Abu Dhabi: Iraq will aim to keep inflation at 5 per cent in 2012, helped by central bank policies to control price growth, the country's finance minister said yesterday, and hopes to redenominate the dinar currency by 2013.
"I hope that in 2012, with some of the policies of the central bank, to control it [inflation] again to around 5 per cent. For 2012, the target is 5 per cent," Finance Minister Rafie Al Esawi said at a gathering of Arab finance ministers in Abu Dhabi.
Iraq's core annual inflation rate quickened to 7.1 per cent in July from 6.4 per cent in June, driven mainly by higher housing rental prices.
"I don't think that inflation will increase. It increased in the last few months to more than 6 per cent. The central bank tried to move its policies, tried to control it back again," Esawi said.
Core annual inflation was not expected to exceed 7 per cent in 2011 as the economy remained relatively stable, with a steady flow of goods and no unexpected government expenditure, an official said in June.
In August, Iraq said it planned to redenominate its dinar currency by knocking three zeros off its nominal value to simplify financial transactions.
"The central bank prepared its study to present to the cabinet, which was not yet received, so it's still in the hands of the government," Esawi said, adding he hoped this would be done by 2013.
Iraq's central bank began discussing the redenomination of the dinar last year aiming to help ease financial transactions. In Iraq many payments are still carried out in cash because of the underdeveloped banking system.
The Iraqi dinar is traded in auction at a fixed rate of 1,170 per dollar.
Iraq is recovering after years of war and sanctions and oil still dominates the economy, accounting for 95 per cent of government revenues.
The minister also said he expected the unemployment rate in the country to range between 15 to 23 per cent this year.
