Devaluation Decision in Iraq After 17 Years

Devaluation Decision in Iraq After 17 Years A devaluation decision was made after 17 years in Iraq. Iraq devalued the Iraqi dinar by 20 percent to boost the economy, which was having a hard time due to the coronavirus epidemic. Thus, the devaluation decision was taken for the first time in the country since 2003. Iraq has decided to devaluate its currency, the Iraqi dinar, by 20 percent, in order to revive the economy, which has suffered during the coronavirus epidemic, and to make local production and private sector more active. The statement on the subject came from Iraqi Finance Minister Ali Allawi. Speaking to Iraqi state television, Iraqia, Minister Allavi stated that the Iraqi Ministry of Finance, which controls the reserves obtained from oil sales, will sell $ 1,450 from the ministerial reserves to the Iraqi Central Bank. Avalli added that the Central Bank of Iraq will supply dollars to local banks at the maximum level of 1,460. The official exchange rate in Iraq was at the level of 1,190. Thus, a record-level devaluation decision was taken. With this decision, devaluation was implemented for the first time in the Iraqi dinar since 2003. As the economic activity in the country almost came to a halt, a serious budget balance problem started to take effect. Before the devaluation decision, the country's budget deficit for 2021 was expected to be around $ 84 billion. According to IMF estimates, the Iraqi economy will shrink by 12 percent in 2020. The Fund noted that the ratio of the country's budget deficit to national income is predicted to be 22 percent.