KTFA Members "Saturday News" 7-25-2020

KTFA

Samson:  The Iraqi government may suspend official hours this week with a comprehensive ban

25th July, 2020

The crisis cell in the Iraqi parliament revealed today, Saturday, a government proposal to disrupt official working hours, this week.

"The Iraqi government is currently studying the issuance of a decision to completely disable the official working hours this week, because of the high temperatures at record rates, all over the country, with large interruptions of electricity," said cell member, MP Abbas Aliwi, to Shafaq News.

And Aliwi said, "The other reason for this proposal is to control the non-rise of infections with the Corona virus, especially with the approaching Eid al-Adha, and people roam a lot in the markets." The decision will be officially issued, and perhaps this will happen during the coming hours, as this is expected.   LINK

Samson:  Ministerial Roundtable discussions express support for Iraqi government economic reforms

24th July, 2020

The Iraqi government and the International Energy Agency (IEA) hosted a virtual Ministerial Roundtable event to discuss reforms of the Iraqi economy and explore new models to encourage long-term investment in Iraq.

The focus of the discussions was the energy sector, particularly Iraq’s electricity and natural gas.

The meeting brought together senior Iraqi Ministers and officials, Ministers from IEA member countries, CEOs and leaders of energy companies as well as international financial institutions.

The Iraqi side was represented by the Deputy Prime Minister and Minister of Finance Dr. Ali Allawi, the Minister of Oil, Mr. Ihsan Ismail, the Minister of Electricity, Mr. Majid Hantoush, and the Prime Minister’s Adviser on Investment, Ms. Suha Najjar.

The event, co-hosted by the IEA’s Executive Director, Dr. Fatih Birol, was joined by senior government officials from other countries, including the US Secretary of Energy, Mr. Dan Brouillette, and the UK’s Minister of State for Business, Energy and Clean Growth, Mr. Kwasi Kwarteng.

Business leaders taking part included the CEOs of Siemens Energy, GE Gas Power, Total, Eni and others.

Reforms White Paper

At the start of the discussions, Dr. Ali Allawi outlined the nature and scale of the financial and economic crisis in Iraq.

Dr. Allawi told participants that this Iraqi government is revisiting all past decisions that have encumbered Iraq’s economy, allowed it to be wholly dependent on oil, and stifled the ingenuity and creativity of Iraqis.

Dr. Allawi said that the new Iraqi government is  committed to submitting a wide-ranging White Paper to Parliament in September 2020 which will set out a roadmap to reorient the Iraqi economy and grow the private sector so that it can play its natural and leading role in the economy.

Dr. Allawi said that reforms are necessary to drive growth and development:

Iraq reforming its economy is not a matter for debate. It is essential, and it is vital that reforms are comprehensive and timely. The meeting today with the IEA highlighted the Government of Iraq‘s seriousness in its endeavour to fundamentally reform its economy, including the energy sector, which we want to be a driver of growth and development.

Modernising the electricity sector

In his contribution, Iraq‘s Minister of Electricity, Mr. Majid Hantoush, outlined the challenges facing the electricity sector in Iraq which impede delivering a service that meets the expectations of the Iraqi people.

Mr. Hantoush underscored that the Iraqi government is determined to update plans to rehabilitate and modernise the electricity sector, and to rehabilitate and expand transmission network.

He reiterated that this Iraqi government will adopt the principle of partnership to encourage investment in this vital sector.

Oil and gas

Iraq’s Minister of Oil, Mr. Ihsan Ismail, stressed the important role Iraq played in helping to stabilise the global oil market, despite the very exceptional and difficult challenges the country is facing, by fulfilling its commitment to implement the OPEC + and G20 agreements.

The Minister of Oil gave a briefing on the impact of the pandemic, the reduction in oil prices and the financial crisis, on the plans to develop the natural gas and oil sectors.

He added that the burning of associated gas is unacceptable, and stressed that the Iraqi government plans to end the burning of associated gas, and that this will contribute significantly to achieving the economic goals of the government.

International support

The Executive Director of the IEA, Dr. Fatih Birol who opened the ministerial roundtable discussions, said electricity and natural gas sectors are critical to growing the Iraqi economy and to the creation of jobs for Iraqis.

Dr. Briol told participants that the new Iraqi government should be supported as it embarks on introducing what he described as “deep and urgent” structural reforms to revitalise the Iraqi economy.

Dr. Briol reiterated his organisation’s continued support for Iraq, saying:

The IEA has been a steadfast supporter of Iraq’s reforms, and we are especially encouraged by the Government’s clear-sighted and comprehensive vision for economic development.  The energy sector will be a crucial linchpin here – stable and affordable electricity can spur the private sector growth that Iraq needs to diversify.

In his contribution, the US Energy Secretary, Mr. Dan Brouillette, thanked Iraqi ministers for what he described as their “frank analysis” of the current challenges facing Iraq and reiterated the US support for the Iraqi government and its reforms programme.

