More Iraqi News Friday PM 12-25-20

More Iraqi News Friday PM 12-25-20

TLM724 Administrator BondLady’s Corner

Devaluation ... The Former Budget Director Talks About "An Inevitable Shock" Instead Of Losing "State Sovereignty"

3,426 economy  12/24/2020 22:26  Baghdad Today - Follow-up

The former budget director at the Ministry of Finance, Hazem Hadi, confirmed that the devaluation of the local currency in the country caused a shock to the market, while explaining that the shock that occurred was necessary to finance the budget deficit instead of endangering state sovereignty, as he described it.

Hazem Hadi said, in a televised interview (Baghdad Today), that the advantages of the financial budget for the next year are "saving money and avoiding borrowing, because the size of the debt to Iraq has become very large and reached 160 trillion dinars, including internal and external loans."

Hadi added, "The internal debt automatically decreased with the rise in the value of the dollar against the dinar," indicating that  "the shock that occurred in the market was inevitable, because covering the financial deficit by borrowing includes major disadvantages, including the loss of state sovereignty."

He pointed out that "the failure of the economic policy in the country in the past years has made Iraq a market for imported goods and the Iraqi market has been flooded with these commodities, and also led to a decrease in revenues due to the decline in the price and production of oil, and all these factors caused a major financial crisis for the Iraqi economy."

Since the collapse of oil prices earlier this year, Iraq is facing an unprecedented liquidity crisis, and the government of Prime Minister Mustafa Al-Kazemi has been forced to borrow from the reserves of the Central Bank to pay nearly $5 billion per month, representing public sector salaries and pensions.

The Iraqi local markets in Baghdad and other provinces have been turbulent since last week, after the decision to devalue the currency to compensate for the deficit in the 2021 budget.

The decision sparked a wave of anger in the Iraqi street, but Al-Kazemi defended his government's move and said that he had two options: "Either the collapse of the regime and enter into overwhelming chaos, or we enter into a Caesarean section for reform."

Al-Kazemi cited during a speech at the Iraqi Council of Ministers session held last Saturday, in several countries, including South Korea and Singapore, when they had previously taken "difficult decisions" in order to reform the economy.    LINK

Parliamentary Finance: The Raising Of The Dollar’s Price Was Directed By The International Monetary Fund And The World Bank And With The Knowledge Of Political Blocs, Not The Government

Baghdad / Obelisk: Member of the Parliamentary Finance Committee, Majida Al-Tamimi, revealed, Thursday, December 24, 2020, that the IMF and the World Bank faced Iraq by increasing the price of the dollar and reducing the currency, and it was not a special decision by the government, noting that this matter is with the knowledge of political blocs.

Al-Tamimi said in a statement followed by the obelisk, that a previous meeting was held between her and the Chairman of the Committee Haitham al-Jubouri and the Vice-Chairman of the Committee Muthanna al-Samarrai on the one hand and the World Bank on the other hand, and they indicated that the process of reducing the dinar against the dollar is the last financial reform solution that Iraq will take, and that

it must proceed with financial reforms according to periods They reach long-term solutions and not temporary solutions within an annual budget.

Tamimi said that their opinion changed and it was agreed with Iraq to reduce the dinar against the dollar, and this matter was reported to the political blocs by the Finance Committee.   LINK

Rapid Deterioration Of The Iraqi Dinar Against The Dollar, Are There Solutions?

Researcher Shatha Khalil *

Mismanagement of the country's economy and the absence of economic doctrine;

The economic plans have destroyed the Iraqi economy and the most important reflection is the exchange rate of the Iraqi dinar and the issue of devaluation, which is to reduce the price of the Iraqi dinar against the US dollar and other currencies in a deliberate and deliberate manner, noting that this differs from the change in the exchange rate that is subject to the supply and demand process in the currency markets.

The Iraqi financial crisis does not seem to be on its way to receding, with the continued decline in oil prices in world markets, or their volatility, and the absence of economic alternatives, today the Prime Minister focused on restoring the economic situation in various parties, working with some economic advisers and with the Governor of the Central Bank of Iraq to prevent a decline and deterioration Akbar for the Iraqi dinar against the dollar, and this was not achieved at an exchange rate of 1500 dinars to the dollar, according to a study and analysis of the current situation, even for a few months, in the context of restoring the country's financial and monetary situation.

As the Iraqi market recorded a noticeable decrease in the Iraqi dinar exchange rate against the dollar, which raised fears of a possible decision to float the currency, or the announcement of an official increase in exchange rates, in an attempt to reduce public budget expenditures, but deputies in the Finance Committee and economists warned Of serious repercussions on the Iraqi economy, in the event that a similar decision is taken.

Reliable sources said that one of the factors that led to the deterioration of the currency's value is that there are 81 banks affiliated with political parties that take hard currency and trade in it for several purposes, including political issues of laundering corruption, as economists have confirmed that there are documents on other banks in cooperation with tourism companies from During the photocopy of the passport and withdrawing 5,000 dollars on the name of the passport holder, he did not know.

Iraqi politicians criticized the government's inability to control the exchange rate, considering that banks and parties are the beneficiaries of that.

