The “Merchant” Card...A Practical Step To Limit The Rise Of The Dollar
Economical 01/25/2024 Baghdad: Haider Falih Al-Rubaie The government has intensified its moves aimed at eliminating the rise in exchange rates in the parallel market, which has greatly affected the movement of buying and selling goods and materials in local markets.
Following a package of decisions that contributed to bridging the gap that occurred earlier between the official and parallel dollars, a government source revealed the day before yesterday, About issuing electronic cards to small merchants with a ceiling of $100,000 per month.
The new government step was met with economic welcome that emphasized the importance of this measure in eliminating the significant rise in parallel exchange rates and reducing the jumps in the green currency, in addition to its importance in covering the prices of imported goods at the official dollar rate, thus achieving great stability in the local markets.
A government source stated to the Iraqi News Agency (INA), that “based on the directives of the Prime Minister, Muhammad Shiaa Al-Sudani, and in light of the discussions that took place between the government, the central bank and electronic payment companies for more than two months, a mechanism for issuing electronic cards to small merchants was approved, with a ceiling. It amounts to $100,000 per month to implement payment operations for import purposes, ensuring a reduction in the demand for cash dollars by real merchants.” The source added,
“The new mechanism is subject to five important conditions, including payment companies submitting a request to the Central Bank to obtain approval to develop this product and launch the (merchant) card, as well as specifying the uses of the cards to be for small merchants in line with the external transfer controls issued by the Central Bank for the year 2023, according to the statement.
The ceiling of these cards should not exceed (100) thousand dollars per month, with the possibility of raising the ceiling in the future in light of the results of the actual implementation.”
The source added that among the requirements for issuing this card is that it “be used for the purposes of purchasing goods and services from known suppliers according to pre-defined white lists, and that the company must bear its duty in accordance with basic requirements, the most important of which are the main international ban lists of the United Nations, the Office of Foreign Assets Control and the European Union.”
Pointing out that the final condition for issuing a merchant card is that “the funds of small merchants be deposited in the branches of various Iraqi banks in Iraqi dinars.”
Immediately after the issuance of these instructions, specialists expressed their opinions regarding this step, which the researcher specializing in economic affairs, Nabil Jabbar Al-Ali, during his interview with “Al-Sabah” saw as positive and could undermine the parallel dollar.
Al-Ali pointed out that “the step is very correct, and will contribute to the ability of small merchants to access transfer tools away from the platform and its requirements,” stressing that this government measure will truly contribute to “ending the phenomenon of smuggling cards with simple transfer capabilities, and the new mechanism will work to reduce the price and influence it.” clearly".
Contrary to the previous opinion, the economic expert, Manaf Al-Sayegh, confirmed that this matter represents nothing but “measures that are not based on sound foundations of what must be dealt with to address the parallel and government exchange rate.” According to Al-Sayegh, during his talk to “Al-Sabah,”
“The problem of solving the dollar is not achieved through measures, but rather by following monetary policies and in accordance with what is internationally accepted, and not measures that represent reactions, as he said.” Al-Sayegh also believes that these cards may not contribute significantly to addressing the rise in the parallel exchange rate, indicating that
large merchants are still suffering from difficulties in obtaining cash financing from the dollar to finance their trade due to the complexities of the Central Bank’s sales platform, in addition to similar difficulties facing travelers.
Al-Sayegh pointed out that the reasons for the rise in the parallel exchange rate are the heavy reliance on importing goods and services and not manufacturing them at home, and the failure to activate industries that can meet consumer requirements.
Al-Sayegh believes it is necessary to stop financing many imports, especially luxury ones, which cause Iraq to lose huge sums of money annually, revive industry and agriculture in the country, and strictly prevent the import of locally produced goods. https://alsabaah.iq/91069-.html
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