The Governor of the Central Bank talks about 9 files, most notably the exchange rate and inflation
9/30/2023
Central Bank Governor Ali Al-Alaq revealed the success of monetary policy in reducing the inflation rate in the country, and while announcing the date of abandoning the electronic platform, he pointed to the reasons for stopping the industrial initiative and imposing interest on housing loans.
The Governor of the Central Bank, Ali Al-Alaq, said in an interview with the Iraqi News Agency (INA), followed by “Al-Iqtisad News”: “The Central Bank views the exchange rate as something directly related to the general level of prices in the country, and that the bank has succeeded in covering the needs of importers at the official price.”
He stressed that the monetary policy succeeded in maintaining the general level of prices through the most important indicators of inflation, which witnessed a decline, and this is the main matter that the Central Bank focuses on in the success of its monetary policy.
He added that “maintaining the general level of prices and a low inflation rate indicates The success of the monetary policy, especially after real traders engaged in the conversion process at the official rate, which gave reassurance in the conduct of foreign trade.”
The electronic platform
He pointed out that “the electronic platform witnessed many difficulties at the beginning of its work, which led to the reluctance of some people to enter it,” indicating that “the implementation rate in the electronic platform has now increased from 20 percent to 95 percent, and this gave reassurance that entering the platform provides speed and safety.” .
He pointed out that "accessing the electronic platform in the external transfer process spares all parties from the risks of being exposed to local and international sanctions," warning of some merchants who cannot work in an organized atmosphere and are looking for chaos, and that the Central Bank is working to contain this challenge in coordination with the government to besiege it. These are the categories that are being diagnosed and followed up.”
Al-Alaq stated that “90% of the Central Bank’s sales are for the purposes of remittances and external transfers, and they are proceeding smoothly and at the official price (1320), but the problem lies in the cash side, which represents 10% of internal daily sales,” indicating that “ten percent is sufficient.” To meet the needs of travelers, but some are trying to dominate by withdrawing the amount allocated to travelers, which creates pressure and an increase in the cash price, and these parties have been identified as carrying out illegal and criminal operations.”
Al-Alaq revealed the process of developing the cash sales system allocated to the traveler within a system prepared by exchange companies, and it is being developed to fill the gaps, and does not accept repetition and the unreal traveler,” denying that there is a tendency to stop selling cash dollars to travelers, and that the Central Bank has no problem in covering requests.
The correct and legitimate ones are within the categories (travelers - study - treatment - private transfers), as the bank provided this through financial transfer companies represented by (Western Union and Mini Card).”
Direct transfer
He explained that "the electronic platform is now being gradually transitioned to direct transfer between the Iraqi Bank and the correspondent bank, with an international auditing company in the middle, stressing that the Central Bank has cut the 60 percent that does not pass through the platform, but rather is a direct transfer."
Al-Alaq noted that "next year The Central Bank will permanently cease being an intermediary in the process, and the electronic platform will end next year and become direct transfer operations as internationally approved. This is a major shift that will put things on the right path, accelerate transfer operations, and intertwine relations with international banks.”
The truth about Iraq's loss of 27 trillion
He pointed out that “the idea of linking the exchange rate to filling the general budget deficit is an inaccurate view, and that the central bank is responsible for determining monetary policy, determining the exchange rate within the indicators it has, and achieving the goal of monetary policy,” indicating that “the calculation process is for those who say that Iraq will lose 27 trillion.”
The difference between changing the exchange rate is a wrong process, and 30 percent of oil revenues do not enter the central bank, because the Ministry of Finance uses them for external payments, while the second part is that the exchange rate should not be linked to achieving balance in the budget.
US Treasury
Al-Alaq confirmed that “the US Assistant Secretary of the Treasury praised during her visit to Iraq the measures taken by the Central Bank to organize the external transfer process, implement compliance rules, combat money laundering and terrorist financing, and direct coordination between the Central Bank, the US Treasury and the Federal Bank, and there is very great American satisfaction.” In this context".
Penalties on banks.
He noted that “the Central Bank is conducting a review and audit process to diagnose violations on the 14 banks who were subject to restrictions and denial of access to the dollar,” indicating that “the Central Bank indicated the presence of a response and compliance from the 14 banks to the specified standards.”
He stated that "the American side does not restrict the demand for the dollar, and there is coordination regarding cash shipments through an annual agreement on the number of shipments and their dates," stressing that the Central Bank prefers to use non-cash payment tools through the use of cards (Visa and MasterCard), which has recorded a significant increase. During the past months, this is a good indicator that reduces the focus on the use of cash, and reduces the trouble of reviewing companies to obtain cash dollars.”
Regulating trade with Iran
Al-Alaq added, "There are ongoing discussions to regulate the import process from the Iranian side in a way that does not expose Iraq to any problems by violating sanctions and agreements," indicating that "the Central Bank will reach a clear formula in organizing the trade process, especially since part of it is through barter."
He stated that "an agreement was reached to settle the debts incurred by Iraq from Iranian gas imports through a new method through which these amounts are paid."
Adopting new currencies.
He noted that “there is work to adopt the UAE dirham, the Turkish lira, the Indian rupee, and the euro as part of the process of facilitating external transfer by opening direct outlets in the currencies of the countries we deal with,” noting that “the trade balance with India amounts to 3 billion.” Dollar, and there are also high numbers for imports from the Emirates and Turkey.”
He stressed that "the Central Bank has reached advanced stages of understanding in adopting the currencies of these countries, which will facilitate the external transfer process."
Campaign to support the dinar.
Al-Alaq said, “The campaign to support the Iraqi dinar is multi-faceted and multi-party. Its goal is the sovereignty of the local currency in internal transactions instead of foreign currencies, which are being limited. There is a gradual transition process within the Prime Minister’s directive to limit dealing in the Iraqi dinar internally, and to oblige companies to do so, which A large percentage of them responded.”
The industrial initiative and housing loans.
Al-Alaq pointed out that “the industrial initiative has not stopped, but the amounts approved for it have been exhausted, and the volume of the loaned initiatives has reached more than 13 trillion dinars,” indicating that “the Central Bank has raised the interest on the housing initiative to 2 percent, and this is a low price compared to other countries.” Globalism".
He explained that "the stated interest does not include complexes that received previous payments, while it includes new complexes." LINK
