Iraq Economic News And Points To Ponder Wednesday Morning 4-8-26
The Minister of Finance chairs a technical meeting to implement the ASYCUDA system in Kurdistan.
Money and Business Economy News – Baghdad Finance Minister Taif Sami chaired an expanded meeting on Wednesday to discuss the draft agreement for implementing the ASYCUDA customs automation system in the Kurdistan Region, in implementation of the directives of the Ministerial Council for Economy in its session held on April 6, 2026.
The meeting was attended by the Director General of the Federal Customs Authority, the Director General of the Regional Customs and his assistant, the advisor to the Regional Minister of Interior, the head of the Information Technology Department there, the Director of the Legal Department at the Federal Customs Authority, in addition to a team of experts from the UNCTAD International Organization.
During the meeting, the Minister of Finance emphasized the need to adhere to the laws within the ASYCUDA system and to identify any legal conflicts between the two parties in order to harmonize them and obtain the necessary official approvals. It was also agreed to form a regional ASYCUDA team as part of the unified national team, with an emphasis on ensuring that all system requirements are met by the relevant companies in the region and that the powers and responsibilities of each party are clearly defined to guarantee smooth operation.
In order to enhance the technical aspects, Minister Sami directed that a Kurdish language interface be provided within the system and adopted for use in forms during implementation, alongside Arabic and English, to ensure ease of use.
The agreement also included launching a comprehensive training program in which the national team will train personnel operating the system in the region, thereby improving technical efficiency and standardizing customs administration procedures across all border crossings.https://www.economy-news.net/content.php?id=67658
Short-Term Treasury Bills: Immediate Liquidity At A Deferred Cost
Dr. Haitham Hamid Mutlaq Al-Mansour Economy News – Baghdad In Iraq's economy, which relies heavily on oil revenues for its GDP, and given the repercussions of the war shock, domestic debt instruments have become essential to ensure the continuity of public spending. Among these instruments, remittance discounting has emerged as a key financing mechanism in Iraq, used to provide rapid liquidity, but it also reveals deeper imbalances in the structure of the financial and monetary system.
Data from the Central Bank of Iraq and reports from the Iraqi Ministry of Finance indicate a continued reliance on short-term treasury bill auctions, with maturities ranging from 7 to 90 days and annual returns between 4% and 7%.
According to estimates based on International Monetary Fund reports for 2025–2026, Iraq's domestic debt is approaching 90 trillion dinars, of which treasury bills constitute between 25 and 40 trillion dinars—nearly a third of the total debt.
This substantial amount reflects the transformation of bill discounting from a temporary tool to a permanent operational financing method, particularly given monthly spending needs ranging from 4 to 6 trillion dinars to cover salaries and current expenditures. Instead of serving as a liquidity management tool, it has become an integral part of the regular budget financing cycle.
However, the real cost is evident in the banking sector. According to World Bank indicators, credit extended to the private sector in Iraq remains below 10% of GDP, a low percentage compared to other developing economies.
This is partly due to government debt accounting for between 50% and 65% of some banks' assets, creating a "credit crowding out" phenomenon and limiting financing for productive activities.
IMF analyses also indicate that directing up to 15% of bank liquidity towards government debt instruments, including treasury bills, weakens the efficiency of financial intermediation and restricts economic growth. In this context, banks tend to invest in low-risk instruments like bills rather than financing private sector projects.
On the monetary front, discounting remittances is not a direct issuance of money, but the intervention of the Central Bank of Iraq through rediscounting these instruments or supporting banks can lead to an indirect expansion in the money supply, ranging between 3% and 6% annually according to analytical estimates based on liquidity trends, which may create latent inflationary pressures.
Most concerning is the growing link between sovereign and banking risks. The more banks hold government debt, the more vulnerable they become to any deterioration in the financial situation.
IMF scenarios indicate that a drop in oil prices below $70 per barrel could force the government to expand its reliance on domestic financing, including discounting remittances, by more than 20%, thus deepening liquidity pressures and increasing the fragility of the financial system.
In conclusion, the discounting of remittances provides a clear example of the fiscal paradox in Iraq: a tool that provides short-term stability but does not lead to genuine structural reforms in the economy.
The sustainability of public finances cannot depend solely on short-term financing; it requires broader reforms that include diversifying revenue streams, strengthening the role of the private sector, and redirecting bank liquidity toward productive investment.
