World News – AU – Iraqi Prime Minister warns of state collapse without financial reforms

Iraqi Prime Minister Mustafa al-Kadhimi gives a speech during the vote on the new government at Parliament headquarters in Baghdad, Iraq. / Reuters

Iraqi Prime Minister Mustafa al-Kadhimi warned on Saturday of the collapse of the social and political system in Iraq and the overwhelming chaos if the country fails to implement financial reforms.

Al-Kadhimi made the statement during an extraordinary session of the Iraqi Cabinet to discuss the federal budget for fiscal year 2021 after the Iraqi Central Bank (CBI) decided to devalue the national currency due to the economic crisis that resulted from the decline in Oil prices and the coronavirus pandemic.

« The political crisis in Iraq is linked to three issues: power, money and corruption. We are working to approach the crisis from an economic point of view and with a bold decision to overcome the obstacles of corruption and money, « the al-Kadhimi media office said in a statement.

Earlier in the day, the CBI decided to change the value of the Iraqi dinar to 1. To lower 450 dinars per U. S dollars, an increase of 331 dinars from the previous price of 1. 119 dinars per dollar.

The exchange rate of the dollar is in the local market 1. Reach 470 dinars, the statement said.

The CBI attributed the decision to the financial crisis stemming from the drop in oil prices and the coronavirus pandemic that created a large budget deficit and forced the government to borrow money from banks to pay salaries pay and cover other expenses.

In a separate statement, Iraqi Finance Minister Ali Abdul-Amir Allawi said: « It has become clear that urgent reforms are needed in various areas of the economy, including the exchange rate. « 

« Despite the difficulty of this decision, we are forced to take such a step in order to address much of the crisis and ensure the protection of the Iraqi economy through a bold reform move, » said Allawi.

Iraq, Iraqi dinar, finance, central bank, devaluation