🇮🇶💵 CAN IRAQ REMOVE THE THREE ZEROS AS A SOLUTION TO ITS ECONOMIC CRISIS?
A familiar debate has resurfaced in Iraq as the country faces ongoing economic challenges: Should Iraq remove the three zeros from its currency?
Whenever financial pressure increases, some politicians and commentators revive the idea of deleting the three zeros from the Iraqi dinar as a quick solution. However, many economists argue that this step alone would not solve Iraq's underlying economic problems.
⚠️ Economic Expert Warns Against Rushing the Process
According to an article titled:
"An Economic Expert Warns via NINA Against Removing the Zeros… Iraq Needs to Eliminate the Causes of Deficit, Waste, and Corruption."
Former Member of Parliament and economic expert Hussein Al-Falluji cautioned against rushing the implementation of the project to remove the three zeros from the Iraqi dinar.
According to Al-Falluji, simply replacing the currency:
❌ Will not increase the real value of the Iraqi dinar.
❌ Will not improve citizens' purchasing power.
❌ Will not solve Iraq's deep structural economic problems.
Instead, he argues that Iraq must first address the root causes of its financial challenges before considering any major currency reform.
💵 Removing the Zeros Is Mostly an Accounting Change
Al-Falluji explained that deleting the three zeros is primarily a redenomination, meaning it changes the face value of the currency without automatically increasing its real purchasing power.
For example:
1,000 old dinars would simply become 1 new dinar.
Prices, salaries, bank deposits, loans, and debts would all be adjusted proportionally.
In other words:
📊 Citizens would not suddenly become wealthier.
📊 Goods would not become cheaper simply because fewer zeros appear on the banknotes.
📊 The country's economic fundamentals would remain unchanged.
🏦 Why Structural Reforms Matter More
According to Al-Falluji, Iraq's real challenge is not the number of zeros printed on its currency.
The larger issues include:
✅ Heavy dependence on oil revenues.
✅ Government budget deficits.
✅ Corruption.
✅ Wasteful public spending.
✅ Weak domestic production.
✅ Limited economic diversification.
Until these structural weaknesses are addressed, many economists believe that removing the zeros alone would have little practical effect.
⚖️ Potential Risks of Removing the Zeros Too Soon
Al-Falluji also warned that introducing a new currency before the economy is ready could create additional problems, including:
⚠️ Market instability.
⚠️ Price manipulation during the currency exchange process.
⚠️ Increased speculation in U.S. dollars and gold.
⚠️ Significant costs associated with:
Printing new banknotes.
Withdrawing old currency.
Updating banking systems.
Upgrading ATMs and accounting software.
These logistical and financial costs could outweigh any short-term administrative benefits if broader reforms are not already in place.
📈 The Broader Context
Many observers note that successful currency reforms are typically supported by broader economic improvements, including stronger institutions, banking modernization, fiscal discipline, and sustainable economic growth.
Over the past several years, Iraq has been pursuing reforms in areas such as:
🏦 Banking modernization.
💳 Digital payment systems.
⚖️ Anti-corruption initiatives.
📊 Financial transparency.
🌍 Greater integration with international financial standards.
Supporters of these reforms argue that strengthening the overall economy is a more important prerequisite than simply changing the appearance of the currency.
📌 Final Takeaway
Hussein Al-Falluji's central message is that removing the three zeros is not, by itself, a solution to Iraq's economic challenges.
According to his assessment, Iraq must first tackle the underlying causes of its economic difficulties—including corruption, budget deficits, waste, and overreliance on oil—before any currency reform can deliver meaningful long-term benefits.
🇮🇶 While discussions about currency reform continue, no official decision has been announced by the Government of Iraq or the Central Bank of Iraq regarding the removal of the three zeros or a revaluation of the Iraqi dinar.
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MNT GOAT
CAN IRAQ REMOVE THE ZEROS AS A SOLUTION TO THE CRISIS?
So, as normal, there’s a knee-jerk reaction just as they always did during a crisis as from past experience they resort to telling the government to remove the zeros as their solution. But will this even work?
This following article tells us why they can’t just remove the zeros to solve this problem. It is titled “AN ECONOMIC EXPERT WARNS VIA NINA AGAINST REMOVING ZEROS… IRAQ NEEDS TO ELIMINATE THE CAUSES OF DEFICIT, WASTE, AND CORRUPTION.”
Former MP and economic expert Hussein al-Falluji warned against rushing the implementation of the project to remove three zeros from the Iraqi dinar and replace the currency. He, stressing that “this measure will not raise the real value of the dinar, increase the purchasing power of citizens, or address the deep imbalances plaguing the Iraqi economy.”
These three reasons by al-Falluji are are exactly related to what I have been telling my readers all along about removing the zeros from the currency. Do you remember what I told you? I said as long as they are still on the sole peg to the dollar the only difference in removing the zeroes is the zeros will be removed. The rate will remain the same. Todays rate of the dinar is .00076 per dollar. Many wished not to believe me. Now al-Falluji reinforces what we were told years ago. For instance, if a 25,000 note is now worth 19 dollars (25,000 x .00076 = 19 USD. Then a 25 note (deleting the zeros) would be worth 25 x .00076 = 2 cents USD. So, there is no change in purchasing power and deleting the zeros only makes the situation worst as they can’t do much with a note worth only 2 cents. By removing the zeros is only an administrative measure unless they are serious about going all the way to FOREX and having a major revaluation. To do the revaluation they would have to address the deep imbalances in the economy such as bring the “local’ dinar at least par with the oil-based petro-dollar. I will get into this a bit more later in my commentary.
In a statement to the National Iraqi News Agency , al-Falluji said , “Removing zeros is merely a nominal and accounting change to the monetary unit, whereby 1,000 dinars become one new dinar, while prices, salaries, deposits, and debts are changed proportionally, without any real increase in wealth or income.“
This is why they can’t remove the zeros unless they are serious about going all the way to FOREX and repegging the dinar. As Dr Shabibi’s plan calls for first removing the zeros without any rate change, then monitoring for inflation. But this monitoring can only last a short time as I showed you who needs a 25 dinar note worth only 2 cents. Yes, they can get by with it for a short time, but they must revalue very shortly afterwards and go to FOREX. Then in my example the 25 dinar becomes worth something.
We can now clearly understand when the economic expert al-Fallujji points out that “replacing the currency under the current circumstances could lead to market instability, exploitation of the currency conversion process to artificially inflate prices, and increased speculation on the dollar and gold, in addition to the significant costs of printing the new currency, withdrawing the old, and upgrading banking and accounting systems and ATMs.”
He explained that “Iraq does not suffer from a crisis regarding the form of the dinar or the number of zeros, but rather from a structural economic and financial crisis, characterized by excessive reliance on oil revenues”. So, here you hear it again…..
Al-Falluji says “Iraq needs to eliminate the causes of deficits, waste, corruption, and weak production before removing zeros from its currency.”
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