Iraq unlikely to remove zeros from the currency

Posted by on Jan 17, 2014 | Leave a Comment

1-15-14 BAGHDAD,— A rumor circulating regarding the removal of zeros from the Iraqi Dinar (ID) is false. Najiba Najib, a member of parliament (MP) from Iraq’s finance committee, recently clarified that there is no such plan in the Iraqi Parliament.

An economic expert believes that the zeros will not be removed from the Iraqi currency because the Iraqi budget is highly dependent on oil revenue.

“There is no draft law in parliament about removing zeros from the Iraqi currency,” Najib said.

She acknowledged that, “The central bank made a request to remove the zeros, but our committee refuses such requests because they are not in the interest of Iraq’s market and also, it is hard to control currency exchange – serious work needs to be done for this.”

Najib further explained that the reason the removal of zeros from the Iraqi currency has been delayed is due to the difficulty of controlling the currency during the crisis Iraq is currently experiencing regarding the exchange of 35 trillion ID in the bazaar. The federal government does not trust the central bank to be capable of carrying out this process successfully.

Another MP from the finance committee, Abdul-Hussein Yassri, said that removing zeros from the ID will increase the value of the currency.

In recent years, there was a draft law prepared by the previous head of the central bank for ID to be written in both Arabic and Kurdish languages, as well as using other signs representative of minorities in Iraq. But due to disagreement with the federal government, the draft law was rejected.

Many economic analysts believe that reform in Iraq’s economy is not related to the removal of zeros from the Iraqi currency because what is happening in Iraq now is related to inflation, not zeros.

“Zeros will not be removed from the currency because the budget of Iraq is highly dependent on oil revenue” Ismael Shukur, an economic expert and university lecturer told Basnews.

Shukur noted that, “95% of the Iraqi budget comes from oil revenue, and the oil is sold in US Dollars (USD) and then gets exchanged to ID. Thus, if we remove zeros, there will be a resultant increase in deficit.”

Dr. Khalid Haidar, Economic Expert at Sulêmanî [Sulaimaniyah] University, emphasized that the economy of Iraq is not productive, and therefore, if the removal of zeros from ID takes place, Iraq’s economy will be in a risky position and people will no longer value Iraq’s currency and will use USD instead. Dr. Haidar said such a move is not in the interest of Iraq nor the Kurdistan Regional Government (KRG).

The first Iraqi currency was released in 1932. It has been changed often, the last time being in 2003 when the dictatorship regime came to end and Saddam Hussein was removed from power.

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