Saturday Evening Iraq Economic News Highlights 9-3-22

Iraq's Debts Are More Than $100 Billion..Does High Oil Prices Contribute To Paying Them?

The economic advisor to the Iraqi government divided the country's debt into internal debts of $50 billion, external payable of $20 billion, and almost non-existent foreign debt of $40 billion, in addition to long-term concessional foreign debt of about $6 billion.

The rise in Iraq's debt is offset by a rise in oil prices, the only financial resource for the state (Al Jazeera Net)

Ali Karim go  3/9/2022|Last update: 3/9/202201:20 PM (Mecca)  BAGHDAD - More than 95% of Iraq depends on crude oil exports to build the general budget annually, while the agriculture, industry, tourism and other sectors constitute only about 5% of the annual finance.

And last July, Iraq exported about 100 million barrels from oil fields in the center and south of the country, while the exports of Kirkuk fields (north) through the Turkish port of Ceyhan amounted to about two million and 350 barrels.

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The total oil export revenues in the same month were more than 10 billion dollars, at a rate of 3 million 303 thousand barrels per day, at a rate of 103.60 dollars per barrel.

Iraq's debts are more than $100 billion..Does high oil prices contribute to paying them? 004-3Saleh divided Iraq's debts into internal, external and very easy long-term (Al-Jazeera Net)

The Size Of The Indebtedness

According to the economic advisor to the Iraqi government, Dr. Mazhar Muhammad Salih, Iraq's debts are divided into 3 types: internal, external, and long-term very concessional.

In an interview with Al-Jazeera Net, Saleh detailed these debts in numbers, saying that the internal public debt amounts to 50 billion dollars, and the Central Bank of Iraq still possesses 63% of the principal and interests of the debt, and the annual interest ranges between 2 and 3%, while the rest of the internal debt is still in the possession of Governmental commercial banks, which means that they are settlements within the government financial system exclusively in the form of treasury transfers for a period of one year, whose payment has been postponed until the annual interest on them has been paid from the annual allocations in the general budget.

He pointed out that the Council of Ministers approved, months ago, a gradual annual plan to pay off the internal public debt.

With regard to the external public debt, Saleh explains that it is divided into two parts. The first is an outstanding debt of $20 billion, which is currently repaid on a regular annual basis by the Ministry of Finance, and is expected to be repaid by the year 2028.

As for the second part of the foreign debt amounting to 40 billion dollars, it represents almost bad debts that were not claimed by the creditors under the terms of the Paris Club Agreement of 2004 regarding the cancellation of 80% of Iraq’s foreign debts before 1990, dating back to the era of the former regime.

According to Saleh, "The suspended external debt belongs to 8 countries, 4 of which are Gulf countries that loaned Iraq during its war with Iran, and it is considered in international norms as obnoxious or hateful debts because it financed the war and did not serve economic development, but it still appears in the accounts books of those countries, It is expected to be written off 100%, without specifying a time.”

As for the last part that the economic advisor talked about, it is very soft long-term debts related to financing development projects that were submitted after 2003 under the Madrid Donor Conference pledges in October 2003, and are due to be paid after more than 20 years, and are estimated at about $6 billion belonging to the Cooperation Agency. Japanese International Economic and some EU countries funds.

Iraq's debts are more than $100 billion..Does high oil prices contribute to paying them? 33Daadoush believes that the oil financial abundance contributes to the repayment of debts, but it is a mistake to rely on it (Al Jazeera Net)

Diversification Or Rentierism?

For his part, economic researcher Dr. Ali Dadush believes that oil revenues play an important role in reducing public debt if prices continue between 90 and 100 dollars per barrel in global markets, but he warned against the Iraqi government's dependence on them to pay off debts because prices are volatile.

Dadush told Al-Jazeera Net that the revitalization of the non-oil sectors will advance the Iraqi economy and help reduce its debt, explaining that imports of goods and services in this case will decrease and reflect positively on the economy in terms of reducing the exit of foreign currency, specifically the dollar, in addition to employment.

He pointed out that the process of economic diversification should be through investing the financial surpluses derived from oil and developing real economic sectors to generate added value by investing in the industrial sector for all locally manufactured goods and products and moving towards advanced capitalist agriculture based on modern machinery and equipment.

Payment Mechanism

In parallel, the expert in oil and energy affairs, Dr. Bilal Al-Khalifa, identifies the Iraqi government's use of the financial abundance of oil in matters other than paying debts.

