KTFA Members "Wednesday News" 1-13-2021

KTFA:

Samson:  Finance Minister announces a package of measures to mitigate the effects of raising the dollar

01/13/2021 15:38:05

The Minister of Finance, Ali Allawi, revealed the ministry's intention to take measures to mitigate the repercussions of the decision to raise the dollar exchange rate against the dinar. This came during his meeting with the head of the State of Law coalition, Nouri al-Maliki, today, Wednesday.

During the meeting, Allawi reviewed the procedures followed by the ministry in dealing with the economic and financial conditions, stressing that "the ministry, within two weeks, will take a package of measures that mitigate the effects of devaluation."

He called for "concerted efforts to overcome the current stage and its repercussions on public life "to support Iraq to face the current financial crisis, plans and actions required to overcome, and the importance of uniting efforts and solidarity among all to reduce the deficit in the general budget in order to achieve social justice."

al-Maliki "the head of the State of Law coalition renewed his call to the government not to neglect the rights of peasants and farmers and to delay the payment of their dues."   LINK

Samson: Iraqi ministries require biometric updates to distribute their employees' salaries

13th January 2021
A number of Iraqi ministries and state institutions stipulated, today, Wednesday, the introduction of the voter card to pay the salaries of their employees. 

The source told Shafaq News that a number of ministries and state institutions have started implementing the decision issued by the Council of Ministers to approve the electoral card formally.  He added that a number of ministries had directed their formations not to pay their employees' salaries until after the biometric electoral card had been updated.

In this regard, Shafaq News Agency obtained an official document issued by the Iraqi Ministry of Transport stipulating the creation of a voter card in exchange for the salaries of its employees. 

According to an official letter issued by the ministry, the ministry stipulated that the salaries of the ministry’s center employees and their formations be paid after issuing the updated biometric voter card.

The Council of Ministers voted, during its weekly session, on Tuesday, to consider the long-term biometric voter card as one of the official requirements approved in state departments, and decided to grant employees a period of 60 days to update their biometric data.    LINK

DeepWoodz:  Imo....BOOOOOOM!! Bye bye corruption! And a big chunk of their deficits!

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Don961:  Article 140 postpones the settlement of constitutional amendments

Wednesday 13th January 2021

Baghdad: Omar Abdul Latif

Article 140 of the constitution stands as an obstacle to the completion of the work of the constitutional amendments committee in the House of Representatives, which may delay the settlement of these amendments to the next parliamentary session.

Committee member Yonadam Kanna told Al-Sabah: "The committee's meetings have stopped because Article 140 of the constitution remains suspended until now, adding to it the political dispute between Baghdad and the Kurdistan region."

He added, "It was supposed to hold a meeting between the political leaderships and a joint committee of the main components in the Kirkuk governorate, which is the basis for the problem of resolving this constitutional article, but the matter is too late, and amendments may not be completed during the current session." "The amendments, even if completed, need to be passed by Parliament, and the matter may be difficult."

And we indicated, "The committee agreed to reformulate Article 140 in a new form, but the deputies of Kirkuk governorate refused to do so, which led to the article remaining unchanged and not submitted for discussion or voting." He confirmed that "the report supposed to be written by the committee chairman and the reporter We haven't seen it yet. "

Article 140 of the Constitution of the Republic of Iraq defines the disputed areas in Iraq as "those that have been subjected to demographic change and the policy of Arabization at the hands of the dictatorial regime."

The article stipulated a mechanism that includes three phases, the first of which is (normalization), which means treating the changes that occurred in the demographics in Kirkuk and the disputed areas in the previous regime and after it, and the second (population census) in those areas, and the last of which (the referendum) to determine what their residents want, before December 31, 2007.   LINK

Don961:  A member of the parliamentary legal profession talks about two indicators that prove the smuggling of hard currency outside Iraq

Baghdad Today - Special

Member of Parliament, Hussein Al-Aqabi, said, Tuesday, January 12, 2021, that there are two indicators that prove the smuggling of hard currency outside Iraq by banks operating inside

Al-Aqabi said in an interview with (Baghdad Today), "The first indicator of smuggling foreign currency, the dollar, outside Iraq, is through the amount of the annual currency auction that the Central Bank of Iraq sells, as it is not commensurate with the volume of trade entering the country"

He added that "the second indicator is related to the amount of taxes, ie the customs tariff and its revenues, and this also does not match the currency auction sales"

He continued that "the Integrity Commission is currently conducting investigations with a number of Iraqi banks, regarding the existence of irregularities regarding the receipts they provide for imports from outside the country," pointing out that "there are indications that give an almost certain impression that there is a process of smuggling foreign currency outside Iraq with a difference." The price, which is a big win for traders ”

Al-punabi expressed his support for "the supervisory bodies, the Public Prosecution Authority and the judicial authority in taking strict measures and resolving the issue, especially in investigations with banks and banks"

Earlier, a member of the Parliamentary Economic Committee, Representative Nada Shaker, submitted a proposal today, Monday (January 11, 2021), which she said would “contribute to ending the file of smuggling hard currency outside Iraq”

Shaker said in an interview with (Baghdad Today), "The file of smuggling the dollar, as it is a hard currency, is not the result of the moment, and it has been in existence for years, and in various ways by very influential parties"

Shaker added, "The dollar smuggling file can be ended through a consistent and clear mechanism, which is that every merchant or company intending to import any material or commodity submits an application for the dollar, given the quality and quantity of the material"

And that "so that the customs tariff will be deducted from the total amount that he is asking for," according to the deputy, which will lead to "preventing any attempts to smuggle the dollar out of the country through false receipts"

Jawdat indicated that "this procedure is much better than the decision to raise the dollar exchange rate and reduce the value of the Iraqi dinar, because despite its reduction in certain percentages for smuggling the dollar, but in return it caused an increase in the prices of materials and reduced the purchasing value of salaries, which created great harm to the poor"  LINK

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Don961:  There is no equality between Iraqis and foreigners before the devaluation of the dinar

 Tuesday 12 January 2021 - 6:15 Morning coffins Economic Researcher

The official exchange rate moved from 1182 to 1450 dinars per dollar. Overnight, the dinar lost 22.6% of its value. Of course, this decline is not limited to the relationship between the dinar and the dollar, but rather includes all other foreign currencies. The relationship of the dinar to all currencies is determined by the exchange rate of the dollar against these currencies.

