BAGHDAD Iraq's parliament has sent a letter to the cabinet telling it not to interfere in monetary policy, a parliamentary source said, in a skirmish over central bank independence that reflects concerns over the extent of Prime Minister Nuri al-Maliki's influence.
Maliki won a court ruling in January 2011 putting independent bodies like the Central Bank of Iraq under the cabinet, alarming critics who view with suspicion signs of authoritarianism in some of his actions.
He said this would not affect the CBI's independence, but other moves by Maliki, a Shi'ite, against senior Sunni politicians and his control over key security ministries have raised concern that he is trying to consolidate his power.
A source in the office of parliament speaker Osama al-Nujaifi said parliament had sent the cabinet a letter reminding it that setting monetary policy was not in its mandate and that it should not assert its authority unconstitutionally.
Parliament sent the letter after cabinet wrote to the CBI stating that it should have a say in its monetary decisions, lawmakers who received a copy of that letter said.
"This is not the first time the government has tried to impose its control over the central bank," Jaber al-Jaberi, a lawmaker and member of parliament's finance committee, told Reuters.
"Every time they try, and then talks erupt, and then they reach an agreement. But then they try all over again," he said.
Parliament said on its website that Nujaifi met with CBI Governor Sinan al-Shibibi on Tuesday to confirm its support for the bank's independence in accordance with the constitution.
"It is necessary that the central bank remains independent from government in order to prevent a hand (controlling) Iraq's money and to execute international rulings issued against Iraq by its debtors," Nujaifi told Shibibi, according to the website.
"The central bank has $60 billion in reserve and this reserve should (be safe)," said Najiba Najib, a lawmaker and a member of parliament's financial committee.
"Central bank policy should be away from any executive side in order to work professionally and independently."
Much of Iraq's external debt was settled via the Paris Club of sovereign creditors in 2004, in a deal that required Baghdad to seek similar settlements with all other creditors.
But some commercial creditors have won court cases and do not accept the terms of that settlement, meaning Iraq has yet to settle its debts with them.
(Reporting by Aseel Kami; Editing by Serena Chaudhry)