MilitiaMan Wednesday Afternoon "The Silent Policy" 11-9-2022
KTFA:
Samson: The Central Bank: Our reserves have reached $90 billion and there is no change in the exchange rate in the 2023 budget
9th November, 2022
Global oil prices have boosted the dollar’s cash reserve in Iraq, especially after the “black gold” price rose and reached the $100 per barrel barrier, while specialists stress the need to exploit this financial abundance in establishing strategic projects capable of supporting the country’s financial budgets and reducing the size of the "almost total" dependence on oil imports, as well as directing part of those towards supporting industrial and agricultural private sector projects
Al-Yasiri’s affirmations came during the economic symposium organized by the House of Wisdom and bearing the slogan (The Iraqi Dinar: Changing the Exchange Rate) and raised zeros) and moderated by the economist, Dr. Falah Hassan Thuwaini, and attended by a number of experts and specialists in economic affairs
Al-Yasiri told "Al-Sabah" on the sidelines of the symposium, "The cash reserves of the Central Bank are sufficient to finance import operations for a period of 22 months, and this is positive for Iraq and makes it live a period of relief, as these reserves amounted to $90.89 billion, which is the first time that the reserves of the Central Bank have been reported. Absolutely, and the economy's health indicates that it is a major bond and wall of the national currency, and it is expected that these reserves will exceed the $90 billion barrier at the end of this year
Al-Yasiri pointed out that the volume of the Iraqi currency issued for circulation is estimated at 83 trillion dinars, equivalent to 58 billion dollars, while the banknotes of the public and banks are estimated at up to six billion banknotes in circulation
Regarding the devaluation of the currency, Al-Yasiri stressed that this decision left a new threshold for the Iraqi industrialist and made it more competitive. After devaluing the currency by 23 percent, this matter limited the volume of imports of goods and many industrialists have a desire to expand their factories or establish new ones
And the Central Bank adviser pointed out that “the process of adjusting the exchange rate has important scopes, which were represented in achieving a financial goal” of “revenues for public finance” and a development goal “enhancing the competitiveness of the real sector against the import sector,” stressing that there is no intention at the present time to change the exchange rate that he described.
With the “stability function”, as it is not possible to manipulate stability, and that the budget for next year 2023 will be prepared on the basis of the current “reasonable” exchange rate that resulted according to calculations between the Ministry of Finance and the Central Bank, as well as the contribution of some international consultations in this decision, which kept the public finances solid after that At the end of the year 2020, the Iraqi state approached bankruptcy
In turn, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, said that "work to improve the price of the dinar should be carried out in accordance with the principle of "common benefit to the community" so that it does not leave harm, as this requires a gradual silent policy and high coordination between the monetary and financial policies, especially since the next phase should be a phase of calm, as the current government is rationally moving towards revitalizing development and achieving economic stability LINK
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Abdul Hussein Al-Yasiri: Iraq will see significant economic growth after Baghdad summit
A member of the Finance Committee MP and National Alliance, Abdul-Hussein Al-Yasiri, favored that the Iraqi economy will witness development in all sectors after the return of Iraqi - Arab relations and the Arab summit conference in Baghdad, which will contribute to the coming of the great Arab companies to invest in the country. lINK
MilitiaMan: We can see that Al-Yasiri has supported the private sector in recent times. It shows he supports a private sector economy imo. What I see in the article above is there are some positive signs for what to expect in the future and what has likely been done already.
We can clearly see that they have enough reserves to last 22 months. The world average is 11 months per the World Bank statistics chart. That level of reserves is very good for the financial circumstances they are about to embark on or have already.
They will need stability and appear to have that largely covered. They do tell us their money supply and are being open about that. The average value of a note issued (six billion of them) is roughly 13,833 per note.
The issue of the devaluation was for useful purposes for the future private sector they plan on moving to. It was with and effectively 23% hit to the citizens pocket book, ouch. They had to take on the chin for longer than expected too.
That appears now to about to change for them to the bright side. The private sector will bring jobs, revenues, etc., and on many fronts.
The Central Bank speaks of adjusting the reasonable exchange rate as having important scopes which are represented in achieving a financial goals with respect to revenues for public use.
It is for the development and competitiveness of the real (private) sector against the import sector. It was prepared (done) with stability in mind.
The 2023 budget exchange rate on the basis of a reasonable exchange rate was a result from and according to calculations between the Ministry of Finance and the Central Bank. They have had the collaborations already and with contributions of some international consultations in the decision to it. They have the calculations done imo..
They go on to say there is work to improve the price of the dinar (likely have improved it and are about ready to show it). The work should be for a common benefit to the Iraq community, so has to not cause harm.
They did harm on the devaluation and now is the time to reverse that.
They suggest that imo they had to be quiet (silent) and gradual about the work. They call it a silent policy.
One that is in high coordination between the monetary and financial policies of the country. The even tell us why too. They needed it especially for the next phase. The next or last phase requires calm.. Therefore, for after all the work to date they have done the current government is rationally moving to revitalizing and achieving reforms with stability. The central bank will defend their work in the market place, twice daily if need be. ioo
It looks as though they are still updating everyone on what they are and have been doing with their financial operations, while suggesting the next phase of them is effectively to be upon us now or at least very shortly.. I like what I see.. imo ~ MM