The Central Bank is planning to reduce inflation
Iraqi Central Bank is planning to reduce inflation
Translated by IRAQdirectory.com - [13/02/2007]
A source at the Iraqi Central Bank said that the bank is preparing plans to reduce the rates of inflation which amounted to about 70% last year because of the oil derivatives prices which rose ten times.
Within last year's budget, the government anticipated the inflation would not exceed 20-25%; however, the consumer price index rose to 70% due to the rise in the prices of oil products and electricity rose it to 80%. If energy is excluded, the index would range between 30 and 35% only.
The fuel price, for example, increased from 50 dinars to 400 dinars after the removal of government subsidy on fuel gradually; most of the main petroleum products were subsidized by the government since the former regime.
Stopping the government subsidy was one of the recommendations of the IMF which requests the application of an economic reforms program by 2008 before approving to write off 80% of Iraq's debt to the creditor nations that are not members of the Paris Club.
Due to this escalation in prices, the Central Bank was compelled to increase the interest rate to 20 % after being 8% at the beginning of 2006, and the last intervention by the Central Bank was recorded in December of that year.
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