SULAIMANI (ESTA) — Iraqi Shia cleric Moqtada al-Sadr said the Central Bank of Iraq and other banks are “prisoners of corruption”, hours after the central bank announced devaluation of the country’s currency.
Iraq’s Central Bank said on Saturday that it had increased the sale price of U.S. dollars to banks and currency exchange to 1,460 dinars, from 1,182 dinars, seeking to compensate for a decline in oil revenue due to low crude prices.
“The Central Bank and all other banks are prisoners of corruption and corruptors,” Sadr said in a tweet on Saturday.
“The government and parliament must seek specialized methods to end this and liberalize it immediately,” he tweeted.
The central bank of Iraq said the key reason behind the dinar’s devaluation was to close the gap of widened 2021 budget inflation after a collapse in global oil prices, a major source of Iraq’s financial resources.
“The financial crisis which Iraq suffered due to the coronavirus pandemic caused a decline in oil prices that caused decreasing oil revenues, altogether have caused a large deficit in the federal budget,” the central bank said in a statement.
The devaluation decision came as a preemptive move to prevent “draining Iraq’s foreign reserves” and help government to secure public servants’ salaries, the bank added.
Iraq depends on oil revenue for 95 percent of its income. The last devaluation was in December 2015 when it raised the sale price of U.S. dollars to 1,182 dinars from 1,166.
Iraqi Prime Minister Mustafa al-Kadhimi warned of the collapse of social and political system in Iraq if the country does not go through financial reform.
“The political crisis in Iraq is linked to three issues: power, money, and corruption. We are working to address the crisis from an economic standpoint and with a bold decision to overcome the obstacles of corruption and money,” said Kadhimi.
Since an oil price crash earlier this year, Iraq has been grappling with an unprecedented liquidity crisis.
The crude-exporting country has had to borrow from the bank’s dollar reserves to pay the nearly $5 billion in monthly fees for public salaries and pensions.
Oil revenues, which account for 90% of the budget, have brought in an average of $3.5 billion.