The UK’s Minister of State for Business, Energy and Clean Growth, Mr. Kwasi Kwarteng welcomed the Iraqi government commitment to reforming and diversifying the economy, saying that the UK will continue to support Iraq across several areas, including economic reforms and called on other countries including those in the region to support Iraq.   LINK

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Don961:  Continuing to link Gulf currencies to the dollar depletes monetary reserves

- 5 Hours Ago

Analysts unanimously agree that maintaining the majority of Gulf currencies are pegged to the US dollar, which has become a heavy burden on the financial conditions in the countries of the region, in light of the decline in global oil prices and the repercussions they have been caused by the closure and foggy restrictions that still hover over the growth of the global economy.

DUBAI - Money market analysts acknowledge that Gulf countries are still able to weather their current crises with the help of their large financial reserves, especially after frequent measures in recent years to rationalize spending, reduce government support, and increase budget revenues.

This impression is coupled with the continued Gulf governments, with the exception of Kuwait, in pegging their currencies to the US dollar, but keeping that may drain more of their cash reserves in light of the Corona virus, which struck most of the vital sectors of the recession.

The sharp decline in crude oil prices has led to a growing belief that the Gulf countries, especially Saudi Arabia, may be forced to abandon the riyal peg to the dollar, after maintaining that policy for decades.

The economic repercussions of the epidemic have prompted Gulf governments, which rely mainly on oil sales to collect foreign currencies, to bite off part of those reserves to support the private sector and citizens.

Fitch Ratings Ratings experts ruled in a recent report that the Gulf countries, whose fiscal deficit is exacerbated by the drop in oil prices, will devalue their currencies, although continuing to link them to the dollar may lead to the depletion of foreign assets and debt accumulation.

Technically, pegging the currency to another currency means fixing its value and not leaving it to supply and demand in the market as it happens with some countries when you are in the process of floating the currency.

Analysts confirm that the reserves of any of the central banks in the Gulf countries are necessary to maintain the peg price and maintain it at the desired level so that the economy does not shake or be affected by external shocks as is the case at the present time.

Policymakers in the oil-exporting region have long said that pegging the dollar to the dollar is in their economies’s heavy dependence on oil and gas, but the fall in crude prices this year has added pressure to a number of pegged currencies.

"We do not expect any change in the exchange rate regimes pegged to the Gulf Cooperation Council countries in the medium term," Fitch said in her report. But she added that continuing to link "will entail a significant depletion of foreign assets or debt accumulation."

The agency stressed that Saudi Arabia, the United Arab Emirates and Qatar have sufficient resources to maintain their interconnection systems, while external support remains important to Bahrain, which its wealthiest Gulf allies pledged $ 10 billion in 2018 to avoid a credit crisis.

In the case of Oman, which has more foreign reserves than Bahrain, the fenders dissipate quickly, and future large debt payments may undermine confidence in the peg.

And Saudi Arabia’s reserves fell last April about 20 billion dollars, as the net foreign assets of the Saudi Monetary Agency (the central bank) fell to 443.7 billion dollars, compared with March.

As for the UAE, which comes in second place among the Gulf countries, its foreign reserves reached $ 110 billion, including cash and assets, compared to about $ 125 billion last September.

The rest of the Gulf countries are considered to be in an exportable situation, as Qatar has cash reserves of about 56.3 billion dollars, and Kuwait has a stock that does not exceed 39 billion dollars.

As for Oman’s reserves of foreign exchange and gold are estimated at 16.6 billion dollars, and finally Bahrain, which recorded a cash reserve of 3.5 billion dollars at the end of last February, without calculating its reserves with the International Monetary Fund or special drawing rights.

Gulf countries cut spending this year and rearranged its priorities, and Saudi Arabia, the region’s largest economy, increased value-added tax to boost revenues.

Fitch experts stressed that the structure of Gulf economies is appropriate to control their finances through rationalization of spending, not devaluation of their currencies.

The agency said, "The devaluation will only return with a few competitive advantages over the countries of the Gulf Cooperation Council due to the nature of their economies not diversified resources."

Social concerns are also likely to cause governments to refrain from devaluing currencies, as they may lead to higher costs of living.

"A potentially violent social response is a risk to both currency devaluation and fiscal rationalization, but fiscal policy may better be accommodated by a more gradual control," Fitch said.

