PM sprang devaluation on ministers after cabinet session, State of Law figure claims

BAGHDAD — The Coordination Framework agreed in principle to change the dollar exchange rate but never settled on when, and Prime Minister Ali al-Zaidi put it to his ministers without warning at the end of a cabinet session, Bilal al-Nasiri, a senior figure in Nouri al-Maliki’s State of Law Coalition, said.

“After the cabinet session ended, Zaidi announced that the meeting was over but asked his ministers not to leave. He then summoned the central bank governor and informed the ministers that they were facing the option of changing the exchange rate,” Nasiri told I News TV, describing a session on Tuesday, the day before the new rates took effect. The government kept the decision secret for fear that early disclosure would unsettle the market, he said. “The government’s view was to deliver the decision as a shock to catch speculators off guard.”

The Framework had heard Zaidi’s case, Nasiri said. “The prime minister presented his justifications, saying that there was no easier solution, because the other options were difficult and could have unfavorable consequences.” But no agreement was reached on timing, he said, and the change should have waited a week or two until parliament had voted on the remaining ministers. “It would have been better to complete the vote on the cabinet before shocking the public with a change in the exchange rate.”

“At the very least, we in the Dawa Party are not satisfied with the decision to change the exchange rate,” he said. Dawa has no minister in the cabinet and so could not formally object, he said. “Most political blocs are represented in the cabinet, but we are not. Had Zaidi completed the cabinet, we would have had the right to object to this decision. But we had no voice in this consequential decision.” The decision was rushed, he said. “It disrupted the political process and the economic situation, and it will impose a heavy burden on citizens.”

The Framework’s blocs had settled the remaining cabinet posts with “no disagreement over any position,” Nasiri said, but the vote was being held up from outside. “Our political decision-making is now hostage to external circumstances, and completing the vote on the cabinet is waiting for a green light from abroad, 100%. Otherwise, why has it remained unresolved until today?”

Parliament confirmed 14 ministers when it approved Zaidi’s government on May 14, leaving nine of 23 ministries, including interior and defense, without a confirmed minister. A Sadiqoun official said on Sunday that Zaidi had worked during his New York visit to ease U.S. objections to Laith al-Khazali, Asaib Ahl al-Haq’s candidate for deputy prime minister, and that a vote could come Monday or Tuesday.

Hikma’s Ali al-Jourani said last week that the devaluation “came from the Coordination Framework,” while Framework blocs said on Thursday that “the exchange rate is a monetary tool, not a fund to cover budget gaps.” Zaidi told the parliament speaker and committee chairs on Thursday that the government had weighed compulsory deductions from salaries, paying public employees every 45 days and more borrowing before choosing devaluation to keep paying salaries without more debt.

Since Wednesday, the Central Bank buys dollars from the Finance Ministry at 1,500 dinars, sells to banks at 1,510 and sets the public rate at 1,520, up from 1,300, 1,310 and 1,320. The parallel market passed 1,700 dinars per dollar in Baghdad after the change and stood at 1,630 to 1,640 on Sunday.