KTFA:

Don961:  Our private banks and government support

Friday 05 June 2020  Samir Al-Nassery

The emergency cell of financial reform, nor its members, the complex economic conditions, repercussions of the spread of the Corona virus, political interactions and conflicts, which have resulted in damage to the national economy, stopping the economic cycle, and economic stagnation. The real economist.

And since the banking sector is the main link in revitalizing the economic process, the current conditions have contributed to the stopping of banking activity, especially the private banking activity since the outbreak of the demonstrations in October 2019 and until now what has had its clear effects on the lack of liquidity, low deposits, credit, loans and banking facilities due to the stopping of working hours.

During the comprehensive roaming ban for more than 30 days and reducing the permanence and banking activity during the partial roaming ban, which led to a significant decrease in revenues, despite the many measures taken by the central bank in providing a package of facilities to banks, including enhancing its liquidity by reducing the legal reserve ratio, postponing loan installments, and stopping and postponing fines imposed on Banks.

According to the analysis of official data and statistics, the structure of the Iraqi banking sector consists of 7 government banks that capture 86 percent of the profits and only 13 percent of the total annual profits achieved at the total level and that the goals set for the banking sector in all government programs of previous governments are focused on lending For the sake of development and considering banks the lever of development and restoring confidence with the public and achieving financial inclusion in the sense of expansion and spread by providing banking products and services, practicing real banking work and digital transformation of the banking sector.

Through an analytical view of the reality of the Iraqi economy and the challenges facing the financial and monetary policies, in particular the stimulation and revitalization of the economy by bank financing and banking facilities, the above challenges stand in front of its implementation at the present time despite the great efforts made by the Central Bank since 2016 to implement its strategic objectives for years (2020-2016), which achieved important and fundamental goals, most notably the structural, structural and technical developments in banks, increasing the proportion of financial inclusion, investment in human capital, and taking a steady step towards stability in the monetary system and achieving stability in the exchange rate since 2018 and still, but private banks are in urgent need And immediate to government support by studying its problems in the current circumstance in the emergency cell for financial reform formed in the cabinet for the purpose of saving some private banks from collapse, taking into account the following: - 

 Firstly, the nature of banking activities depends on the nature of the activities of the economic sectors, and as long as the economic activity is concentrated in trade (imports), the banks' activity remains focused on external transfer and what is related to it .. So unless other sectors (industry, agriculture, tourism, etc.) move to expect the diversification of the activity The banker.

Second, the legal environment must be provided and the rule of law should be extended in order to eliminate the phenomenon of defaulting in the repayment of loans, as bad debts amounted to 7 trillion dinars, and they constitute a large percentage of the total credit granted, and thus the banks ’reluctance to provide loans and banking facilities 

Therefore, we see that the decisions of the Council of Ministers and the Economic Affairs Committee of the Council of Ministers that were previously issued to support the banking sector, especially private banks, are not activated. It led to obstructing the activities and activities of private banks and greatly affected their liquidity, revenues, and deposits for that. For the purpose of overcoming the banks crisis, in a way that ensures banks moving from the role of banking to the developmental role and revitalizing banking work in the current circumstance, it requires the government, in particular the esteemed cabinet and the emergency cell, to activate the decisions previously issued Cabinet and Economic Affairs Committee.

 Third: Activating all the decisions of the Economic Affairs Committee to support private banks, especially the following: -

1 ‐ The Ministry of Finance changed its decision not to accept it to open bank accounts for the ministries and departments of the state in private banks and confine them to government banks according to its letter 207 on 31/1/2019

2 ‐ Activate the decision to allow ministries and government departments to open documentary credits in private banks up to $ 50 million without going through the Ministry of Finance and the Iraqi Trade Bank.

3 ‐ Activating Council of Ministers Resolution No. 110 of 2009 and Resolution of the Economic Affairs Committee 141 on 20/2/2012 on transferring government bank documentary credits of up to $ 30 million to private banks through the Trade Bank of Iraq.

