Iraqi Journal For Economic Sciences

Central Bank of Iraq intervene in the foreign exchange market in order to defend the national currency from fluctuations and stabilize the exchange rate. This intervention by the Central Bank of Iraq allowed a slowdown in depreciation of the national currency against the dollar at the beginning of 2007-2010.This success was a result of smooth using foreign currency reserves to actively support national currency. The dinar/dollar exchange rate has been fluctuating considerably since the end of 2010 and the beginning of 2011, due to internal and external supply -demand shocks .Therefore ,we expressed concern over the growing and persistent disparity between the official exchange rate of dinar and the parallel market exchange rate which is seen as a vital indicator, in long term, of low effective intervention .In the light of the persistent intervention to maintain the peg of the national currency at an overvalued level ,foreign reserves were reduced and a dual exchange rate became prevailing practices. In response to the steady distress of the exchange rate, Iraqi government has to take remedial action resulting in gradual change in the exchange rate. A new exchange rate could be able to absorb the demand excess for US dollar, strengthen government financial resources and put down the divergence between parallel and official exchange rate.

This study aimed to measure the impact of the Public budget deficit and the money supply on the general price level in Iraq during the period deficit (1990-2013), using time series data approach, and to achieve this goal, ordinary least squares (OLS) has been applied. The results of the study confirmed that there is a positive and significant effect for each of the general budget and the money supply deficit on the general price level, which enhances the study hypothesis. This is consistent with economic theory. Results of the study also indicated a strong positive impact of government spending on the general price level, which explains that the financing of government spending completely dominates the mechanism of money creation in Iraq, and the fact that this is reflected in making the government to exchange the foreign currency from the oil resource with the Central Bank to obtain the amounts that it needs with Dinars. This funding has different results, if the state revenues is from the tax and the like.

Basic scientific terms: the budget deficit, the money supply, the general price level, time series data approach.

Bank deposits are considered the main sources of funding for the bank, which are both the domestic deposits and foreign deposits, which constitute the main source of money for the commercial bank. The cash of bank deposits is also considered the main source that enables commercial banks to afford credit. Credit operations and granting loans are basic operations that banks do to get profit. This credit, in economic term, tends to borrowing projects operating in different sectors of economic activity to obtain money or like, that facilitates exchanges. Commercial banks take their importance, from economic view, for being devices capable of collecting the excess funds with the depositors, then these accumulated funds are paid to various areas of investment, like loans to the organizers and to various projects that need financing. These loans are called trade credit and banking facilities. With emphasis that the size of the credit does not only depend on the size of bank deposits, but also on the structure of deposits as well.

The Millennium Development Goals are the first attempts that reflect the aspirations for a better life, and being monitored through a set of selected targets, as measured by a series of indicators that have been nationally adapted, thus and in order to identify to what the Millennium Development Goals have reached in Iraq for the past years, we will seek to monitor the achievement realized for some targets and indicators ratios related to the goal, with the show failures and challenges facing the progress towards achieving the goals, to be an opportunity for decision makers to get around to what should be taken of an effective measures to move closer to the required level in 2015, and prepare for offering the options put forward for the objectives of sustainable development beyond 2015.

The paper studies the interaction between deficit financing, monetary operations and financial markets that is to reconsider the concept of sovereign debt sustainability and the macroeconomic effects of debt monetization.
A framework of sovereign debt analysis is presented to help support effective debt policy, and management, in Iraq and the typical model of oil economy.
Term structure of interest rate spreads in relation with the sovereign credit rating, credit default swaps and the maturity of sovereign bonds have been thoroughly investigated.
The paper addresses the possibility and cost of debt rollover as the main determinants of external debt sustainability, in addition to the rollover task in the policy of internal debt. Also, sovereign bond yield spreads, of emerging market economies, over the interest rate of a risk- free debt instruments are presented in comparison with Iraq. The indicators of debt burden and suggested limits of debt sustainability have been reviewed and assessed. Also, the Iraq- Paris club agreement for debt relief is presented and the bilateral debt restructuring based on.
The macroeconomic framework for development has to assess the path of debt sustainability through interlink between interest rate, growth rate of GDP, inflation and potential primary surplus of budget.