Given these challenges, the following question arises: Will remittance discounting remain a tool for managing liquidity in Iraq, or are there other alternative channels? Certainly, there are other debt instruments besides remittance discounting, but in reality, most of them entail one of three difficult paths:
First: Effectively reducing spending: This includes freezing hiring, cutting operating expenses, and reprioritizing within the budget. However, it does not significantly affect salaries, so its impact will be limited if the crisis continues.
Second: Managing the demand for dollars instead of creating new money: This means reducing imports, tightening controls on transfers, and limiting the operation of the currency auction window. This eases pressure on reserves but raises domestic prices.
Third: Relatively non-inflationary domestic financing, such as issuing real government bonds, absorbs liquidity from the market instead of creating new money. Its success in Iraq is limited due to the weakness of the financial market.
Without any of these tools, deducting remittances will become almost inevitable to finance salaries, because there is no quick alternative source of dinars in light of the halt in oil exports.
Therefore, the remittance discounting tool can postpone the crisis, but it will not lead to its cancellation, because the fundamental problem is the loss of rentier value as a source of the dollar itself in the first place, and it is possible that this tool will turn into an early indicator of a deeper financial crisis if an alternative to it is not possible or if the scarcity of oil revenues continues. https://www.economy-news.net/content.php?id=67653
US-Israeli War On Iran: What Is Happening On Day 40?
EXPLAINER News US-Israel war on Iran - The US and Iran agree to a two-week truce on Tuesday, just an hour before Trump’s deadline to escalate the conflict expired.
Iran says it has accepted a two-week ceasefire, with talks set to begin on Friday in Pakistan’s capital, Islamabad, after United States President Donald Trump agreed to suspend attacks on the condition that Tehran fully reopens the Strait of Hormuz.
Iran’s Minister of Foreign Affairs Abbas Araghchi said safe passage through the strategic waterway will be ensured for two weeks through coordination with the country’s armed forces.
Trump’s move followed a request from Pakistan’s Prime Minister Shehbaz Sharif, who urged Washington to extend its deadline for a deal and called on Iran to reopen the strait.
In Iran:
US, Iran, Israel agree to last-minute ceasefire: The US, Iran and Israel agreed to a two-week truce on Tuesday, just an hour before Trump’s deadline to escalate the conflict expired. Tehran agreed to temporarily reopen the Strait of Hormuz, while the White House confirmed Israel’s participation. The breakthrough followed talks with Pakistan’s leadership, which had pushed for a ceasefire.
Hormuz terms under ceasefire: Under the agreement, safe passage will be coordinated, with Iran and Oman allowed to charge transit fees on passing ships. Tehran plans to use the revenue for post-war reconstruction.
Ten-point peace plan: Talks are set to begin on Friday in Islamabad, mediated by Pakistan’s prime minister. Tehran’s proposal includes lifting sanctions, creating a war-loss fund, a potential US troop withdrawal from the Gulf, and recognition of Iran’s right to enrich uranium in exchange for a pledge not to build nuclear weapons. It is unclear whether the US has agreed to any of these proposals.
Tehran synagogue struck: The Israeli military accepted that an overnight strike – which it said was targeting a senior Iranian commander – caused “collateral damage” to a synagogue in Tehran, expressing regret over the incident.
Tehran leaders project strength: Al Jazeera’s Mohamed Vall reported from Tehran a “feeling of pride among the leaders”, who are telling the public that “this war is ending on Iran’s terms”.
War diplomacy:
Trump says China helped bring Iran to talks: Donald Trump told AFP he believed China played a role in pushing Iran to negotiate the two-week ceasefire. “I hear yes,” he said when asked whether Beijing was involved in bringing its ally Tehran to the table.
NATO chief to meet Trump in Washington: Mark Rutte is set to meet Trump on Wednesday, with discussions expected to focus on the Iran situation as well as Russia’s ongoing war in Ukraine, according to a NATO official.
Regional reactions: The ceasefire has triggered street celebrations in Tehran and Baghdad, with Iranian leaders declaring the conflict is ending “on Iran’s terms”. However, some citizens remain sceptical, warning the US and Israel may be using the pause to “buy time” and regroup.
Israel backs truce with limits: The office of Prime Minister Benjamin Netanyahu confirmed support for the US decision to suspend strikes on Iran, but stressed the ceasefire does not extend to Lebanon.
