More Iraqi News Saturday PM 10-17-20

More Iraqi News Saturday PM 10-17-20

TLM724 Administrator BondLady’s Corner

Iraq Is Relying A Lot On The "White Paper" ... And The Central Bank Is Threatened With Losing Its Independence And Its Cash Treasury

Follow-up Friday, October 16, 2020 01:32 PM  The Minister of Finance, Ali Allawi, affirmed that there is a growing political will to carry out the fundamental reforms needed for the country to address the massive liquidity crisis that has pushed the country to the brink of collapse.

"We have a strong and strong relationship with the Central Bank to unify the monetary and financial policies, and this will provide us with the ability to cover all the requirements and entitlements of the salaries of employees and retirees."

Economists confirmed, the objectives of the Minister of Finance are clear, as the Central Bank has become very cooperative with the government's financial policy, after its independence according to its enforceable law was inconsistent with the possibility of any potential cooperation affecting the basic rules of the bank in order to preserve the guarantee and strength of the Iraqi economy on the one hand.

And not to bear any governmental failure in managing the financial policy on the other hand in the context of common knowledge with successive governments, and because the central bank adopts monetary policies independent of the government's financial policies.

The dispute that arose between the government of Nuri al-Maliki and the governor of the Central Bank, Sinan al-Shabibi in 2012, is not far from memory, which ended with Shabibi being accused of corruption and the issuance of judicial orders to arrest him! While he was in the Japanese capital Tokyo to participate in one of the economic conferences, it came to his trial in absentia and sentenced to seven years imprisonment in 2014 and his removal from office.

Ali Allawi said, "There is more will now than it was five months ago. Now, I think there is recognition that unless oil prices rise miraculously, this is something we have to deal with and manage."

Lower oil prices have cut revenues in the oil-exporting country by nearly half, and over-reliance on oil has limited the government's ability to obtain other income.

The widening of the deficit from month to month has created uncertainty about how future payments of public wages, external debt and essential imports of food and medicine will be paid.

It is worth noting that the unsustainable Iraqi economy , exposed by the financial pressures stimulated by plummeting oil prices and the Corona virus epidemic, is a long-term problem that has bothered reformers for more than a decade.

Prime Minister Mustafa Al-Kazemi's government this week issued what it called the "white paper", which is more like a 95-page book on economic reform, which, if implemented, would prompt a radical reform of the entire system within three to five years.

"It is a paper designed to create a strategic and political framework for a new Iraqi economy," Allawi said. "At the end of this period of change and reform ... we are supposed to have a restructured and more dynamic economy, this is the goal of it."

A lack of support from key political elites has undermined similar efforts in the past. Al-Kazemi's government continues to rely on parliament approval for the vision to gain momentum.

"There is less denial. First of all, denial," Allawi said.

Officials in the Al-Kazemi government, including Allawi, have repeatedly stated that while oil prices are not expected to recover in the short term, only reforms will make Iraq avoid an economic disaster. The future of the project faces a big test: Parliament's approval in the form of a binding decision or legislation.

"Once this is done, we have to roll up our sleeves and start work," the minister added.

Allawi said that at a later time, aspects of the plan outlined in the paper will be incorporated into the 2021 budget, which will require a vote in Parliament. Government support in the electricity and oil sectors will face special scrutiny.

Observers pointed out that what the Minister of Finance announced in his aforementioned statement is considered a dangerous precedent for inserting the Central Bank into the core of the government's financial policy and making it a tool to implement this policy, and this was clearly demonstrated by what was included in the (white paper) of financing the budget deficit and considering the stockpile. Reserves are the only source to fill the deficit and herein lies the real danger.

It is noteworthy that the white paper indicated on page 37 the danger of using the central bank as a source of financing, which would lead to severe pressure on the central bank’s reserves and the resulting unsustainable future consequences.

The experts returned to confirm this risk, as stated on page 42 of the above paper, indirect monetary financing by the Central Bank of Iraq is the only remaining source ...

The need for this reserve in financing imports of goods and services means its dangerously low within nine months, which Ultimately it will lead to a real crisis in the value of the Iraqi dinar, accompanied by the possibility of a collapse in its value.   It is worth noting that the central bank and its reserve treasury are threatened with decline.   LINK

Parliamentary Finance Suggests Passing The Second Borrowing Law

Money  and business  Economy News – Baghdad  A member of the Parliamentary Finance Committee, Jamal Cougar, suggested passing the second borrowing law, which includes borrowing 41 trillion dinars from local and international financial institutions.

Jamal Cougar said that the law on financing the fiscal deficit in the 2020 budget will be passed in the House of Representatives, but after amendments to the law.

