x Abu Dhabi, UAE Friday 21 July 2017

A rollercoaster ride for Mudher Saleh, adviser to Iraq’s prime minister

Mudher Saleh talks about his experiences with monetary policy in war-torn Iraq.

Mudher Saleh, the economic adviser to the prime minister Haider Al Abadi has had a turbulent career.

At the end of 2012, he was thrown in jail upon his return from IMF meetings in Tokyo. The arrest warrant accused the former deputy governor of the central bank of manipulating the Iraqi currency against the US dollar through the currency auctions with banks.

This month, he was acquitted of charges and appointed to a higher post with the premier.

Here he talks about his experiences with monetary policy in the war-torn country.

When were you appointed as deputy governor and what were you tasked with?

I was appointed deputy governor after the [2003] US-led war on Iraq. Prior to that I worked in the statistic department of the central bank. Our role was to build up its foreign reserves. They were nothing, around US$2 million in 2004. By 2012, they stood at $76 billion with a stable exchange rate, a burgeoning financial market and licensing of banks and branches according to international standards. It wasn’t easy but I don’t think our efforts were appreciated. I was also part of a four member committee tasked with the Paris Club Agreement in rescheduling $120bn of debt with creditor countries from the era of Saddam Hussein. We also had to reduce inflation, which stood at 20 per cent at the time, and reached our target of 3 per cent by 2010.

You and the former governor Sinan Al Shabibi were acquitted of charges this month. Do you think your arrest was politically motivated?

The government didn’t like [the fact that] the central bank was an independent body and strong financially, determining monetary policy in an oil state. The government was dependent on the watchdog for issuing dinars against petrodollars for their state expenditures. They questioned the demand of $48bn a year on currency auctions. In order to balance the transactions by the government on its oil revenues, we would sell foreign currency to the banks that they would use towards trade finance. They alleged that $20bn was sufficient for Iraqi trade, and that half that amount was not needed. But after my removal and the ousting of governor Shabibi in 2013, they sold $54bn. Nobody could justify it. Some people were misleading the former prime minister Nouri Al Maliki, and he acted on misinformation and exaggeration.