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Central Bank of Iraq (CBI) declined government’s request to borrow from Reserved funds

05 May 2009
The Iraqi central bank declined the request of government to borrow from the bank’s Reserve funds to fill the shortfall in the budget, considering it as a violation step and contrary to the Bank’s independence. The senior Consultant in the Central Bank of Iraq, Mudher Mohammed Saleh said in a telephone conversation with the "Radio-sawa," that the government resorted to the easiest way to feed the budget’s deficit of this year, in reference to the government’s request to borrow funds from the reserve, while it must resort to apply for long term economic policies. Salih pointed out that the central bank reserves accumulated by the pre-expenses of budgets. Saleh added that Iraq's stockpiles of reserved funds have been covered by cash during the past years, and so it is out of the financial authority of the Government. He also called for the adoption of alternative ways to fill a budget gap, including resorting to the application of secondary-market policies. Salih pointed out that the law prevents the government from imposing its policies on the Central Bank of Iraq, asserting that the Central Bank of Iraq Law No. 56 year 2004, has granted the Bank a full autonomy from the government, that not to provide any loans to the Government, and not to receive orders from the government in the formation of its policies, and its accounts comply to the international standards. But Salih said the Central Bank is submitted to the authority of Parliament. Saleh added that the economic stability of the financial policy is required to enter the market. He announced on an agreement with the government to adopt the policy of the secondary market. Saleh stressed on the need for a consensus between the policies of the Ministry of Finance and the Central Bank, but he acknowledged on differences in some issues sometimes.
Prepared & Translated By: Team Iraq Daily Business Updates
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