The region’s finances: Baghdad did not abide by the agreement to implement the budget
Statement from the Ministry of Finance and Economy
The Central Bank of Iraq has transferred 598 billion dinars to the Ministry of Finance in the Kurdistan region for the distribution of salaries (the sixth month), and the schedule of all ministries will be announced and to fill the deficit from local revenues.
It is worth noting that the Kurdistan Region needs more than 940 billion dinars per month for salaries alone, in addition to consumption expenditures, institutions, the investment budget, and electricity generation costs.
We would like to make it clear to everyone that the Iraqi federal government and the Iraqi Ministry of Finance did not abide by the agreement concluded between the Kurdistan Region and Baghdad and the implementation of the Iraqi budget law.
And according to the budget law, it reports
The monthly dues of the Kurdistan region are more than one trillion and 384 billion dinars.
According to the actual spending, which currently depends on the average monthly expenditure of the Iraqi Ministry of Finance, one trillion and 174 billion dinars should have been sent to the Kurdistan Region, as the amount sent is contrary to the budget law and all agreements concluded between the two sides. link
Exchange offices in Baghdad are closed for fear of arrest
The owners of exchange offices in the capital, Baghdad, reported, on Thursday, that they closed the doors of their offices for fear of the arrest campaigns carried out by the competent authorities.
Waad Al-Dulaimi, one of the owners of these offices, told Shafaq News agency, “We had to close the office for fear of arrests and confiscation of money by selling above the official price, with charges of illegal trade being charged.”
He added, “The price of the dollar has become unknown in the markets because there is no parallel market, as it is prohibited to trade it in exchange offices except at the official rate,” noting that “the exchange shops that opened their doors do not sell or buy dollars for fear of arrest.”
Al-Dulaimi believes that “the way the government deals with the dollar problem is wrong, as it confused the markets and disrupted their work,” warning that the government’s way of dealing with the problem “will increase the price of the dollar instead of decreasing it.”
It is noteworthy that the exchange rate of the dollar rose to more than 156,000 thousand dinars, after US sanctions impounded 14 Iraqi banks on charges of smuggling the dollar abroad, before it decreased slightly to 151,000 dinars.
The bank is seeking to increase its sale of dollars to meet the local demand for it in the parallel market by introducing banking companies that were deprived of the currency sale window, and to increase the traveler’s share of the dollar to 3000 dollars instead of 2000. link
A new statement of the Central Bank regarding dealing in dollars and the exchange rate
Stop the platforms that advertise the exchange
On Thursday, the Central Bank issued a new statement regarding dealing in dollars and the exchange rate, while calling on the relevant authorities to stop platforms and websites that announce currency exchange rates.
A statement issued by the Central Bank of Iraq regarding dealing in dollars and the exchange rate
Following up on the recent developments in the local markets, especially with regard to trading an unofficial exchange rate in the platforms and daily transactions and its unreal and artificial fluctuations, requires us to clarify the basic facts related to the trading of foreign currency (the US dollar) in the local markets, and the role of the Central Bank of Iraq in providing the currency foreign affairs through its official sources, which included all legally permitted transactions, and prevented other illegal transactions. And the need for all relevant parties to unite and cooperate in order to achieve the main general goals, including the stability of the exchange rate in light of the presence of sufficient foreign reserves to meet the legitimate needs of citizens, merchants and investors in foreign currency.
Hence, we would like to state the following:
The source of the US dollar circulating in the local markets is the Central Bank of Iraq, which offers it through banks, exchange and mediation companies, at the official rate (1320) dinars per dollar. Accordingly, what is called the “parallel market” has no reality, as this description is given when the market has its own sources of foreign currency, through private sector exports, local tourism, remittances from residents abroad, and others.
In order to achieve the goal of controlling the movement of funds and foreign trade, and in implementation of the Anti-Money Laundering and Terrorist Financing Law, and in order to enhance the application of international standards, the new system is based on:
The implementation of all foreign transfers and documentary credits through the electronic platform, in which all operations are pre-checked in all respects, and the final beneficiary is verified, which protects the banking sector, non-bank financial institutions and all parties to those operations from the risks they face locally and internationally. Legitimate transfers without limits or restrictions, and the Central Bank does not set ceilings for banks authorized to conduct the transfer. Rather, this depends on the bank’s ability to attract customers, the validity and accuracy of operations, and the number of its accredited correspondents abroad.
Carrying out personal transfers abroad, such as wages for studies, treatment, purchasing personal needs, residents’ transfers, pensions for residents abroad, and others, through international money transfer companies, such as “Western Union and Money Gram.” Citizens are also allowed to use electronic payment cards to be used to purchase goods and services abroad. All these operations and others are covered by the Central Bank at the official established exchange rate.
