Head of the IMF mission's (term) interest peg to the dollar rather than a large reduction of the Iraqi economy

04/11/2017 (00:01 pm)

Baghdad / Zahraa Al-Jassem

Being talked at length between the economic circles, whether legislative or specialized for what the International Monetary Fund for Iraq loans and its usefulness out of the current financial crisis in the aftermath of the decline in global oil prices, Sometimes some people talk about being open field ahead of us to get the facilities and loans and support for international financial organizations and countries major, in accordance with the international financial umbrella obtained by Iraq , up nearly 20 billion dollars, with what he sees others that borrow from the fund is very important for Iraq but also strengthens its position externally in terms of financial transactions, and sometimes others were skeptical of this argument, pointing out that, loans would not But the burden of borrowed state financial obligations and Tkplha debts for many years, with the facts that can not be overlooked after the repercussions of the occupation of Daesh for a number of Iraqi cities , and his successor from the huge numbers of displaced people and the destruction of the infrastructure of those areas, requiring reconstruction after liberation, not to mention the costs of these the war that no one can yet appreciated.

Meetings and dialogues in- depth continued over the past two years and the current, to complete Iraq for the IMF loan of $ 5.3 billion, an annual interest rate low of one and a half percent, accompanied by requests, policies and procedures recommended by the Fund, concerning its credit readiness with Iraq, including additional cuts expenditures and the fight against corruption, and activating the economic sectors and financial reform, which according to officials, in the interests of the Iraqi economy, to remain the most important opinion of the international Monetary Fund in this regard, as head of the IMF mission in Iraq , Christian coconut answer, some questions x The interview (range), via e - mail.


* What is the future readiness credit program with the International Monetary Fund, if exposed oil prices to a significant improvement eliminates the deficit?

- Under the current outlook for oil prices, we believe that it should follow the approach of the financial correction that combines ambition and viability, in order to bridge the gap with the end of this decade (2020). If oil prices rose largely no longer with the need for international financial support from the IMF and other donors fund, leaving the decision of the Iraqi government regarding the continued implementation of the standby credit agreement with the Fund.


* Do you put the fund into account, in his program how Iraq will be able to pay its debts accumulated and borrowing for reconstruction if oil prices continue at current rates?

- Yes, if the Iraqi government implemented a fiscal adjustment program provided for by the standby credit agreement, it would be able to repay its debts.


* What are the means available to Iraq to establish an economic partnership with the world to run the economy and raise growth and development in which rates and reduce the actual levels of unemployment to decimal one not 40% instead of 24%?

- The Iraqi government should implement the following growth strategy: first, to maintain macroeconomic stability by freezing public spending in nominal terms for a period of two years, plugged up the fiscal deficit gradually and maintain the linking of the Iraqi dinar in US dollars. Second, create fiscal space by increasing non - oil revenues and the reduction of current expenditures, that this space is used to promote human capital and re - physical capital in Iraq. Third, improve the business climate, which leads, while reducing the role of the state in the economy in the context of the current fiscal adjustment, to increase incentives for private sector development, especially with the start of reconstruction work. Finally, reform and restructuring in the financial sector will, to strengthen its capacity to support the private sector in the medium term during the reconstruction.

* Everyone thinks that the economy is in a contraction or a severe recession and the price of nominal dinar exchange rate is not realistic and exceeds the value, compared to the current account deficit of the balance of payments., But it is time to reduce the value of the dinar and the exchange rate against the dollar and bear little thing of inflation in order to rationalize the overall total spending of the state ? What is your guidance in this regard?

- The central bank still maintains a comfortable level of foreign exchange reserves, we believe that it is appropriate to maintain the linking of the Iraqi dinar in US dollars. It will not achieve the devaluation of great benefit to the economy and would cause a sharp increase in inflation.


* Iraq 's recent decline in cash reserves at the Central Bank to the extent of 49 billion, how do you view this decline, do you have any recommendations to the Iraqi side about it?

- The central bank still retains a comfortable level of total foreign exchange reserves. As is the case in all oil - exporting countries, can not avoid the decline in these reserves when oil prices fall. We recommend the implementation of the agreed financial control under the standby credit agreement to keep this fall within the limits compatible with the linking of the Iraqi dinar in US dollars.


* What is your guidance for Iraq on reconstruction in the liberated areas of the process, and what is your opinion by asking US President Donald Trump, contributing to the reconstruction of those areas in exchange for Iraqi oil?

- We recommend first, to assess reconstruction needs with the help of the World Bank and then raise the necessary resources to implement them, including Iraq 's oil resources and international financial support. Iraq can assume its debts to conduct the agreed fiscal adjustment


* All afraid in Iraq , the size of the indebtedness of the Iraqi government , both internal and external, how do you view this issue, and what are your recommendations?

- it can carry Iraq 's debts if the authorities carried out the agreed financial correction with the IMF under the standby credit agreement.

The International Monetary Fund, a specialized agency of the Bretton Woods system of the United Nations, was established by an international treaty in 1945 to work on strengthening the integrity of the global economy, and is based in Washington DC, and run by its members who include all countries of the world about their number of 188 countries.

The International Monetary Fund, the central institution of the international monetary system, any system of international payments and currency exchange rates which allows commercial transactions between different countries, and aims to prevent crises in the international system by encouraging different countries to adopt sound economic policies, as members can make use of its resources, to address what they are exposed to balance of payments problems, including the legal objectives of the Fund to facilitate the expansion and balanced growth of international trade, and to stabilize exchange rates and avoid competitive devaluation of currency values, and a correction regulator Achtla S balance of payments experienced by different countries.