Iraq News - Local News - Baghdadpost

Panic in Iraq as leaked budget draft signals devaluation

A leaked draft of Iraq’s state budget sent Iraqis into a panic as it confirmed the government’s intention to devalue the national currency, the Iraqi dinar, and cut salaries to cope with the impact of a severe economic crisis.

Discussions about devaluing the Iraqi dinar, which has been pegged to the dollar for decades, have been going on for weeks as the government worked to finalize the 2021 budget.

The draft law, which has to first go through a parliament vote, gives an anticipated exchange rate of 1,450 Iraqi dinars for the dollar — a significant drop from the central bank’s current official rate of around 1,182 dinars for $1.
As the draft made rounds on social media, the finance ministry expressed “resentment and deep regret over the unauthorized publication” of the proposed law, saying public hysteria would impact the neutrality of ministers.

The cabinet is to discuss — and introduce possible amendments — to the draft in a session scheduled for Saturday.

Multiple officials said the leaked draft was authentic but stressed it might undergo changes in parliament.

Sharp public reactions indicate the challenges the country will face implementing needed economic reforms in an election year, and in particular to the budget-draining public sector.

Nationwide parliamentary elections, a year earlier than expected, are due in June.

“Budget preparation is a complex technical process … over a long period of time,” the ministry said. “Releasing it prematurely to the media is a largely irresponsible act.”