"Some Tuesday News" Posted by Samson at KTFA 10-19-2021

KTFA:

Samson:  PM Financial Advisor : High oil prices surplus will cover three important aspects

18th October, 2021

The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed on Monday, that the financial surplus from the increase in oil prices will cover three important aspects, including filling the expected deficit in the current year's budget.

“The financial surpluses achieved from the increase in oil prices and their reaching $75 per barrel, will cover at least three aspects," said Salih in a statement to the Iraqi News Agency (INA).

He noted that "the first aspect is covering the planned deficit in the general budget for the year 2021, which amounts to 29 Trillion dinars.

As for the second aspect, it is related to covering the real additional deficit gap of less than 10 trillion dinars, which is caused by the failure to estimate non-oil revenues, which only achieve 40% of their estimated or planned estimates in the budget, which unfortunately causes pressure on the planned annual spending and its ceilings, which are caused by  the country's financial collection institutions are underdeveloped.”

"The third aspect goes towards supporting faltering projects whose operation is intended to continue, and for which many business contractors demand an adjustment in implementation costs (spare parts) due to the exchange rate change before the initial contract or other changes in the operating costs of ongoing projects," he added, explaining that "the disposal of financial surpluses, is not easy due to the large number of restrictions and obligations within the general budget itself, including postponing the payment of many expenses that are payable and were not spent in previous years.”

Salih pointed out that "there are dozens of laws that carry financial burdens that the public finances are unable to implement the resulting increases, even according to the hypothesis of achieving an annual average price of a barrel of oil of $75 compared to the price fixed in the federal general budget for the year 2021 of $45 a barrel.”

On the regard of the possibility to adjust the exchange rate of the dollar to the Iraqi dinar, Salih said, “Adjusting the exchange rate is one of the actions of monetary policy in achieving stability, targeting inflation and limiting the rise according to the effective Central Bank law.” 

He went on noting that “this is a matter that takes into account monetary balance considerations, two restrictions, the first that the coverage in foreign currency reaches the local liquidity, which has increased significantly, due to financing the deficit in government expenditures, that led to the expansion of the monetary base, or what is sometimes called in the literature the (domestic) cash reserve, and if the foreign reserves outweigh the (domestic) cash reserve in a way that does not threaten the country's foreign reserve wealth or its depletion and maintains its stability, accumulation and general stability in prices.”

“The second limitation is that the effects of the adjustment in the exchange rate should be fully consistent with the objectives of the country's fiscal policy and its level of stability, meaning that it should not threaten the sustainability of the budget or cause sudden stumbles in public revenues due to changing monetary values ​​​​and entering into failures (compensatory value deficit) in the general budget itself due to the volatility of monetary policy," he said, explaining that "this requires always high and accurate coordination within the country's supreme economic policy operations.”  LINK

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Samson:  Al-Kazemi’s advisor talks about changing the exchange rate: The surplus of high oil prices will cover three axes    LINK

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Samson:  Oil expert: High oil prices will achieve financial abundance and end the need
to borrow

10/18/2021 23:51:26

 The oil expert, Hamza Al-Jawahiri, said that the rise in oil prices to exceed $85 per barrel has good positive effects on the state treasury.

Al-Jawahiri told {Euphrates News}: "This increase will cover the hypothetical deficit in the financial budget, and there will be no need to borrow because there is financial abundance."

And he indicated, "The state's policy is to dispose of the financial abundance, and there are several proposals, such as placing it in development funds for industry or agriculture," explaining that "the fund is an integrated bank that employs these funds according to programs or studies and is granted to citizens and is returned with profits."

Al-Jawahiri considered, "This method is the best way to take advantage of that financial abundance."

The Oil Ministry considered the price hike to more than $80 a "positive indicator, but that requires stability for a long time."

The ministry’s spokesman, Assem Jihad, said: “Iraq aims to achieve the highest financial revenues by adhering to the OPEC Plus agreement,” noting that “the price of Iraqi oil and the producing countries depend (the monthly price) for the exported oil and is not subject to daily changes.” He pointed out that "the challenges of the global oil market are still present due to the lack of control over the Corona virus and the new strains."  LINK

Samson:  China and the integration of global markets

19th October, 2021

Achieving integration in global markets can be achieved through reciprocal trade relations between countries of the world that cover the needs of markets in various parts of the world

And when the conversation goes to trade, attention turns to the most important factory in the world and has a footprint in most but all world markets, and this stems from the capacity and size of manufacturing capabilities, up to the type required in each country, and this made the Chinese manufacturing machine consistent with all the requests that it receives through Market ambassadors (traders)

There is no doubt that any Chinese decision that limits dealing with world markets or undermines exports in relative terms, will carry many negatives on various countries, especially rentier ones, and put governments in an embarrassing position, requiring the search for new markets whose products may not fit with local communities. and the income levels of its members, and here China's decision will have alarming consequences for the markets in rentier countries

The solutions for the rentier countries remain limited and require efforts to achieve import flexibility from several markets, although there is no alternative market for China, but the necessities lead to such solutions

Also, the rentier countries and their markets, when they receive news that working days are reduced for the manufacturing sector, this leads to a serious audit, as this means an inevitable rise in prices in light of the financial crises experienced by all countries of the world due to Covid-19, and coincides with a rise in freight shipping prices. By 400%

Which means an increase in the costs of goods reaching the various markets of the world and the consumer will feel it when he is in the retail markets, and this in any case will affect the family economy, as global markets fear the coming days and expect a significant increase in the prices of various goods, due to the rise in raw materials around the world, as global stock exchanges indicated a rise of 20% for various raw materials, which means the reality of the state of international markets will be different from it before Corona invaded the countries of the world

And the world is facing new facts that change the shape of the global economy and put it in front of new paths required by international transactions. Iraq is part of the international trade system and with a large size, as it imports nearly 90% of the needs of local markets to cover the requirements of 40 million people who represent the population of Iraq, which requires re- Consider the shape of trade policies, and how the impact of local markets can be reduced by developments in global markets

Here comes the role of the Iraqi market ambassadors (merchants) in studying the new developments in the reality of industrialization in the world and within China in particular, in order to get out with the least losses as a result of the new reality that the world may witness   LINK

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Samson:  Poland: Europe is on the brink of a major energy crisis that could turn into a shock

19th October, 2021

Polish Prime Minister Mateusz Morawiecki has said that Europe is on the brink of a major energy crisis, which in a few weeks could turn into a shock.

The statement came during a speech by the Polish Prime Minister today, Tuesday, at the European Parliament in Strasbourg, where an issue related to the Polish constitution and its response to EU laws is also being discussed.

"Today we are on the brink of a huge gas and energy crisis," the Polish prime minister said. "The rapid rise in prices, caused in particular by the deliberate actions of Russian companies, already puts many companies in Europe before the option of restricting production or passing on the price increase to consumers," he added.

He pointed out that the crisis may rock Europe in the coming weeks, as many companies can go bankrupt, and millions of families will plunge into poverty due to the uncontrolled rise in fuel prices across Europe. He warned that "the domino effect must be taken into account. One crisis can lead to new shocks in a cascade."

Gas markets in Europe are currently under pressure, with declining stocks and rising demand, which led to a jump in blue fuel prices.

Earlier this month, gas prices recorded unprecedented historical levels, as prices rose to the level of 1937 dollars per thousand cubic meters.  LINK