KTFA Members "News and Veiws" Friday Morning 5-8-2020
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Mazhar Saleh: Al-Kazemi’s government will launch the first package to revive the economy
Baghdad - people
On Thursday, Advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Saleh, revealed the existence of packages of measures to revitalize the national economy.
Saleh said in a statement to the official agency, followed by "Nass", (May 7, 2020), that "there are packages of important measures to revitalize the national economy," noting that "the first package of them includes the adoption of small loans for young people on very soft terms, as well as large private loans In the areas of agricultural activity, manufacturing, and services, especially as they are income and revenue generating.
He explained that "this initiative represents the integration of the monetary and financial policies of Iraq towards building economic stability and strengthening markets in addition to advancing sustainable development paths and raising levels of employment and use and combating recession."
Saleh added that "the package will go out as a priority to revitalize the agricultural movement in fundamental aspects, including facilitating the acquisition and acquisition of agricultural lands, supporting agricultural production and agricultural technology, and in accordance with the requirements of strengthening Iraq's food security and advancing national agriculture."
He continued, "The first package will be taken over by the Al-Kazemi government to support the macro economy and the national market and move the state apparatus more efficiently."
Expectations indicate that Iraq may witness an annual performance that is the worst for the country since the overthrow of Saddam Hussein's regime in 2003, especially since Baghdad is currently considering the possibility of deduction of huge public salaries, in a move that will receive popular rejection and may renew the wave of protests with a new government taking over .
According to a report published by the French news agency, and followed by "Nass" (May 7, 2020), the GDP of Iraq is expected to decrease by 9.7 percent this year, and poverty rates may also double, according to the expectations of the World Bank, making this the worst annual performance The country since Saddam Hussein was toppled in 2003.
The second largest producer of OPEC was affected by a double blow, firstly by the collapse of oil prices, and secondly by the Covid-19 pandemic, which dramatically affected its oil revenues.
And Iraq’s oil revenues last month reached 1.4 billion dollars, less than a third of the four and a half billion that the country needs per month to pay public sector salaries, compensation and government costs.
That is, the Iraqi government suffers every month from losing $ 3.1 billion in oil revenue.
In the face of this crisis, officials may put massive payrolls on the deduction list, according to two senior officials involved in discussions to suggest solutions.
The basis for salaries is more likely to remain the same, and austerity measures will extend to the large "allocations" that made up two-thirds of the $ 36 billion budget for salaries in 2019.
These allowances include rewards or benefits such as cars and homes, based on factors that include seniority, educational level, children, or informally political and family relationships.
An Iraqi official says that "the cuts we are studying include reducing the allocations of high-ranking public officials by more than half, the average level by 50 percent, and the low level by about 30 percent."
The government will also consider freezing recruitment and promotions, cutting military spending, and stopping maintenance of government buildings to save more money.
The authorities may even print the currency to pay salaries, which will force the central bank to use its foreign reserves of $ 60 billion to support the dinar exchange rate against the dollar.
These measures are part of the $ 54 billion "emergency financing document", just over a third of the amount budgeted for the 2020 draft budget that parliament has yet to pass.
"It is the first time that we have had to do something similar."
" Too little, too late. "
And Iraqi economic analyst Ali Mawlawi told France Press that, with the deficit increasing every month, "What kind of measures will the government take now to try to avoid the economic disaster? It is really very little and very late."
The government pays salaries to four million employees, pensions for three million, and aid for a million others, which means that one out of every five Iraqis receives what can be considered payments from the state.
Maulvi says that the government of Prime Minister Adel Abdul Mahdi, as its predecessors, has appointed employees to please political allies.
He adds that "oil prices rose when Abdul-Mahdi took office, which led to a false sense of safety from his government, and expanded in the public sector to the stage of losing control, which led to this serious financial crisis."
For 2019, the government monitored a 13 percent increase in salary expenses, and jumped 127 percent in pensions, according to a World Bank analysis.
Late last year, the government employed at least 500,000 people in an effort to appease angry anti-government protesters protesting against unemployment and corruption, which led to salary inflation inflated again by 25 percent.