Providing cash dollars to travelers at the official rate set, through banks and exchange and mediation companies, and these operations are carried out through an electronic platform to verify the safety of operations, and the correct use of those amounts for traveling citizens. This platform is currently being developed with strict verification procedures and limiting its use to the specified purpose and at the prescribed price.
The aforementioned system, with its three dimensions, limits any practices that would expose Iraq and its banking sector and financial institutions to risks, and by providing these channels and opening them for legitimate purposes, it makes dealing in dollars outside it an illegal practice subject to legal accountability towards the parties involved in its practice, as no party has the right Or a person trading in dollars issued by the Central Bank, which determines a price, channels, limits, and purposes for its use, and its circulation and trading in it outside the licensed authorities is considered a prohibited activity according to the law, as the Banking Law No. (94) of 2004 stipulates in Article (3) that no one has the right To engage in the business of receiving deposits, or other funds payable by the public, without obtaining a license or permit issued by the Central Bank of Iraq.
The application of the system of foreign transfers, documentary credits and cash sale of foreign currency involves achieving economic, regulatory and legal objectives, including the following:
Enhancing anti-money laundering and terrorist financing measures, and preventing the risks of local and international sanctions from all relevant parties.
Bringing Iraq’s imports into channels that ensure the safety and transparency of operations, and providing important databases and information for planning, organizing and control purposes.
Achieving additional revenues for the state by subjecting all imports to procedures for comprehensive registration of their details and the resulting fees.
Gaining the trust of accredited international banks, which expands the network of relations between the local and foreign banking sector, and increases the number of Iraqi bank correspondents.
Closing the outlets for illegal foreign transfers, besieging the proceeds of crime and corruption, and preventing them from finding a way to escape abroad.
Not charging imported goods with the exchange rate difference resulting from paying a higher price when buying them at the unofficial rate on the black market, which leads to higher prices and a negative impact on the purchasing power of citizens.
The groups that buy the dollar from the market and create an opportunity for speculators and beneficiaries to trade an unofficial exchange rate are:
Importers of merchants who do not follow the fundamental methods of external transfers (remittances and documentary credits) via the electronic platform, which is available to them at the official price, through attempts to collect cash dollars that are exclusively for citizens’ travel from the market, or by using electronic payment cards designated to pay citizens’ purchases and expenses abroad. , or for personal transfers for legitimate purposes.
Importers of prohibited or narcotic substances such as drug dealers and others, or of materials that do not pass through the official border crossings, to escape the requirements of the law or customs, such as importers of cigarettes and some importers of precision instruments, so they go to the market to buy dollars that are not allocated to them to pay their bills.
The category that generates revenues from the proceeds of crimes, such as bribes, thefts, kidnapping, extortion, selling contraband, etc., and they transfer them abroad to hide them.
Citizens who pay for their purchases of goods and services inside Iraq in dollars, which prompts them to buy dollars from the market, and since there is no allocation from the central bank’s sales of dollars for this purpose, their purchase is from a share allocated for other purposes, especially travel.
In order to address the aforementioned phenomena, and reduce the phenomenon of the illegal market, and an exchange rate higher than the prescribed one, work is being done with the government and the relevant authorities to take the following measures:
Merchants and importers use the prescribed channel for that, via the electronic platform, to achieve the objectives of this system and prevent the use of cash dollars in the market for other than its purposes, and this requires obligating this category to provide evidence that the amount of their imports has been duly transferred when their goods enter Iraq at the official border crossings.
Stimulating and supporting categories of merchants to enter the electronic platform by simplifying procedures, especially tax ones, defining their ceilings in advance according to categories, and depositing them in the account of the General Tax Authority through its bank accounts.
Tightening control over the official border crossings and closing unofficial ones, coordinating between the federal government and the regional government regarding the organization and unification of entry procedures for goods and the fees imposed on them, and preventing the entry of prohibited and legally prohibited materials.
The competent authorities undertake the strict application of Cabinet Resolution No. (23026) for the year 2023, which includes limiting the sale and purchase of goods and services in Iraqi dinars inside Iraq.
We call for the provision of official, popular, and media national support in implementing the aforementioned, to achieve the aforementioned goals, in a way that preserves the safety and soundness of the movement of money and foreign trade, and staves off risks for the country, its banking sector, and its financial institutions, by adhering to the rules of the Anti-Money Laundering and Terrorist Financing Law, and international standards and practices. related to. ink
Source: Dinar Recaps
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