The Caliph explained to Al Jazeera Net that part of the financial abundance in Iraq was used to buy US bonds, as its holdings of bonds rose last March by two billion and 117 million dollars, or 8.79%, to reach 26 billion dollars.

He added that Iraq increased its foreign exchange reserve balance to reach $72 billion, while it took a third step by exploiting the financial abundance to buy gold, and now owns 130 tons, ranking 30th globally and fourth in the Arab world.

He concludes that the government has not exploited the financial abundance to pay off debts, and insists on internal and external borrowing, and this is what was approved in the Emergency Food Security Law , which contained the borrowing clause.

Iraq's debts are more than $100 billion..Does high oil prices contribute to paying them? 55Zainab Al-Moussawi: Al-Kazemi's government did not present an economic program to pay off debts, but rather worked to raise it (Al-Jazeera Net)

Parliamentary Position

In turn, a member of the Iraqi parliament, Zainab Juma Al-Moussawi, said that the expired government - led by Prime Minister Mustafa Al-Kazemi - did not present an economic program to pay off debts, but rather worked to raise it through the emergency food security law.

Al-Moussawi adds to Al-Jazeera Net that the financial abundance of oil exports spares Iraq from borrowing, especially at the present time, which is witnessing a continuous rise in crude prices, which will rise with the approach of winter as a result of cutting Russian oil and gas supplies from the European Union.

Al-Moussawi concluded by calling on the next government to make optimal use of the financial abundance and to stay away from internal or external borrowing, revealing a parliamentary move in the event of his return soon to discuss the issue of Iraq's debts and ways to pay them.   LINK

Washington Warns Baghdad: We Face A Common Challenge That Requires Us To Work Together

Shafaq News / The US Ambassador to Baghdad, Elena Romanowski, spoke on Saturday about the climate crisis and its change in Iraq, pointing out that scorching temperatures, severe sandstorms and continuous drought have become prevalent conditions that negatively affect aspects of the daily lives of millions of Iraqis.

In her speech regarding the climate crisis in Iraq, Romanowski said that "the impact of human-caused greenhouse gas emissions is not limited to changing the landscape only, nor is it just a problem related to the future alone."

"Failure to take immediate action by governments around the world - including the Iraqi government - will accelerate these changes, which will turn entire areas within the region that was once called (the Fertile Crescent), uninhabitable for generations," she added. coming".

The US ambassador stated, "The United States is committed to taking meaningful action in the global response to climate change, as President (Biden) this month signed a historic legislative act that guarantees the largest investment ever to address the climate crisis, an investment of $369 billion." It would significantly improve energy efficiency and reduce greenhouse gas emissions.”

She pointed out that "the scope of this international commitment extends to helping the Iraqi government to address the climate change crisis," stressing that her country "has provided Iraq, through the United States Agency for International Development, with support that included funding and technical expertise, as well as the necessary systems to help it face future challenges."

And she indicated that the support included "improving Iraq's ability to manage the issue of water and helping to expand access to this vital resource for more than ten million Iraqis, as well as joining Iraqi business institutions, schools and local government institutions starting from Nineveh to Basra in an effort to increase public awareness about effects of climate change”.

"We have supported the Iraqi government to develop a five-year climate strategy aimed at improving communication with farmers about climate forecasts, reducing damage to crops and soil, as well as protecting Iraq's food supply from threats posed by increasingly unstable weather," Romanowski added.

The US ambassador expressed her pride in her country's efforts to "build bridges of communication between Iraqis and Americans, in order to draw inspiration from the experiences of the two countries, as they both face the challenges of climate change."

Two weeks ago, more than two dozen Iraqi officials returned after concluding a visit to locations across the United States, where they met with hydrologists and other experts and learned about how the United States is adapting to climate change.

And she added, "Fortunately, the Iraqi government has joined the global efforts aimed at reducing emissions and switching to renewable energy, as well as adopting smart climate practices," noting that "with the Iraqi government's accession to the (Paris Agreement) in 2021, it has thus set a goal Reducing emissions by (1) to (2)% as part of the first Nationally Determined Contribution (NDC).

Iraq, according to Romanowski, has joined the Global Methane Pledge, and while the United States is making these historic commitments, it is now essential for Iraq to begin taking the necessary measures to meet those commitments.

The US ambassador urged Iraq’s leaders to “take advantage of the United Nations Climate Change Conference (COP 27), to be held later this year in Sharm el-Sheikh, Egypt, to reconsider and enhance Iraq’s INDCs as well as investment decisively in the technological and investment field necessary to achieve the stated goals.

