After The Decline In Inflation Rates... Economic Calls To Improve Financial Policy Management In Iraq
Money and business Economy News – Baghdad Today, Sunday, financial specialists called for the need to improve financial policy management in Iraq after it witnessed a decline in inflation.
Financial expert Abdullah Al-Bandar said, “The International Monetary Fund was optimistic about Iraq due to recording a clear decline in inflation during the first quarter of this year compared to the last quarter of 2023,” indicating that “economic policies in Iraq are going well and that the government is taking into account Fund directives regarding this.
He added, "The IMF's assistance to Iraq is usually conditional on the extent of Iraq's commitment to its directives and advice. Therefore, the government and relevant parties must move towards improving the management of financial policy in Iraq and making it consistent with monetary policy, since our monetary policy is dependent on oil revenues."
Al-Bandar called for "the need to focus on developing non-oil economic sectors because they are very few compared to oil revenues, such as developing border crossings and developing the customs law, as well as the private sector's contribution to the domestic product, and reconsidering the customs tariff because Iraq is an importing country."
For his part, financial expert Manar Al-Obaidi explained in a post on his Facebook account, “One of the most important economic standards that countries always take into account in determining their data, because of its important role in formulating the country’s economic policy, is the monthly and annual inflation rates, which plays a role.”
It is important in the overall daily life of the citizen and in the various economic sectors,” noting that “according to data from the Central Bureau of Statistics, the annual inflation rates in Iraq decreased from 4.5% at the end of 2023 to reach 1.6% in March 2024.”
Al-Obaidi added, “Countries seek to reduce inflation rates according to their economic policies, as some countries try to target fixed inflation rates that do not increase or decrease, while others are looking for high inflation rates, especially producing countries, and they differ according to the economic policy of each country,”
pointing out that In Iraq, “there is no clear target for inflation rates except for one phrase mentioned in the strategic development plan that talked about keeping the inflation level below the 10% level.”
Al-Obaidi explained that "the decline was not the result of a significant increase in prices, but rather is due to three basic factors that contributed to the inflation rates reaching these rates, which are considered among the lowest levels of inflation in the world and the Middle East."
He stated that "the first level is a change in the weights of goods, as the process of determining inflation depends on determining a weight that represents the relative importance of each commodity, meaning that the importance of bread to the citizen is not the same as the importance of clothing, for example. Therefore, the weights vary according to the importance of the commodity.
At the beginning of 2024, the Central Bureau of Statistics changed the weights." For each commodity, the relative weight of some commodities was increased, such as food, beverages, tobacco, education, and health, in exchange for reducing some of the relative weights of other goods and services, such as housing and transportation, which includes fuel, for which the price of improved fuel was raised in 2024, in addition to household equipment.
This change played an important role in Reducing the inflation rate because some of the goods whose weights were increased did not increase much compared to those whose weights were reduced.
He continued, "With regard to the second level, it is changing the year of measurement, as the year of measurement in which a standard price was set for each commodity or product was the year 2012. The year of measurement was changed to the year 2022, and the increase or decrease in the prices of goods and services became dependent on the standard prices in 2022, not 2012, and this is The change greatly affects inflation rates in a way that reduces inflation rates,”
pointing out that “the third level is represented by the decline in the prices of some foodstuffs, such as bread, dairy, fruits, and drinks, which now represent approximately 31% of the total inflation account, and thus their decline or rise plays a fundamental role in Determining inflation levels. Therefore, general inflation decreased to 1.6%, while core inflation reached 2.7%.
Al-Obaidi wondered, “Why specifically were major changes made, whether at the level of weights or at the level of the base year, in 2024, during a critical period when there are radical changes in monetary policy and financial policy?” And why was the year 2022 adopted as a measurement year?
Is it really suitable to be a measurement year, especially since it is A year that comes after the Corona crisis, in which the world witnessed global inflation of various commodities, and it was not a year of global stability?
He concluded his speech by saying, “What we aspire to is for the data issued by various official bodies to be highly reliable and in line with the reality of the situation in order to formulate economic policies based on analyzing the gap between what is currently on the ground and the target value. No one can imagine.” The reaction of any citizen when you inform him that prices rose only 1% compared to the previous year.” Views 68 Added 06/23/2024 - https://economy-news.net/content.php?id=44523
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