Financial policy has an important position in all economic policies, because it is a major tool of government to direct economic activists in order to achieve economic and social goals, to solve crises and problems, to work for increasing levels of hand work, to stabilize general levels of prices, to create economic development and redistributing income in a fair way.
Iraq’s financial policy had to play a major role in economic direction, as Iraq was a socialist country with its backward economic infrastructure. But despite this, it has not been able to provide economic stability and control economic decline. The direction of financial policy in Iraq was related to the political, economic, and crisis situation that country was going through.
Iraq’s economic system
From the beginning of history up to day, there has been a dispute between civilizations that wanted to impose him on the other one. Economic system has been one of the focuses of those civilized. As it is clear after freedom process of Iraq since 2003, Iraq’s economy has faced many problems in a way, according to reports and evidences; corruption has reached billions of dollars in Iraq due to existed political and financial conflicts.
Economics and politics are two sides of the currency, and the economy contains an important aspect of life. Most of the political developments, war, civil and international chaos are economic reasons. There are many reasons why the country’s economy is working to stabilize the economy, so the economy is constantly in trouble, and the government is trying to formulate plans to work for economic stability.
Financial policy as any other policy in Iraq has been involved in two problems:
First: unorganized decision of the politicians.
Second: Isolating Iraq’s income by having only oil’s income.
Budget shortfall in Iraq is in a type of statues due to financial disparity as a result of much public expenditures than the country’s financial capacity. The filling budget’s shortfall by printing new money in the pre-2003 stage has led to increasing domestic currency over past 13 years, which has led to increase in inflation in the years of last nineties. But because expenditure was not real and it was only printing money during the years of economic blockade caused to decrease value of currency and individual incomes. Financial policy by using its tools can play a gigantic role in directing economic resources, but the success of financial policy is related to the formulation of the policy and reviewing the system, laws, guidelines, and transparency.