The finance committee in the Iraqi Council of Representatives warned on Wednesday about the deterioration of the Iraqi economy due to the low exchange rate of the dinar to the US dollar, assuring that proposals are underway to get the country back on its feet, reports AKnews.

According to AKnews, the Iraqi dinar hit its lowest exchange rate in three years against the US dollar, at a selling rate of 1290 dinars per dollar on Tuesday. On the othe hand, some online sources still show it trading in the range 1160 to 1165.

Committee member Shawrash Mustafa said the committee began to study the deterioration of the Iraqi dinar exchange rate and put in place several proposals to halt the crisis. He did not say what these proposals were, but that they will be delivered to the Ministry of Finance and Iraqi Central Bank (ICB).

The ICB has issued strict regulations on its sale of dollars, due to restrictions on trade with both Iran and Syria.

Azzaman reports that the dinar’s depreciation has prompted the Central Bank to intervene by increasing supply of dollars and withdrawing dinars from the market. The operation is supported by estimated foreign currency reserves of $62 billion, which Central Bank Deputy Governor Mudher Saleh said is sufficient to cover 120% of the value of local currency in circulation at current exchange rate.

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The Financial Times reports that Iraq’s central bank has tightened its clampdown on its sales of dollars, amid fears that buyers are using them to launder money and skirt international sanctions on neighbouring Iran and Syria.
The bank unveiled new rules on Monday to force customers to prove their identities by supplying tax records and import licences. Its deputy governor, Mudher Salih Kasim, told the FT, “Iraq is liberal and the two countries next door are under sanctions. You can see the consequences are very bad: this is spillover.”
The Iranian rial is now trading at 16,000 to the dollar, versus 12,500 in December.
Demand for dollars is as high as $400m and $450m a day, more than double some estimates of the legitimate need, may be due to criminality and Iraqi middle men settling debts on behalf of clients in Iran and Syria.
The new rules will compel all commercial buyers of dollars at the central bank’s near-daily auctions to produce tax clearance certificates and, from 30th June, papers to prove they are allowed to import the goods they say they are using the money to buy.
In February, the central bank asked dealers to submit cheques rather than cash, in order to identify currency buyers, but this largely failed because purchasers were simply hiring third parties such as “porters from the street” to open bank accounts on their behalf.
One currency dealer told The National, “I don’t have the right to ask my client what he is going to do with the dollars when he takes it from my shop. It’s almost impossible to track where the money is going, because the currency has been taken to the street.”
(Sources: Financial Times, The National)


Investment companies will be exempted from paying duties on good entering Iraq under the new customs law, according to a report from AKnews.
Finance Minister Rafie al-Issawi [Rafie al-Esawi, Rafi Hiyad al-Issawi, Rafia al-Issawi], pictured, said last week that the new bill will be adopted on 1st June, 2012, having been postponed twice in the past.
Abdul-Abbas al-Saedi, a member of the Iraqi government Economy and Energy Commission, told AKnews that Investment Law No. 13 of 2006, which excludes investors in Iraq from paying taxes and customs duties, will be included in the law.
This does not conflict with the law of investment and will help to attract investors, he added.
“The customs rate will differ between goods, where it will be higher for complementary goods and cars. There will be other ratios for food and construction materials,” said Saedi.
The new customs law, approved by the Presidency Council of Iraq last year and passed by the Council of Representatives, will cancel:
The customs law No. 77 for the year 1955.
The law of the disbanded Interim Coalition Authority No. 54 for the year 2004 (the policy of trade liberalization of 2004).
The order of Coalition Authority No. 38 of 2003 (the Iraq reconstruction tax and its amendments).
(Source: AKnews)


AKnews reports that Iraq’s new currency will include three languages: Arabic, Kurdish, and English. It will also include archaeological features including those of the Kurdistan Region.

Speaking on behalf of the economic committee in the Iraqi Council of Representatives, Muhama Khalil said that deleting the three zeros, and restructuring the currency will provide significant economic benefits.

He explained that Iraq signed a contract with four foreign companies to producing paper and coin variants of the new currency from the beginning of next year.

The move to delete the zeros will reduce the number of bank notes in circulation and simplify Iraq’s payment system. The Iraqi Central Bank will re-print some 30tr dinars ($26bn).

(Source: AKnews)