Plans for the Iraqi dinar reorganization

The Iraqi dinar strengthened after the improvement of the oil field, becoming one of the most viable currencies in the Middle East.

The Iraqi Central Bank detains foreign currency reserves such as dollars, pounds and Japanese yen also gold reserve; thus, the value of the dinar is covered regardless of market fluctuations.

The dinar exchange rate was equivalent with more than three dollars during the eighties, but the economic declension caused by decades of wars and the increase of inflation led to the dinar depreciation.

Since 2010, the Central Bank established several procedures to increase the currency power and protect the Iraqi economy from the consumer’s chaos.

The CBI adviser, Mohammed Saleh said that the deletion of zeros from the currency was part of the reforming project, which aimed the national currency management and the economic improvement. He refused to disclose the date when CBI would launch the new dinar citing the complex procedure that the process involves. He only revealed that the Central Bank would transmit its plan to the Cabinet within a month.

An expert of the Ministry of Finance, Miller, affirmed that the deletion process would reduce the high rate of inflation giving as example countries such as Turkey or Brazil.

Miller pointed out that the replacement process would be gradually, the new currency circulating alongside with the old dinars. Therefore, the withdrawal of the old currency will not affect the daily exchanges. Although, the economic analyst, Basil Jamal Antoine stated that the restructuring would cause confusion among citizens. Therefore, it should implement a campaign to prepare citizens and financial institutions.

Furthermore, economists criticized the Iraqi banking sector which was not able to deal with investors expectations. They added that the private sector worked after the Central Bank rules and laws leading to the limitation of their services.

The Director of Waka Bank, Samarrai stressed that the Iraqi banking sector could not compete with international banks due to the lack of human and material resources. These gaps prevent the opening of branches of foreign banks in the country. The opening of these branches could influence the economy and the Iraqi dinar revaluation.

Iraq recorded lately substantial improvement, especially in the oil sector, and would use these benefits to cover the Iraqi dinar value. The dinar has already become one of the most powerful currencies in the Middle East. Nevertheless, there are still problems between Iraq and Kuwait concerning the common border and the establishment of the Mobarak port. Franco Frattini, the Italian Foreign Minister also expressed his desire to resolve differences between these two countries establishing the balance in the region.

According to the Kuwaiti Qabas newspaper, Kuwait announced its decision to stop building 60 piers in the Port of Mobarak. This decision will calm Iraqi authorities, especially as the marine life will not suffer any changes. Therefore, the goods exchange including the inflation will not be negatively affected by the failure of the fourth stage of the port establishment.

Furthermore, Iraq denied the establishment of a nuclear station on the border with Kuwait. The Undersecretary of the Minister of Foreign Affairs of Iraq, Alabawi stated for the Kurdish news agency that there were only rumors and the two countries did not formally reveal the decision of creating a nuclear power station. He stressed that this action would damage the Iraqi environment.

Following these events, the Committee announced that the Council of Ministers prepared a draft law of oil and gas field instead of establishing a law targeting the dinar revalue.

The head of the Energy Committee, the Deputy Prime Minister, Hussein al-Shahristani stated that they completed the draft law and would send it to the Prime Minister to make the last adjustments.

Iraq represents one of the most vital countries in the gas and oil-production, including the soil and subsoil resources. Therefore, it needs a law to protect the oil and gas processing also its transport and distribution. The oil sector brings many benefits to the country representing the most important support in the Iraqi economy and the increase of the dinar value.

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