Iraqis protest government decision to devalue currency

Basic foodstuffs have become more expensive after sudden change in price of dollar
Iraqi protesters take part in a demonstration in the central city of Najaf, Dec. 21, 2020. (Photo: AFP/Ali Najafi)
Iraqi protesters take part in a demonstration in the central city of Najaf, Dec. 21, 2020. (Photo: AFP/Ali Najafi)

ERBIL (Kurdistan 24) – Hundreds of Iraqis on Monday in several Iraqi cities held gatherings to protests the recent decision by their government to devalue the Iraqi dinar against the dollar in a bid to cover the budget deficit it had suffered due to low crude prices.

The angry protesters in Baghdad gathered in the famous Tahrir (Liberation) Square, demanding the government to reverse its decision to devalue the dinar by over a fifth against the US dollar, which is now being traded at the bank rate of 1,460 to its American counterpart.

Iraq is a petrol-state where over 90 percent of its budget relies on hydrocarbon sales which have been slashed by low crude prices caused by the coronavirus pandemic. The country is now trying to cover an over-50-trillion IQD budget deficit while the country’s poverty rate has doubled to 40 percent according to the International Monetary Fund (IMF).

In an interview with reporters, Iraq’s finance minister, Ali Allawi, said, “If we hadn’t changed the currency rate or adjusted our expenditures, our (foreign currency) reserves could have run out in six or seven months.”

Citizens are outraged by the currency devaluation as it reduces their purchasing power because the country heavily depends on imports, including essentials such as food. Prices are expected to spike as some retailers in the country have already started to put up new price tags on items.

In the southern province of Nasiriyah, where it recently witnessed waves of anti-government protests demanding reform and better basic services, prices rose by 20 percent in its wholesalers and markets.

“Basic foodstuffs have become more expensive after this sudden change in the price of the dollar,” Saadi Sahib, a pensioner, told AFP.

The Iraqi Council of Ministers prepared the 2021 budget draft on Monday, which consists of plans to cuts in expenditure and lower tariffs on electricity as well as devaluation.

Editing by Karzan Sulaivany