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Currency News

Iraq not to tap hard cash reserves despite fall in oil prices

By Mostafa al-Hashemi


Azzaman, April 27, 2009


Iraq has denied reports that the slash in oil prices has forced it to tap its hard cash reserves to meet a budget deficit.


Government spokesman Ali al-Dabagh said Iraqi reserves at the Central Bank “will not be touched” despite the budget shortfall.


Dabagh did not say how the government would finance the deficit.


However, privately government officials say the government banks on a promise by the Oil Ministry to substantially increase output this year.


Deals have been signed with numerous foreign firms to drill new wells and rehabilitate the currently producing fields with the aim of boosting exports to more than 2 million barrels a day.


Iraq says it has stashed away more than 70 billion in hard cash.


“The fact that we have a budget deficit does not mean that the government will withdraw its cash reserves from the Central Bank,” Finance Minister Baqer Jaber said.


“Once we start using the reserves unwisely, it will adversely boomerang on the economy,” the minister added.

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