The former deputy of the Kurdistan Democratic Party, Majid Shankali, said that “the most important reforms of the government and the new governor of the Central Bank, the rise in the price of the dollar in the markets,” and indicated that

“The official price is 1190 dinars to the dollar, meaning that the only beneficiaries are the banks affiliated with influential parties and personalities.

Is it reasonable that these banks earn 20-23 billion dinars daily?

There is no doubt that, since 2003, Iraq has become Iran's fat economic window, as the country that suffers from stifling US sanctions on it, would not have been able to withstand the US embargo, had it not been for the outlet of Iraq and its loyalists.

Some Iraqi politicians, those who have armed militias, and seize the most important positions in Iraq.

They work for the sake of providing currency to neighboring Iran at the expense of the country, and Iraq has tens, if not hundreds, of private and private banks, most of which are window to corruption and to supply Iran with millions of dollars.

The tasks of the central bank are:

To make an exchange of the hard currency received by the government and convert it into dinars through the window of currency sale (currency auction) to cover the needs of the local market and to cover the payment of foreign remittances and appropriations allocated under the item of basic imports.

In the event of a surplus of hard currency, the surplus amounts are transferred to the reserve of the Central Bank, which causes the reserve to rise from the hard currency, and in the event that the external revenues are unable to meet the requirements of the government in terms of dinars (for the purpose of paying its expenditures in dinars, salaries, etc.), the hard currency reserve is withdrawn from the dollar.

The Central Bank to compensate for the deficit from the dinar and assign government accounts.

The currency auction process and the currency sale window in the Central Bank are marred by a lot of corruption operations, and how not and all the joints of the state and institutions penetrated by the corrupt, part of which is borne by the policy followed in the Central Bank through the restrictions imposed for sale to be commensurate with a limited group of banks and companies requesting to buy currency, and another Other bodies such as the Ports Authority, Customs and Taxes Authority and the Ministry of Trade are responsible for issuing import licenses.

Although the political reform paper (the white paper) was one of its reforms and adopts (floating) the price of the dollar against the dinar.

Currency flotation

What this process means: There are two types of currency flotation.

The first, the special float and the second the directed float.

The first is to leave the market’s exchange rate in the hands of the market.

An increase in the demand for the dollar in the local market leads to an increase in the dollar exchange compared to the local currency, while a decrease in the demand for the dollar means a decrease in the exchange rate of the dollar in the local market.

The situation is very similar to the days of the global economic boycott (economic blockade) against Iraq after Iraq’s occupation of the State of Kuwait, where the exchange rate of the US dollar increased in relation to the Iraqi dinar in a way that was only preceded by the German mark during the Second World War.

The exchange rate of the Iraqi dinar in relation to the US dollar has decreased from 2.8 dollars per Iraqi dinar to 5,000 Iraqi dinars per US dollar.

Determining the currency exchange rate is the same as setting the price of tomato in Alwa Al Mudhaid, in Baghdad.

An increase in the supply of them leads to a decrease in their price in the market, while a decrease in their supply in the market leads to an increase in their prices

The second type is the same as the first type, except that the central bank intervenes when the value of the local currency exchange decreases less than the set rate for it, or the local currency exchange rate rises higher than the set for it.

Any local currency exchange rate measured in dollars, for example, must be according to minimum and upper limits, and the national currency may not exceed them.

According to some economic analysts, that raising the exchange rate, even for a temporary period, will protect Iraq from declaring its bankruptcy?

It can be said that the current currency auction is one of the aspects of the float, but it is restricted and assumes a fixed price or a price that follows the central bank (not the well-known law of supply and demand),

And that almost everyone agreed on the need for reforms related to the work of this auction in order to provide cash liquidity from hard currency to be directly accessible to importers instead of being monopolized by a few and politically influential banks.

Today, the Central Bank sold nearly $240 million in hard currency, an increase of 25% over what was previously sold in the previous weeks’ sessions, which is supposed to provide support for the local market and import requests that are already low in activity due to the Corona epidemic and the causes Others relate to local fears of upcoming financial crises that threaten the income of employees and the middle and poor classes.

A set of suggested solutions:

Focusing on increasing dollar sales in favor of the money exchange companies rather than hawala companies that are tainted by corruption.

Investing the opportunity to stop a group of imports of agricultural and food products and limit the transfer of the dollar abroad by importing products that are easy to produce locally.

That is, it is possible to adopt sweeteners that stimulate, encourage and support agriculture, to reach the stage of self-sufficiency.

Raise the price to 1500 and increase the currency auction in a short period to cover the increasing demand for hard currency through direct outlets for citizens and block the way for speculators and major speculators in hard currency, this plan will ensure that the exchange rate of the $100 denomination in the currency auction reaches 150 thousand dinars in the markets.

Forcing import requests through banks and appropriations to pay customs duties in hard currency directly to the Central Bank in favor of the accounts of the Customs Department.

The real value of the import transfers will then be revealed and an estimate of the size of currency smuggling and laundering.

