The procedures of Monetary and fiscal policy in treatment the deficit budget in Iraq for 1990-2016

Authors

  • Prof.Dr Thoreau Abdul Rahim Ali
  • Abbas Nasser Ali

Keywords:

General Budget Deficit ، Government debt ، General Budget Deficit ، Government debt ، Money supply ، Inflation rate ، exchange rate ، Interest rate ، The cheap cash issuance .

Abstract

     The Accumulation deficit in the public budget in Iraq during the period 1990-2002،  the result of the decrease in  public revenues and increase public expenditure، because of the economic blockade، and its negative consequences، in addition to the results of the wars، which coasted the country enormous money، In order to find the differences in the monetary and fiscal policies، according to the conditions prevailing in Iraq، before 2003، it was monetary policy that financed the deficit in the public budget and through its mechanisms. The fiscal policy did not have an effective role in reducing the deficit، as the statistical data of Iraq refer to high rates of growth deficit to the highest levels، especially after the emergence of the remnants of the economic blockade، and ،therefore، increased debt، because debt is the sum of the budget deficit. We also note that monetary policy is moving in the direction of fiscal policy before 2003 and that the Central Bank can finance the deficit in the public budget، through (new cash issue، central treasury bills، overdrafts)، These financing mechanisms have resulted in structural imbalances in some monetary variables، and thus did not escape the monetary and fiscal policies in reducing the deficit only after 2003، as oil prices rose and the Central Bank obtained its independence under Law No. 56 of 2004، ، Which prevented funding to the government either directly or indirectly، which helped the High oil prices to reduce the deficit until 2013 a result of the decline in oil prices، the budget deficit again appeared to worsen by the end of 2016، and The independence of the Central Bank has faltered in stabilizing the rates of inflation and stability of the exchange rate.

Therefore، this research has focused on tracking the path of deficit and debt in Iraq، and what the procedures of the fiscal and monetary policies towards the deficit of the public budget during the period 1990-2016، with a statement of the impact of those actions on monetary variables.

Published

2022-04-24