Iraq Economic News and Points To Ponder Monday Afternoon 2-9-26

The Presidency Of The Government And The Presidency Of The Republic: To Proceed With A Balanced Policy And Resolve Constitutional Issues

Money and Business   Economy News – Baghdad   Prime Minister Mohammed Shia Al-Sudani received President Abdul Latif Jamal Rashid on Monday.

The meeting witnessed discussions on developments in the general situation in the country and the region, where the need to strengthen national unity and support the government’s measures and steps in enhancing Iraq’s pivotal role in the region was emphasized. 

The meeting also emphasized the government’s commitment to adopting a balanced foreign policy and its support for dialogue in resolving crises and establishing regional security and stability.

The meeting stressed the importance of resolving constitutional requirements towards forming a government capable of completing the development and economic revival process, and meeting the aspirations of the Iraqi people in the next stage.   https://economy-news.net/content.php?id=65514

Customs: Customs Regulations Have Become More Realistic And There Is Significant Trade Exchange.

Money and Business   Economy News – Baghdad   The General Authority of Customs announced on Monday that there are reassuring rates in customs revenues after the implementation of the latest procedures, noting that these procedures are in place in most countries of the world.

The Director General of the Authority, Thamer Qasim, said that "customs demarcation has become more realistic, and there is a large trade exchange," noting that "there are reassuring rates in customs revenues."

He added that "the fee was previously paid as a lump sum per container, while today the fee is based on the size of the container, and this is the practice in most countries," noting that "the lump sum container fees represent a waste of public money and cannot be returned to this practice."

Regarding the implementation of the ASYCUDA system, Qassem confirmed that "some traders were increasing the amounts for imported goods before the implementation of the ASYCUDA system," noting that "a trader who feels wronged can submit a grievance to reconsider the assessment of the customs tariff for his goods."https://economy-news.net/content.php?id=65513

Sudanese: Directing Reform Measures Towards Strengthening The National Economy

Money and Business    Economy News – Baghdad   Prime Minister Mohammed Shia al-Sudani stressed on Monday the importance of reform measures being directed towards strengthening the national economy, stressing the need to study the financial and economic impact of every decision taken within this framework.

This came during his chairmanship of the meeting of the Ministerial Council for the Economy, in the presence of the Deputy Prime Minister and Minister of Foreign Affairs, the Minister of Finance, the Ministers of Reconstruction and Housing, Industry, Labor and Social Affairs, and Water Resources (Acting Minister of Agriculture), in addition to the Secretary-General of the Council of Ministers, the Governor of the Central Bank, and a number of relevant advisors.

The meeting addressed the topics on the agenda, followed up on government efforts to maximize revenues and reduce expenditures, and reviewed previous decisions. The Council approved the organizational structure of the Revenue Collection Directorate within the Ministry of Finance, which had been previously approved in the last meeting, emphasizing the need to select qualified personnel to work within it and achieve its intended objectives.

The council also approved exempting security and emergency services from the decision to reduce fuel subsidies that was previously taken, in consideration of the nature of the work of those agencies.

Al-Sudani stressed that the approach of basic economic reforms, which contribute to supporting the national economy in the foreseeable future, enjoys the support of national political forces, emphasizing the need to move forward with implementing reforms in a way that enhances financial stability and serves development. https://economy-news.net/content.php?id=65512

The Mechanism For Selecting Parliamentary Committees: An Official Explanation

Money and Business   Economy News – Baghdad   MP Mona Hussein explained on Monday the mechanism for distributing MPs among parliamentary committees.

Hussein said, "The distribution of representatives to parliamentary committees is based on the representative's desire to work in the committee he wishes to work in."

She added, "Specialization is important in the process of selecting members of parliamentary committees, and they should have extensive experience in them."   https://economy-news.net/content.php?id=65511

China Injects Cash To Cover A $456 Billion Deficit

Banks   Economy News — Follow-up   The People’s Bank of China – the Chinese central bank – moved aggressively to ensure that banks had sufficient liquidity and could meet the increased demand for cash during the Lunar New Year holiday.

The central bank injected a total of 600 billion yuan ($86.4 billion) through 14-day repurchase agreements late last week, ending a two-month hiatus in such operations, according to Bloomberg. Industrial Securities expects the People's Bank of China to add up to 3.5 trillion yuan in funds through similar instruments before the holiday begins on Sunday.

These injections are intended to address a liquidity gap estimated at around 3.2 trillion yuan ($456 billion), according to Bloomberg calculations. Holiday-related spending, a surge in government bond issuance, and increased corporate demand for yuan are all expected to drain liquidity from the banking system.

For the People’s Bank of China (PBOC), maintaining sufficient liquidity is crucial to avoiding a seasonal liquidity crunch and sustaining economic momentum in the face of mounting challenges. Prior to this latest move, the PBOC doubled its bond purchases in January, injecting a record 1 trillion yuan in medium- and long-term funds into the banking system.

CITIC Securities' chief economist, Ming Ming, said: "The central bank has ample room to replenish liquidity."

He added: "The People's Bank of China is expected to be able to bridge the funding gap by combining the injection of liquidity through traditional liquidity instruments with maintaining a steady level of bond purchases," stressing that "liquidity conditions in the bond market will remain stable."

Part of the liquidity pressure that the People's Bank of China must address stems from household behavior. Analysts at Huaxi Securities predict a liquidity drain of 900 billion yuan due to holiday travel and the tradition of giving cash gifts in red envelopes during the Lunar New Year celebrations.

Additionally, 405.5 billion yuan in reverse repurchase bonds issued by the People's Bank of China are due to mature this week, according to Bloomberg calculations, further straining banks' liquidity. The maturity of another 500 billion yuan in direct reverse repurchase bonds will also drain liquidity.

China is accelerating sales of government bonds ahead of the holiday season, according to Guilian Minsheng Securities, which could exacerbate the liquidity shortage.

Data indicates that local authorities plan to sell approximately 950 billion yuan worth of bonds during the first two weeks of this month, representing an increase of roughly 18% compared to the total bonds issued in January. This is in addition to the central government's issuance of 412 billion yuan worth of bonds.

Exporters converting their dollar earnings into yuan will exacerbate liquidity shortages, according to Sinolink Securities. This demand follows a 2.6% appreciation of the yuan since the end of October, driven by capital inflows, a weaker dollar, and the People's Bank of China's acceptance of the yuan's appreciation.

In addition to the recent liquidity injections, the People’s Bank of China also allowed banks to cut their one-year monetary policy loan interest rate to a record low of 1.5% last month, according to Bloomberg sources.

Economists expect China to cut banks' reserve requirement ratio by 50 basis points this year and lower interest rates. Inflation data this week will help gauge expectations regarding the extent of policy support the People's Bank of China will provide to the economy.

Despite short-term funding costs rising from their lowest level since 2023, analysts expect these rates to remain low. This reflects the People's Bank of China's commitment to supporting the market during peak seasonal periods.

“The last thing markets should be worried about this year is the People’s Bank of China’s tendency to maintain ample liquidity,” Huazhuang Securities analysts wrote in a note. “Despite fluctuations in repurchase rates due to seasonal factors, the money supply still looks very weak.”   https://economy-news.net/content.php?id=65492