Economic expert Dr. Safwan Qusay said Iraq may need to rely on the cash reserves of the Central Bank of Iraq, which currently exceed $90 billion, but warned that this could increase inflation inside the country.
Qusay explained that the Central Bank also holds around 170 tons of gold. He said that if the government decides to borrow from these reserves, Iraq could still keep financial stability as long as reserves remain above $60 billion.
He noted that the $60 billion level is important because it represents the financial backing of the Iraqi dinar currently in circulation. According to him, if reserves fall below that level, the dinar could weaken and domestic inflation may rise.
Qusay also said that borrowing from the Central Bank’s reserves, or the risk of higher inflation, may become a real issue about six months after this May. He added that the government is still able to secure employee salaries during this period.