This measure led to the discontent of citizens, who mainly suffer from a severe economic, social, security and health crisis. The prices of imported goods increased, which effectively contributed to the increase in the inflation rate. Because imports constitute a significant proportion of the GDP. Iraqis also notice an increase in the prices of local goods and services. Whenever prices rise, consumers will suffer, especially those with low and fixed incomes. Poverty has become a fundamental feature of Iraqi society.

But there is another very important point. It relates to how the various dealers with the state are affected by the devaluation of the dinar.

It is known that the most important chapter for public expenditures is the salaries of working employees. The size of these salaries moved from 50.5 trillion dinars in 2020 to 41.5 trillion dinars in the year of the 2021 draft budget. In other words, the decline is equivalent to 17.8%. 

However, the value of the dinar fell by 22.6%. Thus, 41.5 trillion dinars in 2021, equivalent to 32.1 trillion dinars, before the reduction. On this basis salaries fell by 36.4%. This situation leads to a decline in the standard of living of more than two-thirds of the population who subsist on salaries. And the suffering of all citizens, including employees and wage earners in the private sector, professionals, the unemployed and others, suffer more under the influence of additional workers. The first is direct and indirect taxes and fees, which are rising dramatically in the current year. The second is the continuing annual deterioration of the ration card allocations, which moved from 3928 billion dinars in 2008 to 648 billion dinars in 2021, that is, from 3069 million dollars to 446 million dollars. 

It is known that the decline in the purchasing power of salaries, the imposition of high taxes, the reduction and then the abolition of the ration card represent the basic items of the International Monetary Fund's program applied in Iraq. The number of the poor will then increase, and will soon move from a third to half of the population.

The second aspect of state expenditures is related to payments made to foreigners. Among them are the dues of foreign oil companies operating in Iraq, which amount to about ten billion dollars per year. These dues, unlike salaries, are estimated and paid in dollars, not in dinars. Consequently, these companies get their dues, as if the dinar’s exchange rate has not changed against other currencies.

The same analysis applies to the installments and interests of foreign debts, which amount to $ 4,730 million this year. It is due to several countries and financial institutions, foremost among which are the International Monetary Fund, the World Bank, the United States and Britain. The same provision also takes the compensation established for Kuwait and the price of Iraq's electricity and natural gas purchases from Iran.

There is no doubt that inequality between citizens and foreigners occurs in all countries that devalue their currencies. Thus, at first glance, it is not limited to Iraq. But we must distinguish between two things:

The first thing to reduce is to improve the balance of trade. Then exports would increase, domestic production would rise, unemployment would decrease, and growth would accelerate. Thus, the negative repercussions of the rise in imported commodity prices resulting from the reduction diminish. This is not happening in Iraq, as there are no exports that can benefit from the reduction process.

The second matter is to reduce financing the general budget deficit. This is the wisdom of devaluing the dinar. The fiscal deficit recorded a record of 58.2 trillion dinars in the draft budget for 2021. Because of insufficient loans to finance it, the state resorted to cash issuances, and the equivalent rate of the dinar decreased. Then, the standard of living of citizens will necessarily decline, especially those with low incomes and those with salaries.

There is no doubt a mechanism in the government sector represented in raising salaries when the prices of consumption of goods and services (allocations for the cost of living) rise. In order for the standard of living not to decline, the entire salary should rise by a percentage not less than the rate of the devaluation of the dinar. This will not happen for one simple reason, which is that any increase in salaries leads to a rise in public expenditures, thus increasing the fiscal deficit. There is therefore a clear contradiction between the increase in salaries and the devaluation of the dinar. Whereas, if the goal was to support the trade balance, the public authorities would not have hesitated to increase these allocations. 

We conclude from the foregoing that lowering the exchange rate of the dinar necessarily leads to a decline in the citizens' standard of living without affecting the dues of foreigners.

Morning coffins Economic Researcher   LINK

Samson:  Brent crude above $ 57 for the first time since last February

01/2021/13 09:20:53

 The price of Brent crude rose, according to trading data, above $57 a barrel for the first time since February 24 of last year.

As of four o'clock on Wednesday morning Baghdad time, the price of March futures contracts for North Sea oil mix from Brent rose 0.48% to $ 57.03 a barrel, and February futures contracts for West Texas Intermediate crude rose 0.66%, to $53.56 a barrel.

Oil prices continue to receive support due to optimistic expectations of demand on the one hand, as well as against the backdrop of production prospects after the decisions of the "OPEC +" group, on the other hand.

Last week, OPEC + completed a two-day meeting, in which it defined the parameters of the deal two months ago, as the current terms of the agreement were extended to almost all countries. However, Russia and Kazakhstan got an opportunity to increase production in February and March, while Saudi Arabia and a number Other participating countries, on the contrary, decided to reduce it.   LINK