He added that the salaries of employees will not face any deductions. Rather, deductions will affect the special and higher ranks and MPs.

The government of Mustafa Al-Kazemi may raise the internal debt to more than 111 trillion dinars if the parliament approves the second borrowing bill, which includes borrowing 41 trillion dinars to cover the fiscal deficit for the coming months .

Iraq needs from last September until December, an amount of 57.8 trillion dinars, and the estimated financial deficit during this period is 41 trillion dinars, and the government wants to finance it through the second borrowing law .

The government of Mustafa Al-Kazemi, the first government in the history of Iraq, to ​​introduce two borrowing laws in one year, and its rejection of the budget law for 2020 .

If the second borrowing law is approved, the level of internal debt will reach a historic stage, which is 111 trillion dinars, except for the external debt, which reaches 72 trillion dinars, and thus will exceed 70% of the GDP .

Until last August, the internal debt was 52 trillion dinars, but over the past few days, the sovereign guarantees that were granted to private investors, who borrowed from various financial sources, were 14 trillion dinars, in addition to 10 trillion dinars borrowed during the past two months. To pay employees' salaries .

Continuing the borrowing policy will lead to an increase in inflation in the local market, and a rise in commodity prices, which will harm the poor, whose proportion exceeds 30% of the Iraqi population .

The government is facing a large deficit in salaries, as it resorted to borrowing for fear of the downfall of the current political system, which most of the Iraqi people are angry with, and it did not resort to other options, for example reducing public spending, especially in the three presidencies, in which the door to employment is still open .

These amount to the central government’s debts, excluding the Kurdistan Regional Government’s debts that exceed $ 27 billion to international oil companies .

The head of the Parliamentary Finance Committee, Haitham al-Jubouri, said that continuing with the borrowing policy will lead to the collapse of the currency and thus the collapse of the economy, calling on the government to search for other solutions that are more beneficial to the economy .

Number of observations 73 Date of addendum 10/17/2020   https://economy-news.net/content.php?id=22295

Deputy: The Government Deficit Financing Law Included Astronomical Figures, And We Will Not Allow Them

Pratha News Agency3 2020-10-17  A member of the Parliamentary Finance Committee, Jamal Cougar, confirmed that the draft law on financing the government deficit sent by the government includes astronomical figures, indicating that if these figures are recognized, this means that the deficit in the next year’s budget will be 123 trillion dinars, a number we have not seen throughout previous budgets.

Cougar said in a press interview that "the project of financing the fiscal deficit in its current form sent by the government includes astronomical figures and cannot be accepted as it included the government's need for 57 trillion dinars for a period of four months, while the total of what it spent during the past eight months of the same year It was approximately 51 trillion dinars, and we do not know what is the new emergency that doubled the ceiling of the sums. "

He explained, "The government also announced that it needs seven trillion dinars to cover salary expenses, despite the observations that we have on this figure, considering that it needed almost five trillion dinars and a half trillion in the previous months."

Cougar stressed, "The total salaries for four months are 28 trillion dinars, according to government figures, to which five trillion dinars are added to the licensing rounds, in addition to 500 billion dinars as compensation for Kuwait, the total of which is less than what the government listed in the draft law."

He pointed out that "the size of the deficit in the four-month budget, as set by the government, is 41 trillion dinars, and if we accept this matter, this means that next year's budget deficit will be 123 trillion dinars, which is a very large number that we have not previously seen in any federal budget."

Cougar added, "The Finance Committee will not allow this big difference and we will work to make changes in the law, because the numbers are exaggerated," stressing that "when we speak in this way and present our observations, this does not mean that the current government bears full responsibility because it is not concerned.

With the accumulations of previous years, it is responsible for the period in which it dealt with the financial and economic file and bears the responsibility for the delay in sending the current year’s budget and delaying the reform paper for a period of 73 days from the scheduled date of delivery.    http://burathanews.com/arabic/economic/378586

Madrid Chamber Of Commerce: Iraq Has Promising Investment Opportunities

Money  and business  Economy News – Baghdad  The President of the Madrid Chamber of Commerce, Angel Asensio, announced that Iraq has promising investment opportunities consistent with Spain's approach to internationalize its companies.

Said Asensio, in a speech to "international economic conference between Iraq and Spain ," that "in Iraq , investment and promising opportunities in line with the direction of Spain for the internationalization of its companies, and that Iraq is rich in natural resources and energies of young and in return, the sectors that Iraq needs , including housing, reconstruction and digitalization and rehabilitation of cadres All workers are available to the companies to achieve the aspirations of both sides. "

On the other hand, Abdul-Hussein Al-Anbaki, the economic advisor in the Presidency of the Council of Ministers, said that the privileges enjoyed by the investor in Iraq, including the country's efforts to transform towards a market economy and impose customs tariffs to protect the local product, as well as the abundance of labor and the legislative base that protects investors and heads Funds at the level of investment law and the Iraqi constitution .