Finally, it must be emphasized that the current Iraqi government's approach to reducing unnecessary public expenditures, such as: abolishing double salaries, resorting to regulated internal and external borrowing, and compulsory saving of high salaries, is one of the best realistic solutions to overcome the current crisis, provided that it be carried out concurrently with campaigns.

Governmental serious to combat the phenomenon of corruption, and control border crossings

Economic Studies Unit  Rawabet Center for Research and Strategic Studies

https://rawabetcenter.com/archives/120579

International Criticism Comments On The Economic Reforms In Iraq

Time: 12/25/2020 09:27:26 Read: 4,459 times   {Baghdad: Al Furat News} The International Monetary Fund has welcomed the efforts of the Iraqi authorities to make reforms in public financial policy and monetary policy, while affirming its readiness to support these reforms.

"The repercussions of the Covid-19 pandemic and the sharp decline in oil revenues create grave risks that threaten the economic stability of Iraq," said the head of the fund's mission on Iraq, Toker Mirzoyev, in a press statement.

Mirzoyev added, "The continuation of reforms in the next stage, including in the structural areas, will have a great impact on strengthening gains in the short term."

He explained, "These reforms are of great importance in ensuring the stability of the Iraqi economy," stressing that "the International Monetary Fund is ready to support the reform efforts made by the Iraqi authorities at this challenging juncture."   LINK

The International Monetary Fund Confirms Its Readiness To Support Economic Reforms In Iraq

Economie| 12/25/2020   BAGHDAD - Mawazine News  The International Monetary Fund welcomed, on Friday, the efforts of the Iraqi authorities to carry out reforms in fiscal and monetary policy, while affirming its readiness to support these reforms.

"The repercussions of the Covid-19 pandemic and the sharp drop in oil revenues create grave risks that threaten the economic stability of Iraq," Tokir Mirzoyev, head of the fund’s mission on Iraq, said in a press statement.

Mirzoyev added, "The continuation of reforms in the next stage, including in the structural areas, will have a great impact on strengthening gains in the short term."

He explained, "These reforms are of great importance in ensuring the stability of the Iraqi economy," stressing that "the International Monetary Fund is ready to support the reform efforts made by the Iraqi authorities at this challenging juncture."     https://www.mawazin.net/Details.aspx?jimare=135566

Parliamentary Finance: We Will Cancel Any Deduction In Their Salaries

Time: 12/25/2020 10:35:39 Read: 9,685 times 

{Baghdad: Al Furat News} The Parliamentary Finance Committee announced that it will proceed to cancel any deduction of the teachers' salaries in the fiscal budget for 2021.

Committee member Magda Al-Tamimi said in a press statement, "We will proceed to cancel any deductions for teachers, teachers and university professors," considering that "the state-building outputs start from them, so how can we deduct their salaries as leaked from deduction schedules within the budget."

She added that the committee "will work to reduce deductions for employees' salaries in the budget that is supposed to reach Parliament next Sunday."

Al-Tamimi stated, "It supports the existence of an income tax from salaries, but the matter should be gradual and not surprising."  Last Monday, the Council of Ministers voted on the draft federal budget bill for 2021.

The government affirmed that it would not prejudice the salaries of lower degrees, with a reduction in the upper salaries of the three presidencies, members of parliament, ministers, and special grades between 30 to 40%.   LINK

Iraq Plans To Stop Importing Oil Derivatives In 2021

Pratha News Agency 46 2020-12-25   On Friday, the Ministry of Oil announced that next year's plan includes stopping importing oil derivatives and relying on local production.

The director general of oil projects in the ministry, Mahmoud Abbas, said that “the ministry’s plan during the year 2021 includes stopping the import of oil derivatives,” indicating that “this plan is based on the policy of Oil Minister Ihsan Abdul-Jabbar, who pledged to stop importing derivatives and rely on the production of Iraqi oil refineries.” According to the official Iraqi News Agency.

Abbas explained that "the Minister of Oil, upon assuming the position, pledged that the first period and within six months of the start of work would witness halting half of the import quantities."

He added that "the Corona pandemic has disrupted the work of foreign companies for refinery projects," noting that "many projects in the field of gasoline improvement have reached their final stages, but they need foreign expertise."

He indicated that "the Ministry of Oil has a project in Basra Governorate, which is the gasoline improvement unit in the Shuaiba refinery, as well as a unit in the central and Baghdad refineries, and they are close to operation, but they depend on foreign companies," explaining that "these projects will almost be completed next year.

He pointed out that "the Ministry of Oil imports annually three and a half billion petrol and kerosene substances." http://burathanews.com/arabic/economic/383143

The Bases Are On Alert ... The US Embassy In Baghdad Continues To Evacuate Its Employees

Political| 03:33 - 12/25/2020  Baghdad - Mawazine News   Informed sources said, Friday, that the US embassy in Baghdad has completed the evacuation of all its employees, except for the ambassador and his companions.

According to Al Arabiya urgent news, which was followed by Mawazine News, the sources said, "The American embassy in Baghdad is completing the evacuation of all its employees except for the ambassador and his companions."

And she added, "The American bases of the international coalition in Iraq have entered a state of alert." Ended 29 / h https://www.mawazin.net/Details.aspx?jimare=135601

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