Iraq Economic News and Points To Ponder Late Monday Evening 7-8-24
Excessive Issuance Of New Currency: Will It Push The Iraqi Economy Towards The Abyss?
July 8, 2024 Last updated: July 8, 2024 Hussein Al-Falluji* In light of the economic challenges facing Iraq, the importance of issuing new currency appears as an important tool of monetary policy that can be used to achieve economic growth and financial stability.
Unfortunately, these funds have been ineffectively directed over the past twenty years towards consumer sectors instead of productivity, in addition to using this tool to fill the budget deficit to cover salaries and the operational budget.
This ill-advised directive, coupled with the dominance of the public sector and neglect of the private sector, led to increased inflation and depletion of the hard currency balance.
Hence, there is a need to reconsider the use of this important tool and adopt a new strategy that focuses on directing funds towards productive sectors that generate income in hard currencies and supporting the private sector.
The economic situation in Iraq
According to available statistics, the volume of cash issued at the end of 2017 amounted to more than 44 trillion Iraqi dinars, while the volume of the monetary mass exceeded 103 trillion Iraqi dinars at the end of 2023.
All of this money was directed towards the salaries and subsidies sector instead of being directed towards productive sectors.
If this money had been dealt with wisely and scientifically and pumped into the industrial, agricultural, tourism and mining sectors, the economic situation in Iraq would have been much better than it is now.
Focusing on productive sectors such as tourism, industry, and agriculture can contribute significantly to increasing GDP and improving living standards.
For example, investing in tourism infrastructure development and tourism promotion can attract foreign tourists and increase hard currency revenues.
Likewise, supporting industry and agriculture to meet the needs of the local market contributes to increasing the gross domestic product and preventing the exit of hard currencies by adopting modern technologies and improving the quality of products, which enhances competitiveness in global markets.
Reconsidering and scientifically dealing with the new monetary issuance instrument could help in restructuring the national economy effectively and sustainably.
Improving the balance of payments and reducing inflation
This strategy can contribute to improving the balance of payments by increasing exports and reducing dependence on imports.
Supporting the agricultural sector to meet the needs of the local market and exporting the surplus using advanced technology and developing storage and transportation facilities can improve the quality of crops and increase the volume of exports.
In addition, the development of local industries reduces the need to import goods, which preserves hard currency within the country.
Directing funds towards productive rather than consumer sectors also helps reduce inflation resulting from increased demand without a corresponding increase in production.
Increasing the flow of hard currencies into the economy enhances the stability of the local currency and reduces exchange rate fluctuations.
In this way, sustainable economic stability can be achieved that strengthens the national economy and achieves tangible improvements in the standard of living.
Implementation and monitoring
To ensure the success of this strategy, it is necessary to develop a comprehensive plan and economic feasibility studies to determine priorities and target projects.
There must be a monitoring and evaluation system to ensure that funds are used effectively and that desired objectives are achieved.
Cooperation with international financial institutions and strategic partnerships with the private sector can enhance the effectiveness of implementation.
On this occasion, we demand stopping the issuance of cash for the purposes of filling the deficit in the operating budget, and emphasizing strict commitment to directing any new funds issued towards the productive sectors instead of pumping them into the consumer sectors.
This wise channeling of funds will contribute to achieving sustainable economic development and improving the economic situation in Iraq.
*Independent politician
https://mustaqila.com/الإفراط-في-إصدار-النقد-الجديد-هل-سيدفع/
Mazhar Muhammad Saleh: Our Cash Reserves Are The Highest And There Are No Fears Of The Dollar Rising
Economical 07/09/2024 Baghdad: Al-Sabah Yesterday, Monday, the financial and economic advisor to the Prime Minister, Mazhar Muhammad Saleh, commented on the return of the rise in the exchange rates of the US dollar against the Iraqi dinar in local markets.
Saleh explained, “The fixed exchange rate system in Iraq is based on international reserves, which are the highest in the history of Iraq and its monetary policy, as the foreign currency covers a percentage of more than 100% of the total currency currently exported.”
He added, "In view of the strength of the official central exchange market, the exchange rate of the dollar to the dinar in the parallel market today in the country does not constitute any relative importance in influencing the stability of the general price level, as
that general price level has become stable in its components and trends as a result of the influence of the official exchange rate factor."
Currently, the dominant factor in financing foreign (import) trade, amounting to 1,320 dinars per dollar, is a stable trend in the exchange rate and revolves around the stable external value of the dinar,
which is embodied by the state of stability in the relative prices of goods and services to a large extent, as annual inflation in the country does not exceed only 3%. According to Saleh,
based on the above, and in light of the strength of the foreign reserves supporting the Iraqi dinar, whose value as liquid foreign assets exceeds $100 billion, the official exchange market, as a general trend, will remain dominant in containing any colored noise or ambiguous information that is affected by the parallel exchange market in periods.
Short periods due to urgent international or regional political events here and there or in adapting some instructions regulating the monetary market.
