Iraq Central Bank to issue treasury bills worth $2.4 billion to finance electricity contracts

 

By Alaa al-Tameemi

 

Azzaman, June 20, 2009

 

The parliament has authorized the Central Bank to issue treasury bills to raise $2.4 billion for the Ministry of Electricity, a parliamentary source said.

 

The source refusing to be named said the money will be specifically used to finance contracts by the ministry to boost power supply in the country.

 

Power output is still below pre- 2003-U.S. invasion rates despite the funneling of billions of dollars into the national grid.

 

The bills will be sold on domestic markets and investors are promised an interest rate of at least 2% and the possibility of recouping their cash in one year.

 

Iraqi private banks will have the chance to take part in issuing the bills.

 

The money raised will be in local Iraqi currency the dinar and the Central Bank will deposit it on behalf of the Electricity Ministry in dollars.

 

The decision will effectively suck huge amounts of money out of the system in the country – a move which the government hopes will reduce inflation and strengthen the dinar.

 

At current exchange rates the sum of $2.4 billion is worth 2.8 trillion dinars.