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Iraq Foreign Reserves Rise on Currency Devaluation, Oil Prices

Iraq Foreign Reserves Rise on Currency Devaluation, Oil Prices

Tuesday, 14 December, 2021 - 17:00
A man counts wads of US dollars on a money counting machine at a currency exchange shop in Baghdad December 21, 2015. (Reuters)

Iraq's foreign currency reserves have risen to $64 billion from $48 billion since Iraq devalued its currency almost a year ago, Iraqi Central Bank Governor Mustafa Ghalib said on Tuesday.

Ghalib said the devaluation had helped bring the reserves up, and that Iraq's economy was much healthier than during the middle of the coronavirus pandemic, when oil prices plummeted and Baghdad was in preliminary talks with the International Monetary Fund for a possible loan.

"We were meeting sometimes twice a day with the IMF and the World Bank, but the Iraqi government's financial situation is much better now," Ghalib told Reuters in an interview at his office in Baghdad.

"Reserves might have decreased in the 30s of billions of dollars without the devaluation ... the rise in oil prices has also helped," he added.

Ghalib said he expected Iraq's 2022 budget to be based on an oil price of roughly $45 per barrel. Iraq, OPEC's second-largest producer, draws around 95 percent of its state revenue from oil sales.

Iraq currently owes its neighbor Iran around $5 billion for energy imports that are crucial for keeping the lights on, but Baghdad is abiding by US sanctions that prohibit it from paying any cash to Iran, Ghalib said.

Iraq has paid some of those power debts in commodities and supplies, for example buying some $250 million worth of Russian-made Sputnik COVID-19 vaccines for Iran, as well as making wheat purchases for Tehran, he said.

Ghalib confirmed reports that Iraq has opened an account with the China-backed Asian Infrastructure Investment Bank, saying it has deposited around $100 million in the account for possible future payment for infrastructure projects.

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