Follow-up cell: The government may resort to borrowing and printing currency to provide salaries

[horsesoldier]

[yota691]

29-03-2020 11:01 PM

Prime Minister's Office: The option to print currency is not on the table

 

 

Baghdad / Al-Akhbariya: The
head of the follow-up cell in the office of Prime Minister Mustafa Sanad confirmed, on Sunday, his lack of permission to reduce employee salaries, indicating that the option to print the currency is not on the table at the moment.
Sanad said in a televised statement, followed by "Al-Akhbaria", that "I have not stated about the inability to pay salaries during the next month, and that some of my statements express my personal views."
He continued, "I do not tend to have the option to print the currency and that the situation in Iraq will improve if Saudi Arabia and Russia agree to reduce production and raise world oil prices."
Sanad added, "The sovereignty of the countries has become in dollars and technology, and the dumping policy does not benefit the oil producing countries at all."

 

 

[yota691]

The Finance Committee: The state will not resort to issuing a new cash

Tuesday, March 31, 2020 122

 

Baghdad / Hoda Al-Azzawi

Experts in the financial and economic field ruled out that the government would resort to printing new currencies outside the balance of the Iraqi Central Bank, noting at the same time that there are alternatives that can contribute to solving the crisis, including the possibility of internal borrowing from banks and banks as well as the private sector, in addition to the surplus of the 2019 budget Political circles circulated recently that there is an intention to issue paper editions to cover operating expenses and bridge the budget deficit due to the low oil prices that accompanied the spread of the Corona virus.

The decision of the Finance Committee in the House of Representatives, Dr. Ahmed Al-Saffar, stated that there is a difference between the printing of the currency and the process of the new monetary issuance, adding in a statement to Al-Sabah that “printing the currency is an ongoing process from the central bank to compensate for the damaged currency. As for the process of creating a new currency, it is The last solution in case the cash issue is depleted, warning that this measure means inflation and a rise in prices in exchange for a decrease in the purchasing power of the currency.

Al-Saffar ruled out the state's resort to such a measure, in light of the existence of alternatives that could contribute to solving the crisis, including the possibility of internal borrowing from banks and banks as well as the private sector, in addition to that there is a financial surplus from the 2019 budget, which can be invested in case of pressure in spending and research in articles Other than oil to enhance the financial balance, enabling the government to secure employee salaries and manage the crisis at this stage.

The decision of the Parliamentary Committee stressed that the current crisis is temporary and is caused by low oil prices, which coincided with an outbreak of the Corona disease, and the failure of OPEC in agreement with exporting countries such as Saudi Arabia and Russia to reduce production and work to stabilize prices, but noted that this decline does not benefit the producers, and who They are likely to return to the negotiating table again to determine the quantities of production and supplies, thus contributing to a return to prices. 

Al-Saffar pointed out that selling a barrel of oil at a price ranging between 30 - 35 dollars, will enable Iraq to cover the salaries of employees and remove the risk of a collapse of its economy.

Al-Saffar indicated that in the event of issuing a new currency, those with limited income and salaries will be the most affected, as a result of the decrease in the value of the dinar.

On the contrary, Al-Saffar says, pumping a new currency will benefit the owners of flexible incomes from owners of companies, merchants and others, warning that this process poses a risk to the economic situation of a country like Iraq.

The central bank had issued an explanation regarding what some officials are deliberating on the possibility of printing an Iraqi currency to avoid economic problems, stating "The printing of Iraqi banknotes is a routine technical procedure practiced by the central bank in accordance with the requirements of cash circulation, and that the printing of banknotes is a completely separate process from the cash issuance process" .

He stressed that "any party cannot withdraw banknotes from the central bank unless there are balances in their accounts that cover the required amount," adding that "the saying of the dinar does not mean any meaning other than strengthening the treasures of the central bank in accordance with the cash management policy, and not for any meaning or purpose else".

The central bank also stressed that "the bank law and monetary policy do not allow the issuance of cash in favor of an account without balance."

Meanwhile, Advisor to the Prime Minister, Dr. Mazhar Muhammad Salih, stated that "relying on the idea of issuing cash as an alternative financing method for real revenues, to cover the government financial deficit requires a serious decision taken by the Council of Ministers and Representatives and convinced the monetary authority."

He added in a statement to "Al-Sabah" that this procedure "also requires amending Article 26 of the Central Bank Law No. 56 of 2004 which explicitly provides for prohibiting government lending, due to the deterioration in the value of the currency, especially when excessive funding of government expenses is done through this method Easy cash, whether in financing the revenue deficit or the government spending deficit. "

Saleh expected the improvement of the economic situation after the end of the Corona crisis, and this may take until the end of this summer, noting that the management of the financial crisis at this stage is not without difficulties, and the government should put this challenge among its priorities by preparing standards for exchange and ensuring reasonable wages.

In turn, Prof. Faleh Al-Zubaidi, a professor of monetary theory at Al-Mustansiriya University, stressed the importance of having in front of the issuance of a currency, a cover in the central bank from hard currencies of the dollar, the euro, or the yen, or the so-called withdrawal of special rights issued by the International Monetary Fund.

He added in a statement to "Al-Sabah" that there is a possibility for the government to resort to borrowing from the central bank with bonds, otherwise it will cause the printing of a new currency to increase the amount of the currency in the market, and thus lead to inflation, and high prices. 

And Al-Zubaidi indicated that the standard of living will decrease in the event of issuing a new currency, and this will directly affect the owners of fixed income as it affects foreign imports and services.

Also, issuing a new currency outside the central bank balance will increase the poverty rate in Iraq, according to the speaker, Dr. Faleh Al-Zubaidi.

The first vice-president of the World Bank, Dr. Mahmoud Mohieldin, had announced, on Sunday, that the world had entered a period of economic stagnation. Mohiuddin, who is the UN special envoy for the 2030 finance agenda, added that the current recession is similar to the global crisis in 2008, and that this crisis may be exacerbated if the world does not take preventive measures, noting that the bet on getting out of the recession is recovering from Corona.

[DWS112]

On 4/1/2020 at 6:19 PM, yota691 said:

having in front of the issuance of a currency, a cover in the central bank from hard currencies of the dollar, the euro, or the yen,

or 👉  the so-called withdrawal of special rights issued by the International Monetary Fund.  👈

Iraq's proven reserves of 150 billion barrels of oil worth trillions of $ can be a cover for the issuance of a currency?

Edited April 7, 2020 by DWS112

[screwball]

10 hours ago, DWS112 said:

Iraq's proven reserves of 150 billion barrels of oil worth trillions of $ can be a cover for the issuance of a currency?

Correct assets in the ground..oil and gold