Why Contribution of Iraqi Central Bank is Essential to Economic Balance?

Most economic experts believe that perfect coordination between Iraqi government and Iraqi Central Bank can play a significant role in financing the budget deficit and providing credit to the Iraqi government. The Iraqi government has its legal right in the board of directors of CBI and the only authority to appoint and remove the governor of Iraqi Central Bank including various other roles. A famous economist Antoine said that many economists have confirmed more obvious role of the Central Bank of Iraq, when Iraqi government is unable to finance public expenses by traditional measures of taxation or by reduction in the government expenditures. The trend of restoring financial policy according to non-traditional order in financing the budget deficit by printing currency and borrowing from banking system would lead to an increase in the prices at general levels. So, it is essential to impose restrictions on provided credit by the CBI to Iraqi government.

Why Contribution of Iraqi Central Bank is Essential to Economic Balance?It would reduce increasing trends and the aggregation of public debt. Some specific limits are set by the Central Bank of Iraq regarding the credit provided to Iraqi government. It is due to preventing any conflict between the monetary policy of Iraqi Central Bank and fiscal policy of the government. But, it depends on the circumstances and according to the nature of the existing economic measures. The CBI also pointed out that it is responsibility of Iraqi Central Bank to participate in achieving the economic balance in the country. There should be a joint coordination within the framework and its responsibility as the monetary economic institution. CBI also performs an important role in managing and monitoring the exchange rate of Iraqi currency. So, it has its significant position within the framework. The Iraqi Central Bank also stressed that any instability in the balance and lack of coordination in the responsibilities between state institutions can be harmful for both sides.

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