Public jobs are inherited from the previous era in Iraq, as university graduates are theoretically employed by a related ministry upon their graduation. But this strategy has overburdened the public sector engulfed by corruption.
The benefits associated with government positions mean that they are sold for hundreds of thousands of dollars by grade, while the private sector is regrettably unrepentant.
"This is an economy that does not create jobs," says Wael Mansour, chief economist at the World Bank in Iraq.
This raises problems in a country with rapid population growth, and is set to increase ten million in the next decade to 50 million.
"If they really want to make an impact, the only place to do that is by salaries," says Mansour.
difficult decision
However, similar austerity measures "could spark more social unrest, with public services already weakening and unemployment rising," according to the World Bank.
The new Prime Minister, Mustafa Al-Kazemi, had hoped that he would not have to start his mandate with cuts, but fear of public reaction prevented the caretaker government headed by Abdel-Mahdi from implementing the cuts.
"No one wanted to take responsibility," says a second official involved in developing emergency procedures.
The same official describes the meetings in which caretakers were more focused on signing last minute contracts that would earn them quick bribes, knowing that their days in government were numbered.
Given the prospect of a further drop in oil revenues in May with lower prices and demand, things could get worse.
"If we don't agree on something swift, there will be no money in June. We will have to announce a full government shutdown, and this is a precedent," the official said. LINK
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MilitiaMan: BROUGHT FORWARD
In the document .. The Council of Ministers decides to suspend all forms of financial financing until the new government begins
7th May, 2020 Translation...
The Council of Ministers decided at its eighteenth regular session in Tariq 2020/5/5 the following 1. The Ministry of Finance has the right to suspend funding for all until the government’s days by studying the subject and taking safety decisions to address the decrease in revenues due to the low price of oil, except for the government grant Al-Tafsah, the blonde segment installed according to the General Secretariat of the Council of Ministers, numbered: sh. 9123/30/26 Of the date of 2020/4/22 yes, and the Prime Minister in consultation with the Minister of Finance may launch the exchange when liquidity is available in the most necessary cases, and in a manner that does not contradict the relevant laws and the directives of the Prime Minister issued in implementation of. This decision is implemented from the date of its issuance. LINK
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Debt relief is an urgent necessity during a pandemic
6th May, 2020
Gordon Brown Lawrence Summers
The developed world has responded to the emerging crisis of Coronavirus (Covid 19) by supporting their local economies and financial systems in bold and unprecedented ways, on a scale that no one would have imagined three months ago
By contrast, when the world's finance ministers and central bankers meet online this week in the framework of the semi-annual meetings of the International Monetary Fund and the World Bank, steps will be taken to fortify the international system. But nothing could match what countries do at the local level
First, the International Monetary Fund, the World Bank, and regional development banks must move as strongly as global central banks have done to expand their loans.
Second, If there is an appropriate moment to expand the use of the international currency known as special drawing rights, it is now.
If global money is to remain balanced with domestic monetary expansion in rich countries, the urgent need to increase special drawing rights to more than $ 1 trillion. LINK
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MilitiaMan: Kinda looks like the Prime Minister and the Finance Minister had a chat about launching the, or an exchange when liquidity is available.. Well what liquidity are they talking about? They have no hard currency ($USD) nor will they apparently be getting any more any time soon, either. lol
A chat about implementation of liquidity of what may I ask? Scratch chin... lol They know they will have liquidity once they inject the new currency to a live international level. A program rate is going no where!!! imo..
They know the secondary markets are the place to be in to defend oil price swings, currency, etc.. They know when they get fully Article 8 compliant with a new international rate, the SDR basket will or may at least have serious relevance, as noted above. The Time is now.
They can not get to the level they need to be or where it is even an option to do either of the two possibilities with out a strong international currency, imo .No SDR or Secondary Market is on the table at a program rate. Neither one of them can happen with out them lifting the value of the IQD, imo. They had no, nor have now, any more options to put it off!! They are in a corner and the new PM knows it.
So, will they get liquidity when they actually launch into international markets? We shall see, but, imo the world is not only expecting it, the world and the international financial system warrants it. The pressure on Iraq now and along with the Global Financial System is immense going forward. It is not about just Iraq.. As wee see above the IMF and World Bank are talking about it strongly. They are talking about the international financial system.. Let that sink in..
