ANALYSIS OF IRAQ NEWS: " For 3 reasons.. Changing the relationship is “not enough” to improve the performance of the Central Bank" BY DINAR REVALUATION, 13 AUGUST

 Economic consultant Ziad Al-Hashemi has emphasized that merely changing the governor of the Central Bank of Iraq, Ali Al-Alaq, will not suffice to significantly improve the Central Bank’s performance. He argues that comprehensive reforms are needed to address fundamental issues. Here are three key reasons why changing the governor alone is considered insufficient:

1. Structural Deficiencies

• Issue: The Central Bank of Iraq suffers from structural deficiencies that affect its overall performance. These issues include outdated systems and processes that hinder its efficiency and effectiveness.
• Impact: These structural problems can lead to inefficiencies in monetary policy implementation and financial oversight. Simply changing the governor does not address these deep-rooted structural issues.

2. Administrative Weakness

• Issue: There is a notable weakness in the administrative system within the Central Bank. This includes inadequate management practices and lackluster administrative performance.
• Impact: Administrative weaknesses can undermine the bank’s ability to operate smoothly and execute its responsibilities effectively. Improvements require a thorough review and overhaul of administrative practices, not just a change in leadership.

3. Lack of Independence

• Issue: The Central Bank of Iraq suffers from insufficient independence, which affects its ability to make unbiased decisions and implement monetary policies effectively.
• Impact: Independence is crucial for central banks to function properly, as it allows them to make decisions based on economic principles rather than political pressures. Without genuine independence, any new governor would still face the same constraints and challenges.

Required Reforms

• Comprehensive Screening and Development: A thorough review and modernization of the Central Bank’s work model, management structure, and operational procedures are necessary.
• Enhanced Independence: Ensuring that the Central Bank operates with the same level of independence as other central banks worldwide is critical for effective monetary policy management.

Al-Hashemi concludes that while changing the governor might be a step in the right direction, it is not a panacea. The Central Bank requires broader reforms to address these systemic issues and achieve meaningful improvements in its performance.