The Arabs   link

Samson:   Oil prices are rising, supported by positive economic data

25th July, 2020

Oil prices rose, supported by some positive economic data, but tension between the United States and China limited the gains

Brent crude futures were settled up three cents to $ 43.34 a barrel. US West Texas Intermediate crude futures rose 22 cents to settle at $ 41.29 a barrel

On a weekly basis, Brent increased 0.5 percent, while US crude added 1.7 percent

US business activity rose to a six-month high in July. However, American companies recorded a decline in new orders with the acceleration of cases of Covid-19

The number of Americans applying for unemployment benefits reached 1.416 million last week, rising unexpectedly for the first time in nearly four months

The bank reduced its forecast for the oil market surplus for 2020 to an average of 2.5 million bpd from 3.5 million bpd previously

According to data from Baker Hughes Energy Services, the number of oil and gas rigs in the United States, an indicator of future production, fell by two rigs to an unprecedented low of 251 in the week ending July 24 but energy companies added one oil rig in the first weekly increase since March

Putting pressure on prices, China has ordered the United States to shut down its consulate in Chengdu, in response to a US request this week that Beijing shut its consulate in Houston and renewed tension between the world's top oil consumers has added to concerns about fuel demand   LINK

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Samson:  Mexico is moving toward launching the world's largest oil hedge

25th July, 2020

Mexico has asked the largest banks on Wall Street to bid for its massive oil hedging program, while options for trading in crude oil are growing this week ahead of the giant deal. According to Reuters sources

A source with direct knowledge of the matter said that the Ministry of Finance asked banks for quotations, indicating the start of the hedging implementation process

Every year, Mexico buys financial contracts amounting to one billion dollars, which is the largest oil hedging program in the world, to protect its oil revenues. 

Bankers and officials on both sides of the deal expect a lower hedge this year because the options used to protect oil profits are more expensive than last year   LINK

Samson:  Public Perception Of Debt Transparency

25th July, 2020

Senior debt specialist in the global practices sector for macroeconomics, trade and investment

In the context of high levels of public debt, debt transparency has become critical for several reasons: creditor institutions should fully assess the potential borrowing countries’ debt burdens, citizens need to be able to hold their governments accountable for the debt they borrow, and borrowing countries should design strategies based To have a clear understanding of the level and costs / risks of their debts.

One of the pillars of debt transparency is to publish accurate, comprehensive and timely data. In order to obtain a complete picture of the extent to which countries have succeeded in these measures, the World Bank has prepared a colorful graphic map displaying public debt data dissemination practices in IDA-eligible countries. In this framework, we monitor hundreds of national authorities' websites that are available to the public on the Internet to assess countries' performance according to key indicators such as access to debt statistics, their coverage, their frequency, the existence of a debt strategy and an annual borrowing plan. This colorful graph is updated every six months to enhance countries’ efforts to improve their publishing strategies.

The results of the evaluation conducted in April 2020 show that nearly half of the countries surveyed publish a medium-term debt strategy although less than 10% of these countries translate this strategy into annual borrowing plans. But gaps still remain: debt disclosure standards are still very weak in 36% of IDA-eligible countries, and data is either not available, insufficient, or too old to be reliable (before 2018).

This is the first in a series of tools the World Bank is introducing to shape the debt transparency agenda. The following workshops will address the transparency of domestic debt issuance frameworks and the integrity of legal debt management frameworks. Follow us for the latest developments!

To learn more about debt management and transparency tools, see   the World Bank Debt and Public Finance Risk Manual    LINK

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Samson:  Deputy: Iraq is the only country able to defuse the war between America and Iran

13:40 - 07/25/2020

The deputy of the Al-Fateh Alliance Fadel Jaber affirmed on Saturday that Iraq is the only country capable of playing the role in defusing the war between Iran and America as well as Saudi Arabia, noting that Al-Kazemi's visit revealed the depth of relations between the two countries.

Jaber said in a statement to the "information", that "the visit of Prime Minister Mustafa Al-Kazemi to Tehran revealed the depth of relations between the two neighboring countries and that the two countries are determined to develop relations in all aspects because of their many shares."

He added, “The call of Iranian President Rouhani to reject his country from making Iraq arena of conflict confirms to us that Iran is willing to develop its economic and trade relations with us."

Jaber pointed out that "the visit implicitly confirmed that Iraq is the only country in the region able to fuse the war between Iran and America, as well as Saudi Arabia."   LINK

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Samson:  Iranian official reveals the embezzlement of at least $ 22 billion in foreign currency

24th July, 2020
President of the Iranian Fars Province Chamber of Commerce, Jamal Razzaky, said on Friday that at least $22 billion in foreign currency has been embezzled.

Razaky confirmed that "at least $ 22 billion of the Iranian currency has disappeared under the sanctions, under the pretext of allocating the government currency for import."

Razaki did not explain how and when these sums disappeared, but he pointed out that this "corruption" resulted from the granting of hard currency at a government price (42 thousand against the dollar) to importers and traders.

The Iranian official also saw that "the government should cut off the allocation of the currency supported by 4,200 tomans due to corruption and patronage, but instead should allocate those resources in the form of coupons, in order to increase workers’ wages and support the Relief Committee and the health care organization."   LINK