We have had oil shocks of late with futures contracts going negative $38 pbrl and now we see the signs of the bond markets doing the same in the near future for November and December!!! Notice who is saying things that don't seem to be main stream and I will bet for good reasons it is not being said to of by main stream media. When the IMF and World Bank say things and the masses actually hear it?
It moves markets.. Lets just say no one likes or wants panic in markets.. But, imo if the words above were to be mainstream? Hold the door Alice!
We have support by Pompeo. We have by extensions the FIMA, CML, SLL, SDR, etc.. All supported by the PTB.. At the highest levels now.. They want money to move and see that the CBI is on board! ~ MM
Vowing to help Al-Kazemi .. Pompeo: Now comes urgent and hard work "
Pompeo discussed with Al-Kazimi "ways to work together to provide the Iraqi people the prosperity and security they deserve"
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The statement concluded: "We have taken good notice of Prime Minister Al-Kazemi's promise to hold early elections and his will to strengthen the democratic system in Iraq. We look forward to working with this new government to give the Iraqi people the sovereignty, dignity, prosperity and security they deserve." LINK
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" corporation and thus will provide it with rapid growth and that the formation of a larger entity covers wider services commensurate with the large size of the merged corporation and thus its access to broader financial services by this bank commensurate with its size
The Central Bank of Iraq LINK
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On Thursday, Advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Saleh, revealed the existence of packages of measures to revitalize the national economy.
Saleh said in a statement to the official agency, followed by "Nass", (May 7, 2020), that "there are packages of important measures to revitalize the national economy," noting that "the first package of them includes the adoption of small loans for young people on very soft terms, as well as large private loans In the areas of agricultural activity, manufacturing, and services, especially as they are income and revenue generating.
He explained that "this initiative represents the integration of the monetary and financial policies of Iraq towards building economic stability and strengthening markets in addition to advancing sustainable development paths and raising levels of employment and use and combating recession."
Saleh added that "the package will go out as a priority to revitalize the agricultural movement in fundamental aspects, including facilitating the acquisition and acquisition of agricultural lands, supporting agricultural production and agricultural technology, and in accordance with the requirements of strengthening Iraq's food security and advancing national agriculture."
He continued, "The first package will be taken over by the Al-Kazemi government to support the macro economy and the national market and move the state apparatus more efficiently." LINK
Iobey777: WOW!!! So many Wonderful articles today!! Sure looks like Iraq’s new PM is going full steam ahead with IMPLEMENTING the MR of Iraq! I would love to know what the citizens are saying! Hope they are all smiling and happy with their new GOI!
Samson: Trade negotiators in Washington and Beijing agree to implement the trade deal
8th May, 2020
Senior officials in the United States and China have pledged to provide favorable conditions for the implementation of the bilateral trade deal and economic and public health cooperation
A statement issued by the Ministry of Commerce in China and transmitted by Bloomberg Agency Thursday evening revealed a phone call between US Treasury Secretary Stephen Mnuchin and US Trade Representative Robert Lighthears and Chinese Vice President Liu He
The two sides spoke during the phone call on issues of economy and public health, with discussion of trade matters, including the first stage of the trade deal, signed last January
The phone call comes at a time when investors have raised concerns globally about increasing tensions between the two largest economies in the world, as the United States accuses China of being the cause of the spread of the "Coffid-19" globally
A trade war had sparked Washington and Beijing over the past two years amid the imposition of customs duties on each other's products before the tensions and bickering between the two sides stopped with the signing of the first phase of the trade deal in January
The Corona pandemic has raised questions about whether China can meet its obligations in the first phase, which includes the purchase of an additional $ 200 billion in US goods over a two-year period and at the weekend, US President Donald Trump said he might end the agreement if Beijing fails to meet these obligations
In a statement issued by the American Trade Representative office yesterday, he clarified that the two sides agreed during the phone call that despite the current global health emergency, both countries expect to fully fulfill their obligations under the agreement at the appointed time
According to the Chinese Ministry of Commerce statement, both countries are working to implement what is described in the trade agreement LINK