4 ‐ Activating Economic Affairs Committee Decision No. 253 of 2015.

Regarding the acceptance of sukuk certified by private banks to pay insurance, customs fees and taxes.

Fourth ‐ Activate Cabinet Resolution No. 378 of 2018 regarding the collection of government fees in state departments through electronic payment.

Fifthly: Activating the Financial Services Court formed in accordance with the Central Bank Law No. 56 of 2004, and the Court may refer cases that require referral to the competent courts in accordance with the applicable penal law.

Sixth: Bad debt claims by clients in private banks are considered urgent cases and excellent debts, similar to government debts.

Seventh, in addition to the efforts exerted by the Central Bank, the government also needs to work to create conditions and take measures to help private banks obtain the internationally accredited credit rating and thus enhance international banking relations with correspondent banks.

Eighth - The Ministry of Finance compensated for the damages in the fixed and cash assets lost by the branches of private banks, which amounted to (37) branches in the governorates occupied by ISIS in 2014 and are documented with the Central Bank of Iraq.

IX ‐ Activating Cabinet decisions No. 313 of 2016 and No. 218 of 2017 regarding localizing employee salaries and requesting government departments to localize their salaries as per their desire and not directing them to localize salaries exclusively in government banks.  LINK

MilitiaMan:  Thanks DON961... I am sure the activation of things at this time is so very welcomed to the world at a large. The third Item: Shows they have special attention to  #1 - #4. They are seemingly addressing specific needs of the international Islamic world to come into Iraq to do business. At least Item #4 of the Third is.. SUKUK is in part, international bonds that are very popular and meet strict Sharia Law.

This speaks of what they were going to do years ago and didn't. Now Samir Al-Nassery is telling us what is on the table for activation on a Friday.. Interestingly enough it is well before their markets open again. Well keep this in mind.

We know they have a plan and one plan they have spoken about is the secondary markets with their currency to be able to get revenues or internal borrowing. Selling Bonds is how they can do that. Bonds that are SUKUK and meet strict Sharia Law will be where millions of investors will go to.

Thus, demand should not be an issue. As Sukuk has safety mechanisms in place. This is telling me they are now going into the new social market economy.

I think we can all smile.. imo Now lets see what Alak has to say.. He is apart of the Emergency Cell, imo.. ~ MM.  

"Bonds can be bought and sold in the “secondary market” after they are issued. While some bonds are traded publicly through exchanges, most trade over-the-counter between large broker-dealers acting on their clients' or their own behalf. A bond's price and yield determine its value in the secondary market."

"Sukuk bonds: An Islamic finance product that is similar to a western-style bond. The bond pays a return to investors, but is structured in such a way as to be compliant with the Sharia principle of not charging riba or interest."

1.2 Islamic securities market overview

The Islamic finance industry encompasses the full spectrum of financial services activities, including banking, insurance and securities. The industry has, from a small base, experienced significant growth over recent years. Some estimates put market growth at approximately 15% per annum over the last three years, with a current total worth of approximately $800bn worldwide as of June 2008.

The development of Islamic finance in the last two decades of the 20th century consisted largely of the expansion of banking and trade-related financing activities. Islamic securities markets (and insurance markets) had  until the turn of the century lagged behind, but are now also experiencing significant growth themselves, much of which has been in Sukuk (Shariah compliant securities) and Islamic
funds.

Don961:  Member of Parliamentary Finance: The country's financial situation is very critical and we are working to get out of the crisis

Economie 06/2020 2020 18:05 426    
Baghdad today _ Baghdad 

Member of the House of Representatives for the Finance Committee, Hanin Qaddu, confirmed today, Friday, that the country's financial situation is in a critical condition as a result of the continued decline in global oil prices, while he stressed that the Committee continues to hold its own sessions to reach effective solutions to the crisis.

