MilitiaMan and KTFA Members "A HUGE Deal" 10-22-2020

KTFA:

A member of Parliament Finance sets an expected date for the October salary distribution  LINK  

MilitiaMan:  He emphasized that the government should proceed with its reforms, noting that the Minister of Finance said that the White Paper will be implemented as of January 1, 2021.

The part that seems to get lost, is the bold underlined above. Reforms are apart of the White Papers. What the White papers are yet to have exposed to the masses, is first and prior to any implementation of the White papers, is a rate at which the reforms will be allocated in and to! Yep, prior to the end of year salaries that are yet to be determined Or have yet to be paid is a rate for the last final 4 months of the year..

Toyvp:  COURTESY OF TGOECKS The White Paper for Economic Reforms: vision and key objectives

 22 Oct 2020 - 2:50 pm

The Iraqi government has formally adopted the White Paper for Economic Reforms prepared by the Crisis Cell for Financial and Fiscal Reform.

The White Paper seeks to put Iraq’s economy on a path that allows the state to take appropriate steps in the future to develop it into a diversified, dynamic economy. Dr. Ali Allawi, Deputy Prime Minister and Minister of Finance

The White Paper is a comprehensive programme that sets out a clear roadmap to reform the Iraqi economy and address the accumulated, decades-old serious challenges that confront it.

Iraq’s Deputy Prime Minister and Minister of Finance, Dr. Ali Allawi said that the White Paper seeks to put Iraq’s economy on a path that allows the state to take appropriate steps in the future to develop it into a diversified, dynamic economy that creates opportunities for citizens to live a decent life.

And although the current severe fiscal crisis that Iraq is going through is related to the recent sharp decline in oil prices and to the repercussions of the Coronavirus pandemic, the White Paper makes it clear that the causes of Iraq’s economic and financial woes date back several decades.

The White Paper identifies the expansion of the role of the state as a key cause of the crisis.

The roots of the crisis

The White Paper provides a detailed outline of the factors that have distorted the Iraqi economy, undermined its capacity to provide a decent life for large number of Iraqis, and its failure to keep pace with the economic developments that the world has witnessed.

The expansion of the role of the state

The White Paper identifies the expansion of the role of the state and emergence of a command economy in Iraq as a key cause of the crisis.

From the nationalisation of vital economic sectors in 1970s, to the commandeering of all economic levers by the state to support the war effort in the 1980s, through the period of  sanctions imposed on Iraq in the 1990s, these shocks, as well as the absence of strategic planning, mismanagement, maladministration, patronage and misguided political ideology, all led to an expansion of the role of the state in all aspects of economic life in Iraq.

The Iraqi economy continued to be directed by the state after the events of 2003 because of the failure of the new political system to create a free and diversified modern economy as outlined in Iraq’s Constitution, and instead continued to rely on the state as the almost only driver of economic activity in the country.

The expansion of the role of the state, and the associated increase in the number of those employed in the public sector and the cost to Iraqi exchequer of their salaries and pensions, came at the expense of the government’s ability to invest in basic infrastructure in Iraq.

To illustrate the point, the White Paper points out that from 2004 to 2020, state expenditure on the salaries of civil servants and on public sector pensions increased by 400% in real terms, as the total number of public sector workers during the same period increased by threefold.

The cost of salaries and pensions of public sector workers is expected to be around 122% of Iraq’s oil revenue in 2020. The White Paper for Economic Reforms

And between 2006 and 2018, average public sector salaries increased by 134%, more than the increase in labour productivity, which rose by only 12%, or the cost of living, which rose by 28% during the same period.

Over the past 17 years, government spending on the salaries of state employees, and on public sector pensions became the fastest growing expenditure item in Iraq’s successive federal budgets during this period.

There are currently around 4,500,000 public sector employees and 2,500,000 pensioners.

Decline of the private sector

The expansion of the state’s role, in addition to the complex administrative system and the state’s weakness in imposing the rule of law, the militarisation of society, and the influence of non-governmental actors in public institutions, led to the decline of the Iraqi private sector.

With the exception of a number of small and medium-sized companies operating in the oil and telecommunications sectors, and very small companies operating in the fields of trade, retail, transport, construction, hospitality and textiles, there is almost a complete absence of private sector companies in manufacturing.

In addition, most of the larger private sector companies depend on providing services to the state and on government contracts.

The White Paper also identified other factors that led to the deteriorating economic situation in Iraq is, most notably:

The collapse of oil revenues

The impact of Covid-19

Mismanagement and lack of planning

The weakness of financial institutions

The absence of modern coherent systems for managing state revenues

An ineffective and outdated banking sector

Complex and antiquated government procedures

Destruction of infrastructure and the costs of the war against Daesh terrorists

Two strategic goals 

The White Paper identifies two overarching strategic objectives. The first is to initiate an immediate reform programme to address the budget deficit to create a fiscal space to give time for the process of implementing the other wider reforms over the medium term.

The second objective is to put the economy and the federal budget on a sustainable path, after which Iraqis can decide and choose the economic direction of the country.

The White Paper anticipates that the short and medium-term objectives and associated reforms will require between 3 to 5 years to implement.

