Iraq's foreign reserves rise to a record high , 4 APRIL

 Iraq's foreign reserves rise to a record high 

4/2/2025

 The Prime Minister's financial advisor, Mazhar Mohammed Salih, confirmed on Wednesday that foreign reserves are at their highest historical levels, helping to achieve economic balance and stability for the country. He also indicated that reserves still cover more than 100% of the currency in circulation.

Saleh said in a press statement: “The slight decline in the Central Bank’s reserves, estimated at 1% of the country’s total foreign reserves, is linked to two factors: First, the increased level of foreign currency reinforcements provided by the Iraqi banking system to its correspondents abroad for the purposes of financing trade and external transfers, which led to a significant decline in the dollar exchange rate against the dinar in the parallel market and an increase in the value of the dinar in that parallel market.”

He explained that "control over domestic liquidity levels has become high, significant, and influential in light of the increasing external value of the dinar, which continues to indicate a decline in the effectiveness of the parallel or secondary market in the country. There has also been a very clear decline in growth rates in the general price level and a very high level of price stability, unlike anything the country has ever witnessed before."

 He added, "The other issue depends on the degree of growth in the amounts in which the public finances exchange monthly oil revenues in foreign  currency for the dinar for the benefit of total spending (which is the basis of foreign reserves) and converting them into Iraqi dinars," noting that "this is also linked to the degree of discipline and control of public expenditures on the one hand, and thus the slowdown in the liquidation of government foreign currency proceeds into domesticliquidity that can be spent on the other hand through the general budget." 

He pointed out that "taking into account the risks of fluctuations in average export oil prices of about $70 or less per barrel in energy markets, which occurred in recent months, this means that the compatibility between the level of replenishment of foreign reserves (through collecting them through cash issuance), which may have become slower and less rapid on the part of public finance, and external transfers in foreign currency for the benefit of financing private sector trade on the part of the monetary authority, which is still at a relatively high pace, is what caused this deficiency or slight decline in foreign reserves."

Saleh continued, "Foreign reserves remain at their highest historical levels, achieving economic balance and stability for the country. The function of foreign reserves remains to defend price stability. However, it is also wise for the Central Bank of Iraq to closely monitor the movements of the current account of the balance of payments to maintain the stability of foreign reserves and monitor their growth safely." 

He stressed that "these foreign reserves still cover more than 100% of the currency in circulation and enjoy a high commercial efficiency of more than 15 months of imports, compared to the global standard of three months." He added that "the monetary authority is the only competent entity responsible for managing the country's monetary policy at the domestic and external levels, with a high degree of consensus in terms of balance and transparency to
achieve and maintain economic stability."   LINK