Civil Servants Short-Changed

Authorities in Iraqi Kurdistan dump worthless currency on public sector employees.

Civil Servants Short-Changed

Authorities in Iraqi Kurdistan dump worthless currency on public sector employees.

Mohammad Ahmad, a 34-year-old civil servant in Sulaimaniyah, recently brought home a treat for his child: 2,000 dinar, a little over one US dollar, in change.

His three-year-old son's response, "Is this is a trick?"

In Kurdistan, Iraqi coins are used to make jewellery and play games, and even children know they have no monetary value.

Since February 2006, civil servants have received 2,000 dinars of their salaries in coins, which in Iraqi Kurdistan are not accepted as payment for utility bills or to even buy a cup of tea.

"The government is getting rid [of the coins] by giving them to us," said Ahmad. "It's ridiculous."

Saddam Hussein's regime kept the Iraqi dinar at a fixed rate of 3.22 dinar to the dollar in the Eighties, but its value plummeted under international sanctions in the Nineties. The dinar is now valued at about 1,465 to the dollar, making 25 dinars worth about 1.7 cents.

The government began issuing 25 and 50 dinar coins in 2004, but they have never been popular. Inflation since the fall of the regime three years ago has significantly driven up the prices of almost all goods, making the small coins nearly worthless.

"People don't like coins because they are heavy and they're not easily transacted," said Mussa Tofiq, professor of economics at Sulaimaniyah University.

The Iraqi central bank has tried to get rid of its reserves of coins by getting the government to use them to pay part of civil servants' salaries. It has issued about 1.2 billion dinars, or about 818,000 dollars, in coins to Iraqi Kurdish banks since January 2006, said Mohammad Abdullah, head of the government-run regional General Bank in Sulaimaniyah.

The problem, civil servants say, is that even government agencies, including the state banks that issue the coins, won't take them back.

"They don't even accept them for electricity bills," said Mohammed, whose children use the coins from his salary to play games. "The government doesn't have a plan. It can't force the coins to be circulated in the market."

Tayyb Tahir, a teahouse owner in Sulaimaniyah, charges 150 dinars for a cup of tea but said he never accepts the coins because he can't use them for change or to buy goods in the market.

"The central bank was wrong, and now the government doesn't know how to deal with [the problem]," said Tahir.

Abdullah said officials are waiting for the Iraqi Kurdistan ministry of finance to issue a decree forcing banks and government ministries to accept the coins.

He insists that the coins will eventually have value, “When the country is stabilised and developed, the coins will be used for telephones, gas, electricity and other things."

Tofiq said the government might also be able to solve the problem by creating more valuable coins, such as denominations of 250 and 500. "The most important thing is that the government itself accepts them," he said.

Wrya Hama-Tahir is an IWPR trainee journalist in Kalar.
Iraqi Kurdistan
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