The reform pillars

The White Paper identified five key pillars for the reform programmes:

1- Achieving sustainable financial stability

Key reforms include:

Reducing the deficit from 20% to 3% of GDP and expenditure on salaries from 25% to 12.5% of the federal budget

Collecting electricity tariffs from all users based on the real price of fuel on global markets

Recovering and returning Iraq’s smuggled and stolen money

Increasing revenues from customs and taxes

Reforming Iraq’s Pensions Fund and move to gradually end federal budget support

Reforming financial management systems

Reviewing the current exchange rate of the dollar against the dinar

2- Implementing strategic reforms and creating sustainable job opportunities

Key reforms include:

Modernising and rehabilitating the financial sector

Modernising and rehabilitating the banking system, supporting the development of private banks, reforming government banks and introducing and activating the Core Banking System in Al-Rafidain and Rasheed Banks

Expediting the development of e-banking services

Establishing new trading markets, such as a commodity market and a currency exchange market (Forex)

Supporting the sectors that drive the economy, such as agriculture, oil and gas

Introducing a private sector support fund, simplifying procedures, and providing other non-financial aid

Creating job opportunities in the private sector and supporting small and medium enterprises

Adopting a national strategy for education and training that links educational outcomes with the future need for the labour market

3- improving basic infrastructure

Building Iraq’s digital infrastructure is a key aim of the White Paper.

Key reforms include:

Increasing the effectiveness and improving the performance of all parts of Iraq’s electricity sector

Developing Iraq’s digital infrastructure, including the introduction of advanced technology (4G) at the beginning of next year, and preparing for the introduction of (5G) technology

Modernising the legal and regulatory framework of the transport sector, and encourage private investment in transport

Developing industrial cities and free zones in Iraq

4- Providing basic services and protecting vulnerable groups during and after the reform process

The reforms aim at establishing a unified and financially sustainable pension system for all Iraqis whether they are working in the public, private, cooperative or mixed sector. The White Paper for Economic Reforms

Key reforms include:

Improving water supply for both drinking and irrigation and complete sanitation projects and networks

Building 1,000 new schools during the period of the reform programme

Reforming the social security system

Establishing a unified and financially sustainable pension system for all Iraqis whether they are working in the public, private, cooperative or mixed sector

Completing and implementing the draft health insurance law to ensure that all Iraqis have access to essential health services

5- Improving governance and introducing changes to the legal framework to enable institutions and individuals to implement reforms

Reviewing and amending the official guidance in relation to government contracts

Introducing e-governance systems to strengthen oversight of government contracting and the collection of taxes and customs

Working with specialist investigative international organisations to return the large sums of money smuggled out of Iraq

Introducing an electronic governance system in the field of government contracting and tax and customs collection

Completing the project establishing the National Information Centre to facilitate the introduction of government e-services to citizens, and automate the procedures for obtaining key documents  such nationality and passports and accessing pensions and social security

Introducing electronic signature and transactions throughout the public administration system and phasing out paper transactions 

A detailed implementation plan of White Paper will be published later to outline the required process, identify key stakeholders and establish timelines and monitoring mechanisms.

https://gds.gov.iq/iraqs-white-paper-for-economic-reforms-vision-and-key-objectives/  

MilitiaMan:  No matter how we slice this, they need an international exchange rate prior to launching.

They European Bank of Reconstruction and Development is in the final stages for Iraq's ascension to the bank. It is with them and along with the Global Accounting Firms of Ernst & Young and Pricewater House - Cooper that are involved with the final requirements.

To get to the final requirements tells us this White Paper has already been in play for many months and years already.

To meet with the EBRD and E & Y and PWHC is for to implement it internationally.

They mention in item #1 about reviewing the Dollar / Dinar Exchange Rate and in #2 they talk about new markets that include commodity markets and above all FOREX.

The final requirements appear to have to do with those two key elements of where we are at with this stage of the White Papers. The rest will be over a 3-5 year period.

There is an article telling us that the Director of the CBI as of recent, that an exchange rate is expected from 120 - 121 IQD to 100 USD. 

 That fits with internationalism. Something that the EY and CPWC have been working in conjunction with the EBRD.

News lags reality. Frank has always suggested that if it is in print now, it is done already.

So the final decisions most likely sorted. Again, if the decisions were made an the Prime Minister and the CBI Governor are in an extended stay in London has implications that there was a need for it. Just like the one with the USA was extended.

Keep mind contracts are a big thing in the WPs. imo Very very very exciting and powerful times we are in. Lets see what the CBI says when they get home.. 

The banks are open for accounts today and tomorrow, fwiw too.

To have an exchange rate change as the CBI Director has said would require the NSCNs(LD’s) .. imo ~ MM

DocMagee94:  So White Papers “formally adopted”, and part of First Pillar of reform is to “review the price of the dollar against the dinar”...,why is no one talking about this? Isn’t this a HUGE deal????

MilitiaMan:  It is a huge deal. That is is one reason that I focused on the article. A main reason. As the entities I mention would have the need to know what rate at which to apply value to contracts present and future for both commodities and the Forex markets.. HUGE deal. most likely they are sorted and are ready for the CBI to expose the rate.. imo.. ~ MM