And she considered that "the issue of reducing emissions in Iraq may seem difficult, as the economic pressure to obtain the most carbon-free energy is a material reality, and perhaps in the Middle East more than anywhere else, but this goal remains within reach and the current conditions have advantages that are not yet available. It was previously unimaginable to some."    LINK

Iraq Surpasses Saudi Arabia In Its Oil Exports To America In A Week

Shafaq News/ The US Energy Information Administration announced, on Saturday, that Iraq's oil exports to America increased during the past week, exceeding Saudi Arabia.

The administration said in a report seen by Shafak News Agency, "The average US imports of crude oil during the past week from nine countries amounted to 5.121 million barrels per day, down by 234 thousand barrels per day from the previous week, which amounted to 5.356 million barrels per day."

She added that "Iraq's oil exports to America amounted to an average of 401,000 barrels per day last week, higher than the week before, in which oil exports to America reached an average of 225 thousand barrels per day, surpassing Saudi Arabia and becoming the third largest exporter to America last week."

She pointed out that "the most oil revenues for America during the past week came from Canada at a rate of 3.093 million barrels per day, followed by Mexico at a rate of 440,000 barrels per day, and oil revenues from Saudi Arabia at a rate of 330,000 barrels per day, and then Colombia at a rate of 289,000 barrels per day."

According to the administration, "the amount of US imports of crude oil from Nigeria reached an average of 137,000 barrels per day, from Brazil at a rate of 134,000 barrels per day, and from Trinidad and Tobago at a rate of 67,000 barrels per day, while no amount was imported from Russia."   LINK

Most Notably The Countries Of The Middle East.. A Report Talks About Upcoming Unrest In More Than 100 Countries

2022.09.03       An analytical report issued on September 1, 2022, said that the “unprecedented” rise in food prices, coinciding with the climate crisis; He created the perfect atmosphere for civil unrest in more than 100 countries, the British Middle East Eye website reported.

The report, issued by the risk analysis firm Verisk Maplecroft, warns of increased political unrest over the next 12 months, with more than 80% of the world experiencing inflation above 6%, and the possibility of repressive measures being used to stifle dissent.

It is noteworthy that the countries of the Middle East and North Africa are more exposed to these risks than others, as three of the ten most threatened countries are located in this region, according to the report.

Egypt, Lebanon, and Tunisia were already in the midst of an economic and political crisis before the latest shock from the Russian attack on Ukraine in February of this year.    

The damage will not be equal

But Torbjorn Soltvedt, principal analyst at the company that wrote the report, told Middle East Eye that the damage would not be equal in the Middle East; He divided the area into three threatened categories.    

He claimed that "Lebanon, Turkey, and Iran are the most fragile countries, and are already located in a region of hyperinflation," adding that "Jordan, Tunisia, Algeria, Egypt, Iraq and Morocco are in the middle category, where high rates of unemployment and inflation increase the risk of civil unrest."

Saltvedt also pointed out that "only the Gulf Cooperation Council countries and Israel seem well-equipped to relieve the increasing social and economic pressure."    

In this context, the countries of the Gulf Cooperation Council, which depend on oil and gas exports as a major source of income, have benefited from the record rise in energy prices.    

Likewise, Israel, which enjoys a more diversified economy, has also benefited from higher energy prices, after significantly increasing its gas exports to Europe.

Use of force to quell protests

On the other hand, Soltvedt told Middle East Eye: "Governments that cannot get out of the crisis...repression by force will be their main way of responding to this growing unrest."

  But Saltvedt pointed out that the use of force to quell the escalating protests "risks exacerbating an existing crisis of legitimacy."

  "Many countries in the region share that they have not adopted effective mechanisms to channel popular discontent, at a time when dissatisfaction with the current economic and political situation is growing," he said.

  In turn, Hamish Kinnear, Middle East and North Africa analyst at the same company, pointed out that Tunisia, widely considered the epicenter of the Arab Spring, is "more vulnerable to the risks of civil unrest."

  "The political chaos in Tunisia is hampering efforts to secure economic assistance from international financial institutions such as the International Monetary Fund, although any deal with the IMF will likely require austerity measures that will exacerbate civil unrest," Kinnear said.

  Although Egypt is relatively more stable, it suffers from similar economic problems, Kinnear said, adding that Egyptian President Abdel Fattah al-Sisi could also "mobilize external financial support faster, especially from friendly Gulf states."

  On the other hand, Kinnear pointed out that despite the continued rise in food and energy prices in the region, it increases the chances of political unrest. Uncontrollable range.  https://www.nasnews.com/view.php?cat=93158