SULAIMANI (ESTA) — Iraqi Central Bank will settle the exchange rate of Iraqi dinar at 1,450 per U.S. dollar from Sunday, a member of Iraqi parliament’s financial committee said.
Abdulhadi Saadawi said on Friday that the Central Bank of Iraq would set the value of 100 dollars at 145,000 dinars from Sunday.
“The financial committee has protested the decision because it would leave a bad impact on people, but the government of the central bank said the aim of the decision was to secure more money to provide employees’ salaries,” he added.
Already, the value of the dinar is falling on the street, with exchange houses in Sulaimani selling the dollar for 1,380 Iraqi dinars.
Discussions about devaluating the Iraqi dinar, which has been pegged to the dollar for decades, have been going on for weeks as the government worked to finalize the 2021 budget.
The draft law, which has to go through a parliament vote first, gives an anticipated exchange rate of 1,450 Iraqi dinars for the dollar — a significant drop from the central bank’s current official rate of approximately 1,182 dinars for $1.
The government plans to cover its deficit in the draft federal budget law for 2021, which is estimated at 58 trillion dinars ($48.698 billion).
Income is set at 92 trillion dinars, with oil revenue standing at 73 trillion. The price of a barrel is set at $42.
The Iraqi Council of Ministers holds a meeting on Saturday to discuss the draft budget law.
As the draft made rounds on social media, the Finance Ministry expressed “resentment and deep regret over the unauthorized publication” of the proposed law, saying public hysteria would impact the neutrality of the legislators. The parliament is to discuss — and introduce possible amendments — to the draft in a session scheduled for Saturday.
In an October interview, Finance Minister Ali Allawi said the devaluation was being considered seriously in talks with the International Monetary Fund.
The IMF has proposed a rate of 1,600 dinars to the dollar, which the Iraqi government deemed “politically difficult”, AP cited a senior-level official as saying.
The anticipated rate in the draft of 1,450 dinars ($1.22m) against the dollar “will help cover the financial deficit, but, of course, if they don’t manage to make some supportive steps for poor people, then the impact of inflation will be very severe,” said Mohammed al-Daraji, a legislator in the finance committee.