Finance minister has proposed a 1,500-dinar official rate in the 2027 budget, lawmaker says

BAGHDAD — The finance minister has proposed raising the official exchange rate to 1,500 dinars to the dollar in the 2027 budget, a member of parliament’s Economy Committee said, citing a leaked draft, though no decision has been taken.

“There is a proposal from the finance minister to adjust the official exchange rate to 150,000 dinars for every $100, but there is no final decision so far,” Safaa al-Jabiri of the Sadiqoun bloc told iNews. The Finance Ministry has not commented, and the draft budget sent to the cabinet on Sept. 27 was released without any figures, including an exchange rate assumption.

The change would make each dollar about 14.5% more expensive in dinars than the Central Bank’s benchmark of 1,310 cited by Jabiri. It would also raise the dinar value of oil revenue, which arrives in dollars and provides more than 90% of the state’s income, making it easier to pay salaries in dinars. That was the logic of the last devaluation, in late 2020, when the rate was raised from about 1,182 to 1,450 during the pandemic oil slump, before the government cut it to 1,300 in February 2023. Revenues covered only 76% of salaries and welfare in the first seven months of this year, economist Nabil al-Marsoumi said last week.

The parallel market is already well above the official rate. Exchange shops were selling $100 for 160,500 dinars in Baghdad and 160,000 in Erbil on Tuesday. The Central Bank has blamed the gap on speculation, expectations and regional conditions, and an economist said last month that public talk of removing zeros from the dinar had pushed people to buy dollars as a hedge.

Finance Minister Falih al-Sari was due to appear before parliament’s Finance Committee on Tuesday to answer questions about the budget, after members complained that “people speaking on behalf of the minister” were discussing it before they had been briefed.