The optimum level of international reserves in Iraq.

Abstract

Rise in the reserve ratio in Iraq for an optimal level and adequate international reserves. Despite the intensification of relying on withdrawals from reserves, in light of the sharp decline in oil prices, the main source of government revenues. As well as the function of international reserves set aside in the state of economic and social policies is desirable, along with its role in preventing the deterioration of the exchange rate of the local currency. But when there is an excess in the formation of these reserves to high too much, it should result in a disagreement in viewpoints between specialists. And bear the national economy as a result of retaining these reserves is to sacrifice uses (or alternative opportunities) resources represented by these reserves, if there should be parity between cost and social return can even estimate the optimal level of reserves. In order to be in a safe and secure them against put towards emergency and unexpected shocks, which can be exposed to balance of payments (higher import prices, the lack of export proceeds, foreign borrowing difficulties and high interest rates ... etc.) and at the same the cost of these reserves at their borders economically acceptable. There is an optimum exploitation of international reserves and surplus bears the national economy as a result of retaining these reserves, meaning there is no abuse of funds related to the central bank reserves. It is possible to exploit this part of the surplus funds, through specialized banks (development) after a restructuring, or through a new development bank, to invest in Iraq in the process of economic development.