“Tidbits From TNT” Monday Morning 10-14-2024
TNT
Tishwash: Iraq Accelerates Fiber-Optic Roll-Out
Iraq has increased the rate at which it is installing fiber-optic internet connections.
The Ministry of Communications reports that more than 3.5 million FTTH (fiber-to-the-home) connections have been complete so far in 2024.
This compares to 2.9 million last year, 1.5 million in 2022, and 276,000 in 2021.
(Source: Ministry of Communications) link
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Tishwash: Governor of the Central Bank of Iraq receives the Ambassador of the Federal Republic of Germany to Iraq
His Excellency the Governor of the Central Bank of Iraq, Mr. Ali Mohsen Al-Alaq, received Her Excellency the Ambassador of the Federal Republic of Germany to Iraq, Ms. Christiane Homann.
During the meeting, they discussed banking relations, enhancing the financial inclusion plan in Iraq, and the importance of digital transformation, in addition to providing full support to Al-Riyada Bank for financing small projects, which will launch its services soon.
His Excellency the Governor stressed that there is a great desire among citizens to use electronic cards, which enhances electronic payment in Iraq, as the Central Bank of Iraq has taken many steps in this direction in coordination with the relevant authorities.
His Excellency explained that Al-Riyada Bank will provide its services to an important segment of customers, as it aims to provide support to emerging small and medium enterprises, as it will be a bank different from other banks through its unconventional products that will contribute to creating job opportunities for various social groups in society, and open new horizons in a stable investment environment, noting that there will be representative offices in most Iraqi banks to facilitate customers' access to it and benefit from its services.
The plan to reform the government and private banking sector was reviewed with direct support from the Prime Minister to achieve a stable, secure and efficient sector.
For her part, the German Ambassador expressed her country's readiness to provide advice and technical support for such important projects that support the common goal of diversifying the Iraqi economy.
Central Bank of Iraq
Media Office
October 14, 2024 link
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Tishwash: Pursuing Reform: Q&A With Iraq’s Central Bank Governor Ali Muhsen Al-Allaq
October 10, 2024
The governor of the Central Bank of Iraq, Ali Muhsen al-Allaq, speaks to Global Finance about the main challenges and top priorities for the bank.
Global Finance: Iraq went through decades of wars and crises. How did that impact the Iraqi banking sector?
Ali Muhsen al-Allaq: The banking sector faced severe headwinds starting with the Iraq-Iran war of 1980-1988, which damaged the country’s financial stability and the banks’ ability to service internal debt. With the 1990’s crisis and the Kuwait war, the dinar’s value then collapsed on the parallel market. That created a major challenge for banks in settling deposits and loans, ultimately undermining public confidence in the banking system.
More recently, the fall of the former regime coupled with terrorism, the war against the Islamic State, and ongoing security and political unrest directly impact banks’ ability to attract savings. In times of uncertainty, particularly during displacement in war-torn areas, individuals tend to hold onto cash.
On the other hand, Iraq’s isolation from the rest of the world, starting in the 1990s, resulted in a large technological gap. This is particularly true of state-owned banks, which inherited problems from previous decades. They find themselves unable to keep up with the recent challenge of building a solid private sector to help diversify the economy.
GF: What is the top priority for the Central Bank of Iraq currently?
Al-Allaq: Our primary objective is to maintain price stability while also promoting sustainable development. The CBI is continuously trying to balance its economic responsibilities in light of the inflationary waves currently impacting the global economy, which have a severe impact on the cost of living for low- and middle-income households. Given Iraq’s reliance on imports, the CBI works hard to stabilize prices by controlling liquidity levels. The central bank also supports economic growth by financing projects that stimulate local production and reduce imports. Finally, the CBI also drives banking sector reform and promotes financial inclusion through electronic payments to deepen the overall level of banking services in Iraq.
GF: What are the main challenges facing the central bank?
Al-Allaq: Iraq’s delay in keeping pace with technology, due to prolonged security and political crises, has made banking sector reform a top priority for us. Because reform takes time, we have set the stability of exchange rates as a first, and very challenging, intermediate goal. The ongoing crises have eroded public confidence in the banking sector, reducing the impact of action on interest rates on the real economy—a crucial tool for all central banks, especially during inflationary periods.