Hanin Qaddo said, in an interview with (Baghdad Today), that "the economic and financial situation of Iraq is very critical as a result of the depression in the world and the continued decline in global oil prices."

“The Parliamentary Finance Committee is in a constant session in order to find effective solutions to avoid the current crisis, and try not to prejudice the salaries of employees and retirees,” Qaddu added.  A member of the Finance Committee in Parliament stressed: "There must be alternative options in order to get the government out of the impasse it is going through, regarding its obligations to provide the salaries of employees."

And revealed the member of the Finance Committee, Faisal Al-Issawi, (Saturday 30 May 2020), the formation of a committee from the government and parliament, to address the economic crisis that Iraq is going through, while disclosing the participants in its membership.

Al-Issawi said, in an interview with (Baghdad Today), that "a committee has been set up to solve the economic crisis headed by the Chairman of the Finance Committee in Parliament Haitham al-Jubouri, whose mission is to present proposals that ensure continued payment of salaries of employees, retirees and social assistance."

He added, "The committee formed to solve the economic crisis submitted 90 proposals, none of which have been approved yet, except that during the current week, appropriate options will be put in place for the government and parliament to cross the crisis."

Al-Issawi also pointed out that "reducing the salaries of employees is an unrelated proposition, while compulsory savings and unimportant allocations were discussed."

He pointed out that "the saving mechanism according to the proposal starts from salaries that amount to one million, where 5% of it is saved, while salaries of a million and a half million, up to two million, are saved 10%."

Al-Issawi pointed out that "the proposals talked about the revenues of the border outlets, how to manage them, activate taxes, collect electricity, reduce expenditures in the state, unnecessary allocations, and reduce the salaries of presidencies and higher levels."  LINK  

MilitiaMan:  Another reiteration of what is going on. But, Al-Nassery just told us what he is doing and that is going into the social market economy. That includes the Secondary Markets..

They are not going into the market economies of the world at a program rate.

The theme is not wait and stagnate it is ACTIVATE!! They say in the current week to come.. Hey!!!! They are not supposed to give a date... lol ~ But, hey I am not complaining.. lol  ~ MM

Don961:  Without prejudice to the salaries of employees .. A member of Parliamentary Finance offers several alternatives to overcome the crisis

Policy 05/06/2020 09:43 240 Editor: am      Baghdad today - Baghdad

Member of the Parliamentary Finance Committee in the House of Representatives, Majid Al-Waeli, on Friday (05 June 2020), presented several alternatives to overcome the stormy financial crisis in the country, without touching the employees ’salaries, while he hinted that the committee will hold a meeting with Prime Minister Mustafa Al-Kazemi and the Ministry of Finance next week .

Al-Waeli said in a press statement, "There are many alternatives that can mitigate the severity of the current crisis significantly, including an increase in the price of a barrel of oil, which is sold by $ 5 to the refineries of the Ministry of Oil, while the rate of selling it according to the 2019 budget is 60 Dollars. "
And between, "Those refineries buy about one million barrels per day; that is, there is a difference in the price of up to 55 dollars, meaning that there is a price difference of 55 million dollars," noting that the treasury can supply about 50 percent of this amount, i.e. up to 20 25 million dollars. "

He added, "The other alternative is to reconsider the sums of real estate sold cheaply and rented with sums, especially those that are located in the heart of the capital and in distinct areas of it, as it can be re-evaluated again because some of them are inhabited without paying any sums for the rents in the first place." He pointed out that "the government should also pay attention to the debts arising from telecommunications companies, especially mobile phones and the Internet, and their collection, which amounts to millions of dollars."

Al-Waeli warned, "The amounts owed by the border crossing points, customs and taxes after being properly and clearly monitored, as well as transport companies, despite the existence of a crisis in that at the present time, all of which can be invested to alleviate the economic crisis caused by the drop in oil prices."

