They need to start reforming the financial sector
said a number of economists that the state of confusion experienced by the Iraqi economy for several decades because of the policies that were followed and that begins with the reform of the financial sector, which requires the adoption of policies Court for the entry into force of the state of deterioration, which affected all sectors and stressed the need to achieve economic stability, which leads to the promotion of investment.
In this regard, sees Riyad Obeid It should be noted as to the structure of the Iraqi economy was hit in the period after 2003 much of the deformation result of exposure to many aspects of sabotage material in which he was Iraq in general. In addition to poor economic policies of the incubator for this structure, which seeks to promote the strengths of the Iraqi economy and address the weaknesses arising as a result subjective conditions surrounding the side.
He pointed to the monetary and fiscal policy, which are preparing the most important economic policies that play a greater role in influencing the financial sector, and reliable make a development niche in the performance of this sector because the procedures in direct contact with the real performance of financial institutions.
with Dr Ahmed Abreha: No central bank can control basically cash that he not be able to avoid the accumulation of foreign assets has, and the last controlled oil resources and the disposal of the Government. But nevertheless had a way of borrowing from banks or absorb more liquidity put Hawwalath at high interest rates and this will decrease the net benefit in the balance sheet over time with continued interest payments, and if abandoned banks from lending to the Central Bank of the result of net inflationary purely, and I have become clear, “he There is no difference between requiring the government to hand over all resources exports immediately, “to the Central Bank or sell foreign currency as much as they need, because the Cash Basis is influenced government spending is nothing but.
He can say that the impact of government spending on monetary variables is reflected in the increased release cash, and that the data Release of cash in Iraq reflects the outcome of the impact of government sales of foreign currency to the Central Bank and sales of the latter to the private sector together, no way to measure the impact of government on the monetary variables in isolation from the central bank sales of foreign currency. The impact of government spending itself on the general level of prices is another search. He pointed out that Abreha countries with high oil hegemony adopted a cash rate of exchange is installed, and other countries adopted the strategy of inflation targeting, such as Norway, Colombia, Mexico, Iraq used both the two policies. Indicating that inflation is always and everywhere a monetary phenomenon from the perspective of monetarist and cause the budget deficit to inflation, in their opinion because the government will tend over time to create money to finance the deficit, ie, by continuing to increase the stock of government debt in the budget of the central bank through the discount Treasury and accumulate money orders, or even outright purchase of Asdarriet. Have evolved in the nineties financial theory of the general level of prices.
based on this theory to redefine the domination of Finance that it is not just a deficit budget, which funded the creation of cash but on other grounds, such as government bonds and as wealth net, and in such a system depends sustainability of public finances to reduce the value of the debt, leading to increase prices to erode the real value of wealth of Finance until reaching a new equilibrium, this context was Mthakqa “in Iraq during the time of the siege, which is the reality of many countries that have suffered from runaway inflation. and thus can be said that financial theory does not discover the mechanisms deep was unconscious, but dealt with the realities of atypical wanted modeling language theory.
He has shown recent studies of a relationship between the fiscal balance of government ie the proportion of the surplus (deficit) to GDP and inflation, although the relationship is credible in the economy of a regular fund the government spending of taxes and revenues similar, in relation to gross domestic product and household income, not the oil economy, financed government spending procedure in which the creation of cash, as it turns out, with the ability to finance the import demand offer is limited, in practice, “foreign currency steady exchange rate.
in indication of For her part, d. Soraya Khazraji that the concept of monetary policy is the intervention of monetary authorities for the purpose of influencing the money supply and direct credit using the means of certain monetary and purpose of access to the application of certain economic goals, mainly the stability of the price level where the associated level of stability in prices stable general economic and stability in the money supply, in addition to the stability in prices stimulates domestic and foreign investment alike. As well as achieving the level of use is high and operation of the hands is one of the important objectives, which contribute to the employment of human and natural resources, in addition to the reduction of unemployment, in addition to increasing economic growth to the year sought by everyone by increasing the volume of output (GDP) and increase the income of individuals and raise living standards and increase investment, In addition to the creation of resources in the foreign exchange and local levels to help increase growth rates and contribute to economic development to be achieved. As well as for maintaining the balance of payments as the balance of payments is a mirror shows the income and expenditure of State relating to transactions between the state and the outside world that appears through the expense of the creditor and the debtor is the paragraphs of balance and shows of force in case of a surplus, and weakness in the case of a deficit, therefore, seeks to permanently monetary policy to maintain the balance of the balance of payments and in order to obtain the maximum amount of foreign exchange reserves because of its effects on the internal and external conditions of the country.
She noted that the exchange rate stability goal of an interconnected with other goals indirectly, such as the stability of prices of goods and services, production and investment, especially given that some countries with weak local currency and are declining towards the dollar, foreign currency, which directly affects the prices of imported goods is reflected in the instability of the general price level on an ongoing basis as it relates to foreign exchange rate.