A fragile exit, and a narrow diplomatic window: Analyst Trita Parsi described the ceasefire as a strategic retreat by Trump, arguing the conflict had “become an absolute disaster” and forced the White House to seek a way out. “Trump needed an exit, and he took it,” he said, warning the next two weeks will be decisive, either opening a path to genuine diplomacy or allowing tensions to flare again.
Parsi noted there is “potential” for meaningful talks, but cautioned “we’re not quite there yet,” underscoring the fragility of the moment. Even if negotiations fail, he added, a return to full-scale war is unlikely in the same form. Iran still retains key leverage, particularly its ability to disrupt the Strait of Hormuz, giving it the capacity to exert sustained pressure on both Washington and the global economy.
In the Gulf
Gulf countries sound alarms: Gulf countries including Kuwait, Bahrain, Qatar, Saudi Arabia and the United Arab Emirates issued near-simultaneous alerts and activated air defences in the lead-up to the announcement of a ceasefire.
Bahrain says fire contained after attack: No injuries were reported at an unnamed facility following the incident, authorities said.
Saudi Arabia role acknowledged: The country was briefly mentioned and thanked by Australian leaders for its role as a mediator who helped facilitate the current ceasefire agreement.
Qatar: Before the ceasefire was reached, Qatar said the war was approaching a stage where it could no longer be contained. A Foreign Ministry spokesman urged urgent de-escalation, saying, “This is why we have been urging all parties to find a resolution… before it’s too late.”
In the US
US frames ceasefire as leverage for diplomacy: White House Press Secretary Karoline Leavitt said the military campaign was a success that achieved its goals, rejecting the idea of a retreat. She described the ceasefire as a calculated move, arguing it “created maximum leverage” for Trump to pursue tough negotiations, opening the door to a diplomatic solution and long-term peace.
US journalist released in Iraq: Secretary of State Marco Rubio confirmed the release of American journalist Shelly Kittleson, who had been kidnapped in Iraq days earlier. Her freedom came after the armed group Kataib Hezbollah said it would release her on the condition she leave the country immediately.
Scrutiny over ‘perfectly timed’ bets: An online prediction platform, Polymarket, is facing questions over possible insider trading after an anonymous user reportedly made $400,000 by accurately betting on the start of US military action and the timing of the ceasefire — raising concerns about leaks tied to geopolitical decisions.
In Israel
Israel backs ceasefire, but not in Lebanon: Israel said on Wednesday it supported the two-week ceasefire with Iran but maintained the deal “does not include Lebanon”, where it has been fighting Iran-backed group Hezbollah.
Reluctance over ceasefire: Al Jazeera’s Rob McBride reported that Prime Minister Netanyahu is “widely suspected of having derailed the last round of talks” brokered by Oman and remains “very wary of the word ‘ceasefire’.”
Five people injured in Israel: Israel’s emergency services said five people in northern Israel were injured following missiles from Iran and rockets from Lebanon.
Israel warns Lebanon ships: The Israeli military urged all vessels in the maritime zone off the coast of southern Lebanon to immediately head north of the city of Tyre, warning that it would operate in the area.
In Iraq and Lebanon
Strikes continue in Lebanon: Israeli operations have persisted. An air raid reportedly struck an ambulance in Qlaileh, near Tyre, while shelling was also reported in Baraachit in southern Lebanon. Lebanese health officials say medics and rescue crews are being repeatedly targeted.
Hezbollah signals defiance: The Lebanese group Hezbollah has not directly commented on the ceasefire, but shared a past statement by the late Iranian supreme leader, Ayatollah Ali Khamenei, alongside imagery of torn US and Israeli flags, warning: “We will make the enemy kneel.”
Iran-aligned groups pause operations in Iraq: The Islamic Resistance in Iraq said it will observe the truce, suspending military operations in Iraq and across the region for two weeks.
Deadly strikes in Iraq before ceasefire took hold: The truce followed a final surge in violence, with Iraqi officials reporting that strikes late on Tuesday killed at least seven people, including two children.
Global economy
Oil drops below $100:Crude prices fell on Wednesday after Trump announced a two-week ceasefire with Iran, easing fears of supply disruptions.
Caution despite ceasefire relief: Alex Holmes of the Economist Intelligence Unit said the ceasefire remains uncertain, with markets in “wait-and-see mode” as a “big gap” remains in negotiations. While oil prices fell after the announcement, he noted they are still significantly higher than in late February.
https://www.aljazeera.com/news/2026/4/8/iran-war-what-is-happening-on-day-40-of-us-israeli-attacks