Another 20 years of Iraq’s high inflation rate has been forecast by economist Bahaa al-Din Yassin of the Kurdistan News Agency. Inflation has cooled to around 7% according to the CIA from 70% nearer the beginning of the decade, but this is still high by the standards of the so-called developed world.
According to reports, Yassin said: that “the inflation suffered by Iraq will continue until 2030 because of economic slack suffered by Iraq during the past years.”
He blamed previous governments from taking decisions that negatively impacted the Iraqi economy for political reasons. However, he added that “Iraq needs to complete separation between the economic decisions and political decisions.”
He also said that inflation cannot be controlled by the dual relationship between the Ministry of Finance and Central Bank of Iraq, as they have ongoing differences.
The Ministry of Finance is reducing reserves from 20% to 15%, whilst the central bank is responsible for maintaining price stability – which is not so easy when the government is spending money – and for implementation of monetary policy, including exchange-rate policy and managing foreign reserves, and regulating the banking sector.
Reports that the central bank will be removing three zeros from the currency have been denied – though doing so wouldn’t cause, or prevent, further inflation.
The central bank reports that core inflation is just 1.9%. Core inflation excludes fuel expenditure.
Sources: CIA World Factbook, Kippreport News, Kurdistan News Agency)