The Sudanese advisor for financial affairs said that after the disappearance of the phenomenon of dollarization in internal transactions, especially in contracts, obligations and payments inside the country since last year and its legal ban, the parallel exchange market has begun to have its general effects today only on a narrow economic scope of prohibited transactions practiced by informal markets. At a rate of 10% of the total supply and demand transactions for the currency. Saleh stressed that
“the stability of the exchange rate of the dinar to the dollar that the country is witnessing, even in the secondary markets mentioned above, is a real and established stability.
Rather, it is derived from the strength of the influence of the price and quantitative factors of the monetary and financial policies and their integration in imposing overall price stability in the country and containing the inflationary expectations that were caused by the forces of The parallel exchange market during the past years. The financial advisor concluded his speech by pointing out that
“the secondary (irregular) market, due to the freedom of external transfer, is under the influence of the official exchange market rate, whose operations are constantly expanding in the interest of dealing with the fixed official exchange rate.” https://alsabaah.iq/99176-.html
Al-Sudani Directs To Reconsider Some Economic Decisions
Economy | 08/07/2024 Baghdad - Mawazine News Prime Minister Mohammed Shia Al-Sudani confirmed today, Monday, that the government has provided the private sector with great supportive opportunities and worked to empower it, while directing a review of some unproductive economic decisions and policies. Al-
Sudani chaired the periodic meeting of the Ministerial Council for the Economy, in which the decisions related to the economic reality and the implementation of the reform aspects included in the government program were followed up, according to a statement received by Mawazine News Agency.
At the beginning of the session, Al-Sudani pointed out "the importance of reviewing the economic decisions and policies that were taken in previous stages, and that the time has come to stand up to a number of unproductive work contexts and practices, and that reform requires strong and correct decisions."
The Prime Minister explained that "the government has provided the private sector with great supportive opportunities, and worked to empower it and launch its projects, and it is closely following up on everything required to continue the pace of growth, and its supportive decisions will not be directed towards the benefit of groups that live on specific outlets, without providing a contribution or returns to the country."
The statement added that "the Council discussed the report of the Diwani Order Committee (24573), headed by the Deputy Prime Minister and Minister of Planning, to follow up on the volume of support directed to petroleum products and fuel supplied to factories and plants and to the Ministry of Electricity."
The statement explained that "the Council also followed up on the issue of taxes due on companies and ways to organize them, and approved the adoption of a clear mechanism for the tax, in addition to approving the work to separate the real operating factories from the fictitious factories and audit the numbers and tables presented in the report and adopt an economic vision that supports the export of factory products and expansion of production."
The statement continued that "on the organizational side, the Council approved the formation of a technical committee from the sectoral bodies in the Ministries of Oil and Trade, in addition to the Council of Ministers' advisors; in order to control roles and resolve loose ends," and directed "to set the next meeting within a week to make final decisions." https://www.mawazin.net/Details.aspx?jimare=250986
Al-Sudani Receives A Delegation From The US Department Of Defense
Political | 08/07/2024 Baghdad - Mawazine News Prime Minister Mohammed Shia al-Sudani stressed, on Monday, the need for a firm stance against the Zionist aggression on the Gaza Strip.
The Prime Minister's Media Office stated in a statement that "Prime Minister Mohammed Shia al-Sudani received the US Deputy Assistant Secretary of Defense for Middle Eastern Affairs, Daniel Shapiro, and his accompanying delegation, in the presence of the US Ambassador to Iraq."
He added, "During the meeting, the procedures for proceeding with ending the mission of the international coalition to fight ISIS and activating bilateral relations between Iraq and the United States were discussed," noting that "the meeting witnessed discussion of the situation in the region and the continued aggression on Gaza."
Al-Sudani pointed to "the suffering of the Palestinian people, the difficulty of accessing humanitarian aid and relief supplies under the stifling siege, and the failure of the international community to assume its responsibilities in pressuring the Netanyahu government to stop the genocide."
The Prime Minister stressed "the need for a firm stance against the aggression, and the necessity of preventing escalation that threatens to expand the scope of the conflict."
For his part, the American official pointed out "the importance of Iraq's role in reducing tensions in the region, and the inevitability of continuing the approach of communication and cooperation between the two countries in the areas of armament and security and raising the combat level of the Iraqi forces, in a way that supports Iraq's security and sovereignty, economic development and progress at all levels." https://www.mawazin.net/Details.aspx?jimare=250976
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Provoking Thoughts and Points To Ponder On Adversity:
The human race has had long experience and a fine tradition in surviving adversity. But we now face a task for which we have little experience, the task of surviving prosperity. - Alan Gregg
Adversity reveals genius, prosperity conceals it. - Horace
The virtue of prosperity is temperance; the virtue of adversity is fortitude. - Francis Bacon
In the day of prosperity be joyful, but in the day of adversity consider. - Bible
In victory even the cowardly like to boast, while in adverse times even the brave are discredited. - Sallust
Adversity is sometimes hard upon a man; but for one man who can stand prosperity, there are a hundred that will stand adversity. - Thomas Carlyle
http://famousquotesandauthors.com/topics/adversity_quotes.html