Dinar Reporter (IQDUSD)

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Economists see the importance halt conflict between fiscal and monetary policies

BAGHDAD - Iraq votes 16 / 05 / 2008 at 21:02:39


The view of economists that the Iraqi conflict between fiscal and monetary policies constitutes a burden on the Iraqi economy, demanding a need to consolidate track in two parallel lines and be complementary to each other in the absence of the possibility that there will be more than a single policy in a single economy.

Says economic researcher Hossam Commissioner for the Independent News Agency (Voices of Iraq) that "while it sought monetary policy to absorb liquidity encountered financial policy approach completely incompatible when it sought to pump more liquidity." He said that "fiscal policy orientations halted monetary policy."

He added that "this issue is not strange if Maalmna that the conflict which occurred between fiscal and monetary authorities in the afternoon in meetings of committees and forums are not hidden have surfaced and heard concerned the economic aspect, who recommended the need for coordination between policies."

He went on to say that Osama fiscal and monetary policies "that kept opposing what led to the central bank spent hundreds of millions of dollars in its programme to reduce the price of the dollar against the strengthening of the Iraqi dinar exchange," saying that such spending "gold dust scattered in the general economic policy because it was not the coordinator was not Disciplined and united, in addition to the sums spent by the Central Bank itself in the process of increasing interest on deposits in banks night and civil government. "

He said these actions had banks and the civil government to "freeze all its activities and deposit taking deposits and capital to get the benefits to the Central Bank without the banks to strengthen their role in the market movement and the different economic programmes."

The teaching and economic researcher Hilal Ta `that" the reasons for discrepancies between policies stem from the need to fight the massive scale of destruction in the Iraqi economy by fiscal policy, which tended to expand the volume of expenditure. "

He added that "On the other hand, felt the Central Bank to take deflationary monetary policy to curb inflation resulting from the expansion in the volume of spending fiscal policy by raising interest rates in addition to the use of currency auctions."

Experts had called on Iraqi economy, at a symposium organized, last Monday, the Central Bank to abandon its adoption of tight monetary policies, because of their negative impact on the national economy, by changing the value of the real exchange rate of dinar and causing a deficit in the general budget.

The participants in the symposium, stressing the economic importance of the monetary policy "were not neutral if unable to cope with fiscal policy, reduce the gap inconsistencies between them."

Ta `He stressed the" necessity of unifying monetary policy and fiscal policies that must be travelling in two parallel lines that complement any other policy there can be no more than a single policy in the economy single. "

The monetary policy of the Iraqi Central Bank Law No. 56 set in 2004 to put the issue of inflation-targeting and responding to the escalating rates and work to reduce the priority goals to reach the state of lasting stability in the general level of prices, by influencing the levels of liquidity Assembly.

The Central Bank of a series of actions that would lift interest rates. A procedure often resorted to by States to absorb liquidity and create a balance between the monetary supply on one hand and supply of goods and services on the other. I accept the Central Bank to raise interest rates in August 2004 to 6% and 7% in September, so that arrived in December 2007 to 20%.

The economic researcher Abdel Rahman Star Ferry Scene-as called for by a researcher from the Ta `that" it is not possible to unify fiscal and monetary policies "

He justified this by saying, "the difference between the policies is the nature of the time period, where the impact of fiscal policy later can sense only after a year, such as tax rates, grants and subsidies, while the monetary policy such as lifting the selfish interest rates or reduced, making the economic impact would appear and quickly, possibly within a week ... That can unify policies. "

He continued by saying scene told (Voices of Iraq) that "unification policies were in a time where the former regime was responsible for the central bank monetary policy of fiscal policy could have the same policies, but now Unification can be between policies only if the political decision-Tawhid"
He concluded by saying that "therefore remain contradictory effects during this period and the period ahead," pointing to "the importance of the" general lines of policy believer. "

It was teaching at Mustansiriyah University Sattar Jabbar with the scenery in different time periods between policies, adding that "despite the claim of Central Bank of advisers that there is full coordination between them, however, reflects the fact that there is any kind of coordination between policies."

Jabbar, asks, "When we talk about inconsistencies between the two, on what point we will build our economic ballots for the growth of the Iraqi economy."

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