Additionally, the low level of financial depth, the prevalence of an unregulated small and midsize enterprise [SME] network and the heavy reliance on the oil sector exacerbate structural imbalances. That makes our country vulnerable to external shocks, leading to increased budget deficits and rising internal public debt, all of which further weaken the impact of monetary policies on the real economy
GF: The Iraqi banking sector is under international scrutiny, with concerns that some countries sanctioned by the United States access US dollars through Iraq. How do you combat fraud and money laundering?
Al-Allaq: The central bank is striving to strengthen Iraqi lenders through various measures including intensified controls, procedures and inspections targeting banking and non-banking financial institutions, and the establishment of an AML/CFT and a compliance office in Baghdad. To ensure a high level of compliance with global regulatory standards, we also contract with specialized international companies to pre-audit foreign transfers, restrict the delivery of US dollars to travelers at Iraqi airports and conduct enhanced internal processes regarding all transactions in foreign currencies.
GF: How can the Central Bank of Iraq help diversify Iraq’s economy?
Al-Allaq: One of our primary goals is to promote sustainable development by supporting bank liquidity and directing it toward private sector projects. In 2015, the CBI launched two key initiatives: the One Trillion Initiative to finance small and midsize enterprises through commercial banks, and the Five Trillion Initiative to fund large projects via specialized banks. These efforts have expanded to include a one trillion dinar [$770 million] initiative for renewable energy, aimed at addressing our country’s electricity challenges and climate concerns.
These initiatives are designed to develop the non-oil sector and drive economic diversification. As a result, non-oil GDP grew by 4.4%, reaching 87.7 trillion dinars in 2023, driven by growth in manufacturing, construction, trade and services. Additionally, the central bank’s National Strategy for Bank Lending has further supported economic diversification by organizing funding for private sector projects link
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Prime Minister's Advisor: Implementation of the 2024 budget is proceeding smoothly
The Parliamentary Finance Committee is expected to discuss the 2025 budget next November, amid a general trend to pass it easily and not amend it significantly, while the Prime Minister's Advisor for Financial Affairs, Dr. Mazhar Muhammad Salih, stated that the 2024 budget that entered into force had a "precautionary deficit" of about 64 trillion dinars.
Salih said, in an interview with "Al-Sabah": The average Iraqi oil sales for 2024 were estimated at no less than $75 per barrel, noting that the general financial need for "bridge loans" (which are short-term loans) to address the possibility of a deficit may not exceed 10 trillion dinars in all cases, which are borrowing amounts permitted under Law No. 13.
The financial advisor added that the country's "financial life" in 2024 is proceeding smoothly, wondering, otherwise how did the Ministry of Finance issue 2024, in cooperation with the Central Bank of Iraq, "achievement bonds" for public subscription.
Saleh explained that these bonds are denominated in Iraqi dinars and come in multiple categories, including a category of 500,000 Iraqi dinars for two years with an annual return of 6.5%, indicating that these bonds are a safe investment, as the government is committed to paying the annual interest on them, and they are an integral part of bridging the deficit in the general budget for the year 2024, which means that they will come into effect.
In turn, economic researcher Ziad Al-Hashemi warned in an interview with “Al-Sabah” that the 2024 budget is facing pressures in terms of limited liquidity, noting that this has caused the government to be unable to spend the capital or investment budget, and to direct liquidity exclusively towards the operating budget.
Al-Hashemi continued that this mechanism has disrupted the implementation of the government’s development and service programs and has significantly disrupted them, expecting the deficit in the 2025 budget to increase with the decline in oil prices, below $70 as a result of the decline in global demand for oil.
He expected that it would cause financial hardship and a weakening of the ability to spend if the decline in oil revenues continued for periods exceeding two quarters, indicating that the hardship might force the government to return to borrowing internally and externally, in the hope that oil prices would rise again in the near future. link
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Mot: .. Can You Feel it!!!??? --- Hmmmmmmm
Mot: ... Ya all Ready fer Monday!!!???
