Analysts blame central bank’s policy for Iraqi dinar’s limping

BAGHDAD / IraqiNews.com: Iraqi economists blamed the central bank’s shrinking policy which led, according to them, to hampering the development. Iraqi premier’s economic advisor Abdul Hussein al-Ankabi said that “the central bank’s fiscal policy which depends on withdrawing money from the market led to hampering the macro development in the country.” “The central bank adopts a vision in the belief that inflation in Iraq has a fiscal nature, but the truth is the main cause of the inflation is the defect of the infrastructure and the lack of investments which limited the withdrawal of money through increasing the interest rate,” he added. “The central bank has adopted a shrinking policy for more than three years without positive results which asserts that the inflation is not fiscal,” al-Ankabi noted. “The exchange rate is not real, as the central bank supports the exchange rate through the dollar auction, which means the dinar is dropping and does not reflects the real power of the central bank,” he also said. For his part, Abdul Jabar al-Halafi, economist, told IraqiNews.com that many reasons stand behind the contradictory relations between the decrease in dollar price and the increase in the market’s prices. “The decrease in the exchange rate does not mean an increase in the dinar’s value, as we do not use it in our external deals,” he added. Al-Halafi said that there is also the increase in the crude oil prices which negatively affected the fuel and commodities prices. He pointed out that the solutions could be the coordination between the fiscal and financial policies through the planning ministry, in addition to the government’s intervention to protect the consumer. SH (S)/SR 6