Thursday, September 10, 2009
Central Bank of Iraq and Their Success Against Inflation
About a year ago I wrote about the brilliant success of the Central Bank of Iraq in reducing inflation in their war ravaged country. I wanted to follow up and see how they are doing today.
I simply was amazed at the success of the Central Bank of Iraq in 2008. I am even more amazed now.
At the same time I last wrote about the CBI there was civil war on the streets of Baghdad. But brave civil servants in the Iraqi financial ministries were making the tough calls to bring stability to the Iraqi dinar. I praised their courage, insight, and discipline in looking long-term and resisting easy political options---unlike our own Federal Reserve Board here in the United States. They literally risked their lives for the future of their new nation, as opposed to our own political class in Washington that will not even risk their jobs for ours.
During the height of the Saddam regime and even during the early years of the American occupation of Iraq, inflation in the country ran between 70-100% or even higher. Saddam and his sons treated the Iraqi central bank as a private piggy bank, raiding it for cash whenever they needed money, which was often. Decades of central bank corruption and mismanagement left Iraq literally broke despite the massive oil wealth being pumped from the ground.
Well, how is the Central Bank of Iraq doing today?
Inflation was 4.1% in Iraq in 2008.
Inflation was down .4% in July 2009.
1 US Dollar = 1,174.30 Iraqi Dinar today.
In 2004 the rate was 4,000 dinars per U.S. dollar.
The official target rate of the Central Bank of Iraq is 1,170 dinars per U.S. dollar. so they have successfully pegged the dinar to the dollar.
GDP growth in Iraq was 6.6% in 2008. What was GDP growth in the United States in 2008? A measly 0.4%.
Read this amazing article on how the Central Bank of Iraq recently refused to yield to political pressure and borrow against its own reserves to cure a budget deficit. Notice that our Federal Reserve Board is doing the exact opposite.
I would like to praise and celebrate the extraordinary achievements of Dr. Sinan Al Shabibi, Governor of the CBI, and all those brave men and women who are building a solid economic foundation for Iraq.
Ben Bernanke, take notice. Here is the official website of the CBI. Read some articles, please.
Robert J. Abalos, Esq.