"Tidbits From TNT" Friday Morning 5-12-2023

TNT:

CandyKisses:  The largest borrower from the IMF is at risk of bankruptcy

Argentina is struggling in its battle to prevent its currency from collapsing and the central bank from going bankrupt, according to some estimates, according to Bloomberg.

The South American country has already spent all of its international liquid reserves, plus an estimated another billion dollars, raising the risk of currency collapse as the nation faces a historic drought and impending recession.

Without cash, questions arise about how long the government can continue to defend the peso from total collapse. A devaluation could fuel inflation by 104%.

"Lower reserves lead to more pressure on the exchange rate, which in turn leads to more pressure on inflation, and I don't see any possible scenario in which inflation is below three digits this year," said Fernando Losada, managing director at Oppenheimer & Co.

Argentina has struggled to build up international reserves and keep them at healthy levels for decades, to combat rising prices and reconcile liabilities on foreign bonds.

It now technically holds less than $34 billion in total foreign reserves, but the majority of them are not cash, but assets — such as gold, swap lines of credit with China and dollars that Argentines have in their savings accounts.

This is a problem for a country that needs cash ready to be spent. Argentina's foreign currency liabilities already exceed total reserves by nearly $1 billion. 

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Tishwash:  The Governor of the Central Bank of Iraq receives experts from the International Finance Corporation (IFC).

His Excellency the Governor of the Central Bank of Iraq, Mr. Ali Mohsen Al-Alaq, received today, Thursday, a delegation of experts from the International Finance Corporation (IFC) affiliated to the World Bank, headed by Mr. (Marcel Rashid), the supervisor of financial market projects in the Levant region.

During the meeting, ways of developing the relationship between the Central Bank of Iraq and the International Finance Corporation were discussed, and a plan was drawn up to establish a (loan guarantee company), which was proposed by the governor earlier as part of a comprehensive study he presented regarding building the bases for a national strategy for bank lending, while the staff of the Central Bank is responsible for building the national strategy. lending according to the rules.

The establishment of a loan guarantee company is an important factor in stimulating lending, by reducing the rates of loan defaults that the banking sector in Iraq suffers from.

Central Bank of Iraq 
Media Office 
11 - May – 2023     link

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Tishwash:  The Finance Committee announces the start of auditing taxes and fees in the budget

The Iraqi Parliament said that the Parliamentary Finance Committee has begun to scrutinize items and identify ideas in the areas of taxes and gasoline purchase fees in the 2023 budget. 

According to a statement issued by the Parliament’s Media Department, which was seen by “Ultra Iraq”, the subcommittees met on behalf of the Finance Committee to “study and add items to the budget and amend it, study the details of the allocations of spending agencies and the schedules included in the federal budget for the fiscal years 2023-2024-2025 and audit Details of the numbers received.   

According to the statement, the committee stressed "the need to determine how to spend according to the needs of institutions, and to manage funds with the aim of determining sources and priorities in implementing projects that meet the needs of the state."   

The committee for the items prepared "the texts that it intends to add to the items of the budget and to define ideas and visions related to the areas of taxes and fees for the purchase of imported improved gasoline, so that the amounts return to the state treasury after selling it."

The meeting also discussed "the file of mobile phone companies' fees, the balance mobilization tax, social networking fees, the obligation of the ministries of electricity, communications and construction, and the authorities concerned with imposing fees and levies, and all spending units are evaluated in collecting revenues to preserve public money, in addition to the criteria for estimating the purchase of real estate." .  

The committee studied the analysis of financial figures and "checking the detailed data regarding the amounts of service and commodity requirements, special programs, contributions, and the government program; for the possibility of making transfers between the chapters of exchange according to the need of spending units according to economic feasibility, in addition to the financial amounts of contracts of some ministries and central funding, in A way to support provincial projects, social welfare and productive companies. 

The 2023 budget, which will be applied for the next two years as well, came with a total proposed expenditure of 197.8 trillion dinars, equivalent to 152.2 billion dollars, while the price of a barrel of oil is about 70 dollars per barrel, and a fiscal deficit of 63 trillion dinars, equivalent to 48.5 billion dollars.

The budget included the imposition of taxes on "revenues from sales of one liter of gasoline at a rate of 5%, on gas or kerosene oil at a rate of 10%, on imported fuel at a rate of 15%, and on sales of black oil at a rate of 1%." 

Earlier, the academic and economist, Nabil Al-Marsoumi, considered that  the above taxes in the 2023 budget would lead to "an increase in the cost of transporting people and goods, and then a new rise in the prices of goods and services." 

Although these taxes will lead to “enhancing non-oil revenues and limiting even a little fuel smuggling abroad,” according to the decree, which rectifies, “they will lead to an increase in the cost of transporting people and goods, and then a new rise in the prices of goods and services, which may lead to exceeding the percentage of The annual inflation specified in the budget is 5%, which has a negative impact on the standard of living of citizens.  

On May 9, the Iraqi Council of Representatives decided to "extend its legislative term until  the budget law is approved ." 

And the Parliamentary Finance had previously issued a report on the budget law that included great observations about  the largest budget in the history of Iraq,  with an increase in operational spending by 75%.

And then announced a plan to reduce expenditures and the deficit within the budget law, in agreement with Prime Minister Muhammad al-Sudani to host the ministers of finance and planning with the aim of "reducing the large deficit" in the 2023 budget  link

Mot: Now is the time to find out what your siblings are planning for Mother's Day.

Mot:  Why does time have to move so fast??