BAGHDAD \u2014 Iraq\u2019s Central Bank Governor Ali al-Allaq warned Thursday that the country\u2019s budget deficit had become \u201creal and chronic,\u201d reflecting structural dependence on oil revenues, and said Iraq may need to seek external borrowing after state banks reached their lending limits.<\/p>\n
\u201cThe deficit in the past was a numerical deficit and the budget would end without a real deficit, but now the situation has changed and there is an actual deficit,\u201d Allaq told state newspaper Al-Sabah. He said the danger lay in the deficit becoming \u201cchronic and structural,\u201d meaning state revenues were effectively confined to the oil sector.<\/p>\n
Allaq said domestic debt had become concentrated in state banks and the Central Bank, and that \u201cthe lending capacity of government banks has reached high limits,\u201d pointing to external borrowing as a potential recourse. He noted that IMF loans come with \u201cconditions and structural reforms,\u201d and said countries typically resort to foreign loans when domestic resources cannot finance development needs or cover deficits from falling revenues.<\/p>\n
The governor said weak coordination between monetary and fiscal authorities risked \u201ceconomic imbalances affecting monetary stability, the exchange rate and inflation levels,\u201d and called for better integration between the two sides. He said the Central Bank had previously proposed a \u201cprogram budget\u201d model to improve spending efficiency but the proposal had not been implemented.<\/p>\n
Allaq denied any intention to change the dinar exchange rate, saying current policy focused on maintaining stability and \u201cenhancing confidence in the national economy.\u201d He also dismissed concerns over the government\u2019s ability to meet payroll obligations. \u201cThe salaries are secured for the foreseeable future,\u201d he said.<\/p>\n
The comments follow a warning Wednesday from financial expert Mahmoud Dagher that Iraq was facing its worst financial crisis since 2003, with monthly oil revenues below $1 billion against a monthly requirement of more than $6 billion to cover salaries and pensions. Dagher said the government\u2019s remaining option was creating new dinars through Central Bank lending to the Finance Ministry, a move he warned could raise domestic debt to as much as 140 trillion dinars ($91.5 billion).<\/p>\n","protected":false},"excerpt":{"rendered":"BAGHDAD \u2014 Iraq\u2019s Central Bank Governor Ali al-Allaq warned Thursday that the country\u2019s budget deficit had become \u201creal…\n","protected":false},"author":2,"featured_media":124936,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[14],"tags":[592,7787,5979,26649,8850,94,42336,3759,894,608,596],"class_list":["post-124935","post","type-post","status-publish","format-standard","has-post-thumbnail","category-iraq","tag-and","tag-bank","tag-central","tag-deficit","tag-had","tag-iraq","tag-revenues","tag-said","tag-state","tag-that","tag-the"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116613572433611066","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/124935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=124935"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/124935\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/124936"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=124935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=124935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=124935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}