IMF: CBI should relax foreign exchange system regulations at earliest opportunity; CBI in strong position to support IQD

Posted: July 27, 2013 in Iraqi Dinar/Politics
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CBI in a strong position and can maintain the value of the dinar

07/27/2013 12:00 AM

Head of Mission of the International Monetary Fund stressed the IMF on the need to adopt the process of economic reform and broad, as Usher strengths and imbalances in the joints Economic came in a report the Fund’s Article IV of 2013 on Iraq which is the assessment annual appreciation on the part of the International Monetary Fund (IMF) to the economies of the Member States in the Fund, and issue a report accompanied by my assessment of the latest economic developments in those countries, and the expectations of experts Fund for growth in the overall economy as a whole three to five years following the date of issuance of the report.

The section on Iraq, the report is based on the consultative meetings held with the Iraqi side, and the Iraqi private sector and members of the Iraqi civil society, in March of 2013.

economic reform, structural and widespread
Head of the IMF mission to Iraq Carlo Sdrallweg in an interview ( morning): Iraq needs to formulate structural economic reform agenda and widespread, and even more importantly, it needs to follow up the implementation of that agenda with all its contents.

There is still a lot of work to be done in the area of public finance, not only in improving the management of the budget, but more important than that to be in the area of improving growth and poverty reduction as well, and pointed to the importance of raising the quality of spending, and this can be achieved, In the first place, by eliminating waste, and direct expenses to the poor even more. Indicating the need for Iraq to focus on increasing the level of provision of electric power, and the restructuring of state-owned companies owned by the state, and streamline regulations to help ensure its focus on helping the private sector rather than the imposition of restrictions upon, and pointed out that Iraq needs as well as to revive agriculture, including reform of the system PDS has contributed to the decline in domestic agricultural production through large food imports. We recognize and are aware that all these measures are difficult to perform, and will require time. Therefore, the need for requiring the adoption of a realistic approach and settled to achieve all that.

in question (morning) on exposure of the private banking sector in recent times to attack by the pretext of money laundering and illegal transfer of funds. Do you see that building?

said in answering We are not aware of any specific cases of money laundering particular, but we recommend that the Central Bank of Iraq to redouble its efforts in promoting a stable financial sector and safe. In this regard, the commitment of the Iraqi Central Bank Governor on behalf of, and to strengthen the work of the Banking Control encourages us to push for the implementation of this recommendation.

In our view, a lot of work still to be done to improve control over the banks, and examples, supplying banking supervision cadres better, and training courses better, and outsourcing joint (with other government agencies) “co-sourcing” of the functions of the Department of Control banks to the Central Bank of Iraq, to improve the framework for the addition to expand the reach of the regulatory business to include government-owned banks to the state.

Moreover, the improvement of the framework for combating money laundering and the financing of terrorism, in line with the recommendations of the Financial Action Task Force for the Middle East and North Africa (MENA FATF), along with the continuous efforts in strengthening errands control carried out by the Central Bank of Iraq on combating money laundering and the financing of terrorism, it would be that would help in addressing the concerns of money laundering and financing of terrorism and processed. It must also develop financial infrastructure, such as reporting on the historical background of credits and recordings collateral (assets guarantor), and ways of banking technology, in order to support the performance of the banking sector.

and the Iraqi dinar exchange rate and on the role of the Iraqi Central Bank in the currency auctions. In your opinion, what should the CBI do about it?

Sdrallweg clarified the matter, saying that we need to believe that the Central Bank releases foreign exchange system at the earliest opportunity where this editorial is possible technically.

We expect that the relaxation of regulations of foreign exchange would provide the funds needed by the Iraqi citizens in U.S. dollars, and to help the Iraqi economy, and reduces the difference in question, which fell fell sharply in fact, after the measures newly taken by the Central Bank of Iraq, which simplified market transactions, and opened it in front of customers.

This means, the minimum, the opportunity to get any Iraqi citizen on foreign exchange, if it wishes to make any transaction ongoing international legitimate, for example, for the purposes of importing goods, as well as for interest payments, or transfers for expenses family.

The power bank Central
and he said we understand there همين Co يبعثان the concern on the liberalization of the foreign exchange system.

First, some have argued saying that the opening of the auction probably works on the Iraqi depletion of reserves of foreign exchange to levels dangerously low, thereby undermining the value of the Iraqi dinar. It also does not believe that this decline in the value of the dinar will happen on the ground because the Central Bank of Iraq in a strong position with him can maintain the value of the dinar, and because foreign exchange inflows from oil revenues are too high.

The CBI has the amount and plenty of reserves amounting to the level of more than 70 billion U.S. dollars, a large sum to a degree sufficient to cover more than the value of nine months of imports, or to cover more than 104 percent of the money before the broad sense; sense that it is equal to all of Iraqi dinars in circulation in addition to deposits.

misuse of foreign exchange
and The second Alhmin is the ability of the central bank to prevent the misuse of foreign exchange in illegal activities. We do not believe that the currency auctions are the right tool to prevent misuse mentioned. As is the case at the level of international best practices, the IMF recommends that address the concerns of money laundering through the due diligence (or conduct of the study precluding doubt) to customers, and transaction reporting doubtful the Investigation Unit (intelligence) financial, rather than restrict free access to the auction. Accordingly, the liberalization of auction foreign exchange needs, in parallel with the editing, to be accompanied by a strengthening of errands regulatory carried out by the CBI and other government agencies on combating money
laundering and terrorist financing.