While Manuel Mora, representative of the State Secretariat for Trade, reviewed the trade balance between the two countries and the nature of exports and imports between them, noting the importance of diversification in products as well as the importance of legislating the investor protection law, while Spain's ambassador to Baghdad, Hansi Escobar, confirmed that the situation in Iraq is heading towards complete stability, which is what He encourages investment work and that the government of Dr. Mustafa Al-Kazemi is moving forward towards achieving comprehensive reforms in the country.

He thanked the Iraqi embassy in Madrid for its initiative and organizational effort to make the conference a success.   Number of observations 83 Date of addendum 10/17/2020    

https://economy-news.net/content.php?id=22296

Tohme: Any Financial Reform That Ignores The Review And Correction Of Oil Licensing Round Contracts Will Be A Formality And A Clear Neglect Of Iraq's Most Important Financial Revenues

Economy  Saturday 17 October 2020 | 10:52 a.m.| Views: 150   The percentage of payments for licensing rounds for the year 2019 and when the average price of oil was (61) dollars per barrel was (18% ؜) of the total revenue from the sale of oil, in other words that when Iraq sells oil worth one billion dollars, the share of the licensing rounds companies is equal to (180) ) One million dollars, and this percentage of the profits obtained by the oil licensing rounds companies make the contracts closer to being partnership contracts rather than service contracts.

He pointed out that any financial reform neglects reviewing and correcting the licensing round contracts in order to achieve fairness in Iraq and collect the highest benefits as stipulated in the Iraqi constitution, it will be a formality and a clear neglect of Iraq's most important financial revenues.    https://aynaliraqnews.com/index.php?aa=news&id22=139860

The Minister Of Commerce Affirms To Support The Market Economy And To Hold Specialized Exhibitions

Economie| 11:55 - 10/17/2020  Baghdad - Mawazine News  , Minister of Trade, Alaa Al-Jubouri, confirmed, on Saturday, the government support for the private sector, support for the market economy, and the establishment of specialized exhibitions.

A statement of the Chamber of Commerce, of which Mawazine News received a copy, stated, “Today, Minister of Commerce Alaa Ahmed Hassan received a delegation that included the President of the Federation of Chambers of Commerce, Abdul Razzaq Al-Zuhairi, President of the Baghdad Chamber of Commerce, Firas Al-Hamdani, and members of the Chamber’s Board of Directors Duraid Othman Al-Ghariri and Hussam Jawad Hassan And the chamber’s president’s advisor, Maha Al-Obeidi, in the presence of the Director General of the Special Development Department, Riad Fakher Al-Hashemi.

The statement quoted the chamber’s president, Firas al-Hamdani: “Discussions were held with the Minister of Trade, Alaa Ahmed Hassan, about government support and its orientation to the market economy, proposing proposals, observations and areas of cooperation with the ministry and holding specialized exhibitions on the grounds of the Baghdad International Fair.”

For his part, Al-Zuhairi stressed “the role of the chambers of commerce and the proposals to establish economic forums and conferences to support the private and public sectors, as well as the desire to cooperate with the Department of the Companies Registrar about updating the data of the companies registered annually and removing the reserved and unregistered names in the Chambers of Commerce as well as the trade name and what is related to the laws in force. And cooperation in allocating a permanent hall in the Baghdad International Fair to hold specialized exhibitions.

A statement of the chamber, according to its president, indicated that "the Minister of Commerce emphasized the restoration of the status of the national industry in the external environment and the definition of the identity of the Iraqi merchant," indicating that "the establishment of an economic forum in Baghdad has international, Arab and local economic dimensions, which will be supported and attended by the Prime Minister, ministries, sectors and public bodies." .

Al-Hamdani added, "Several proposals in the working paper presented to the Minister of Trade, including the addition of the Baghdad Chamber of Commerce in the membership of the Export Support Fund, the General Company for Exhibitions and Commercial Services, and the establishment of the Iraqi Export and Import Bank in order for the merchant to facilitate the issue of opening documentary credits, as well as adding the Baghdad Chamber of Commerce in the membership of the committees.

Sharing with Arab and foreign countries, giving exports and exports priority in facilitating procedures, adopting the principle of re-exportation, and canceling the ban on exporting some Iraqi products.

Trade Minister Alaa Ahmed Hassan asserted that "there will be future meetings to overcome all obstacles in the service of the Iraqi merchant."    https://www.mawazin.net/Details.aspx?jimare=126607

 

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