ERBIL, Kurdistan Region - The International Monetary Fund (IMF) and the World Bank agreed to provide “technical and advisory” support to the Iraqi government in enacting reforms and stabilizing the currency, a statement by Iraq’s Central Bank said on Wednesday.
Headed by the governor of the Central Bank, Ali Mohsen al-Alaq and deputy finance Minister Taif Sami, the Iraqi delegation discussed Iraq's move towards holding a "non-financing" program that includes the IMF’s provision of technical and advisory support for the economic reform adopted by the Iraqi government in achieving financial and monetary stability.
“It was agreed to prepare a draft agreement on the program and to start implementing it in the coming days,” the statement read.
“The central bank also called on the IMF to provide support for the central bank to achieve exchange rate stability,” said the statement highlighting that the agreement will be in accordance with international practices and Iraq’s agreement with IMF in 2008, which was ratified in parliament.
Alaq also met with Brian Nelson, the US Department of the Treasury's Under Secretary for Terrorism and Financial Intelligence, to discuss facilitating the procedures of the central bank in the process of financial transfers.
The stability of the exchange rate is an issue that faced the Iraqi government at the start of the year, as the value of the Iraqi Dinar started depreciating in the Iraqi markets against the US dollar.
In January, the value of a US dollar was placed at 1,750 IQD - the highest since the issuing of new banknotes in 2003.
The drop in the Iraqi dinar value was attributed to corruption, smuggling dollars out of Iraq, and pressure from the United States.
The Iraqi public servants are the most affected by the instability of the exchange rate, as their salaries suffered from the drop in the currency value.
Iraqi Prime Minister Mohammed Shia’ al-Sudani - who has vowed to control the unstable exchange rate - sacked the governor of the country’s Central Bank head in late January, replacing Mustafa Ghalib Makhif with Alaq as protests in Baghdad ensued after prices of goods surged.
Iraq earlier in February restored the exchange rate of the IQD-USD to 1,300 per dollar, the highest value of the dinar since 2020, amid a depreciation of the dinar leading to a surge in prices of basic goods and protests by Iraqi citizens.
The Iraqi Central Bank in late 2020 devalued the dinar against the US dollar by 22 per cent, dropping it from 1,182 IQD to 1,450 IQD and sparking public outrage. The devaluation came in an effort to combat a national liquidity crisis and bring in much-needed cash to the government’s coffers.