Asked about the possibility of moving to a free economy in line with the Constitution Iraq?

drew Sdrallweg that Iraq did not adopt clear economic policy (economic model and clear) and live in a state troubled between a planned economy to him (router) and the free market economy. and pointed out that the model of the current economic growth, which play a government the dominant role in the Iraqi economy, taking a its limits.

In order for any free economy to develop on a sustainable basis, the government needs to implement a combination of macroeconomic policies, good governance, and to enhance the delivery of services, and the rebuilding of infrastructure, particularly in the electric power sector, in addition to strengthening the business environment, these measures will support the growth of the private sector, but last but not least, it is imperative for the government to know the limits of the maximum capacity, in order to leave space for the private sector to flourish.

Asked about his vision for an increase in oil production and exports? Do you agree with the official forecast for this increase?

said, assuming that the investment plans ambitious for the Iraqi government will be realized on the ground, we expect to increase oil production gradually, about 400 – 500 thousand barrels per day in each year, to 5.7 million barrels per day by the year 2018 . However, this outlook depends on the smooth implementation of plans to develop oil fields, and the existence of a relatively stable security situation. Any delay in the development of oil fields, or in the expansion of energy infrastructure, export, or worsening of the security situation worse, will lead to the growth rate of the lowest in the oil sector.

increased to have to say that our expectations lower to a large extent the expectations of the government, which believes that the production of oil will rise to 9 million barrels per day by the year 2018. We tend to be more conservative; because we are less optimistic about the pace of expansion in the infrastructure necessary for export – which may be a drawback most important in the face of export, as we are more for the sake of cautious about progress on the project water injection, and increase the number of buoys “SPMs” In addition to the high level of domestic consumption.

additional investments
he stressed mentioned in our three key areas of reform in the energy sector. First Iraq, could benefit from the oil and gas law, which shows on a permanent basis, the roles of government, the private sector and the provinces and territories in the oil sector. But we know that the draft law of oil and gas was still under consideration since a long time, which deals with a lot of sensitive policy issues; therefore compatibility between all parties involved in the negotiations on the draft law in question is important to reach a lasting good. Secondly, the situation requires additional investments in electric power production, and the restructuring of electric power producers, and the imposition of tariffs electric enough. These measures are required in the energy sector to provide a reliable source in the supply of electric power to homes, businesses and industries. All of these efforts combined will help in the development of non-oil sector, and ultimately lead to more jobs.

electric energy subsidies
The third axis is the necessity of removing the distorting fuel subsidies provided to producers. In 2011 alone, we estimate the total volume of fuel subsidies of $ (9.8) billion U.S. dollars, or the equivalent of 5.4 percent of GDP. This is a very heavy cost for a country like Iraq has big needs at the social level and the level of infrastructure. The electrical energy subsidies create distortions detrimental to the economy, the wheel could discourage investment in the energy sector and in industries that require more intensive workforce, as well as those subsidies create incentives for waste and smuggling. Therefore, it has encouraged us in our report mentioned the Iraqi authorities to reduce those subsidies, and use part of the savings to increase targeted assistance to those who most need it.

and low income of most Iraqi families, what and mechanisms of action needed to develop household economy?
Allweg he dominated both production oil and the public sector on the economy of Iraq. The government is directing the path of the income generated from oil exports to hire / Run Iraqis in the public sector, and to provide government subsidies. In our view, the model of economic growth this take has its limits. The oil sector and the government can not create enough employment opportunities for Iraqi citizens who accelerating population growth. In addition, it has resulted in decades of sanctions and conflict for a loss in human capital and the destruction of infrastructure, which prevents the government from providing basic services to citizens, including social safety nets that work. reduce widespread poverty and unemployment increased, saying, We believe that the authorities Iraq should focus on the creation of an enabling environment for private sector development. We’ve talked a lot about sound economic policies in the areas of public finance and monetary areas.

In order to develop growth, and reduce poverty and unemployment, it is incumbent on the Iraqi economy to be strong structurally. This reality not the case in Iraq at the present time. There is a lot of things that still need to work on it, and we Anttriq in our report only to the key priorities for structural reform, including. credits granted and between in the forefront can say that the existence of financial sector efficient and large to a sufficient degree acquires paramount importance for economic growth, and, according to what experience shows in many countries over a long period of time. In Iraq, the financial sector is still weak, to a large extent but just to give an idea of this weakness, the percentage of “Total credit / loans to the economy,” amounting to about 29 percent of GDP, compared with 55 percent in the countries of the region. However, this figure also includes a number great deal of credit granted by the state-owned banks State-owned government companies owned by the state, so if we look at the total credit granted to the private sector, they represent only 15 percent of GDP, and this percentage is very low.

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