He explained, "The executive bodies should take great care in the issue of the agricultural calendar and protect the product, by preventing the entry of unnecessary agricultural crops available in the local market, or imposing customs prices on the importer from them to equate with their local counterparts as they are cheaper than what exists in the Iraqi market, which leads Consequently, to revitalize the agricultural sector, especially in conditions of curfew, by paying attention to the agricultural lands owned by some citizens and whose crops are sufficient for consumption by them, their families, and their neighbors.

He pointed out that "the committee has also proposed to raise the customs tariff for raw raw materials, after the Iraqi industrialists were harmed by them and those who import the raw material, to show then that their prices are more than the price of the ready-made imported material, which leads to the closure of the factory and the layoff of workers, while imposing a tariff On imported materials, he will make them in competition with the local product, "noting" the necessity of encouraging the national product and making a price difference between it and the importer. "

He continued, saying: "It is possible to raise the exchange rate of the dinar against the dollar, even if only in a small percentage that corresponds to the vision of the central bank, after deliberating between it and the financial committee on this issue, despite the first refusal of the matter as a financial policy, but the committee is trying to hold the stick from the middle and the possibility of implementing this matter even a few numbers and gradually maintain the value of the Iraqi dinar against the dollar " .

Al-Waeli indicated that "there is an expected meeting of the Finance Committee with Prime Minister Mustafa Al-Kazemi and the Ministry of Finance next week to present those alternatives before it and implement what can be implemented from them."

And he added, "The committee is in the process of preparing an integrated study in the light of the reports submitted by both the central bank on the financial crisis and the government as a vision by the advisers' body, which dealt extensively with employee deductions as a solution to overcome the financial crisis."
The government of Prime Minister Mustafa Al-Kazemi faces several problems, including the country's severe financial crisis, the emerging Corona virus crisis, and low oil prices.  LINK  

MilitiaMan:  The latest theme is next week? lol That theme of next week seems to fit with the ACTIVATION theme from Al-Nassery, as well. Then there is the implementation theme that is also noted to be one to make my cheeks hurt..  !

They are to present alternatives next week and one they mention is raising the exchange rate before they implement the alternatives... lol Ya think? To get to a market economy they will need that done.. Oh ya!  imo ~ MM

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Osmosis:  What do they mean by "raising the value a small percentage" ??  

MilitiaMan:  My view is they are basically giving out information about what they are going to do but, are being shy about it. Think about it they can't say hey everyone were dropping three zeros to raise the value of the IQD this weekend..

Look at this way, it is possible they mean drop a few numbers. Well zeros are numbers. They just make it sound minimal. imo They will need a strong currency to get into the International and Global Stage.

The activating of the Economic Affairs will require it. For instance the ISX  linking to the NASDAQ  is linking to secondary markets, just as the Forex is. They will need to be able to sell their Bonds in a secondary market.

They will not sell bonds successfully at a program rate but, with a international Article 8 compliant one? Sure can. imo The ISX and FX have rules that dictate level of participation. They have minimum requirements to trade.  A program rate is not one them... lol imo

They are telling us today a mosque day, that they are in this "current week" getting information from the Crisis Cell and out of the 90 items that were presented, ten +- are in the position for the PM to make decisions on in this "current week".

One of them happens to raising the value of their currency by a few numbers,. That is what I expect to be in the running, as it makes the most sense.

Think about it. They drop a few numbers (000s) and apply an international calculation, they would be able to get into the secondary markets. They say they are going to have the items to the PM during this "current week" so that "next week" they can implement the decisions on the items that will work to get them out of the financial crisis.

The ISX has not said they were going to postpone opening next week again. This current week is still today and tomorrow, as for the PM getting what he needs.

Next week in Iraq starts Sunday. Same day as the ISX is scheduled to open again.

That information to the PM is said to be before they implement the alternatives that they have to fix the crisis they are in.. Let that sink in..  They will have the data to the PM in the current week for implementation, next week..

They are telling us what they are doing very pointedly.. imo.. As about as close as they can, prior to a full blown announcement. imo.. ~ MM