchange rate, noting that the ministry received an amount of 15 trillion dinars in full to meet the needs of salaries. ”

For his part, the Minister of Planning stated that “the ministry instructed to stop international obligations to pressure spending units, which led to the deprivation of some provinces of services,” noting “the exception of some projects in the governorates that have funds to implement their projects without requiring them for additional funds until liquidity becomes available.” At the same time, “the importance of directing to alternatives in allocating funds for vital projects to complete them, especially health institutions and residential complexes in the governorates,” pointing out that “the inclusion of any new project that requires its inclusion in the federal budget law or meets any development gap.”

And after MP Muhammad al-Darraji, his inquiries about the feasibility of borrowing an amount of 5 billion dollars abroad despite the lack of benefit from previous loans in meeting the needs, and knowing the extent of the continuation of the loan from the central reserve.

In his response, the Minister of Finance indicated that “the need to borrow was to support the general budget and fill the financial deficit without giving support to investment projects, explaining that the trend to borrow from the International Monetary Fund comes because it has specific programs that support countries suffering from financial crises, such as Iraq, with loans for a period of time.” Three years, provided that it is linked to administrative and financial reforms, “pointing out that” the government opened communication channels with the International Monetary Fund, because Iraq has no source for internal borrowing except the Central Bank of Iraq and the absence of accredited financial markets in Iraq, in addition to the fact that government banking institutions are overburdened with debts to the government to finance The financial deficit in budgets and private banks does not have large financial financing.

Allawi added that “tangible economic reforms need 5 years by finding new alternatives for revenues,” noting that “the total debt is 80 to 90 percent of the Iraqi national product, and the foreign debt is 160 trillion dinars, including Kuwait and Saudi debts amounting to 40 billion dollars.” , Citing the lack of a possibility for the Ministry of Finance to count the monetary mass in Iraq.

For his part, the Speaker of Parliament stressed the necessity of presenting any government move to negotiate any external loan to the relevant parliamentary committees before negotiating with foreign parties, pointing out to “tackling the lifting of the financial restriction that the government had taken prior to contracts in the governorates that witnessed demonstrations and allowing spending units. He thanked the two Ministers of Finance and Planning for coming to the Council and answering the parliamentary question related to the implementation of the oversight role.

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