"Tidbits From TNT" Wednesday Morning 8-25-2021
TNT:
Harambe: Zimbabwe to Use Part of IMF Funding to Prop Up Currency | Bloomberg
(8/25/21)
Zimbabwe will use more than half of the $961 million allocated by the International Monetary Fund in the form of special drawing rights to support its beleaguered currency.
The government abandoned a 1:1 peg between a precursor of the reintroduced Zimbabwe dollar and the greenback in February 2019. The currency now trades at 85.82 to the U.S. dollar and even lower on the black market, a plunge that’s made it difficult for the government to get it accepted locally, and it’s generally not tradable outside the country.
“For the support of the currency we want to hold back about $500 million,” Mthuli Ncube, Zimbabwe’s finance minister, said in an interview on Tuesday.
The southern African nation abandoned the Zimbabwe dollar in 2009 after inflation rose to 500 billion percent, according to the IMF, and legalized trade in a range of currencies including the U.S. dollar and South African rand. The economy had tanked after a failed land-reform program began in 2000 that saw the seizure of White-owned commercial farms and the subsequent collapse of export earnings.
Zimbabwe’s remaining SDRS will be used to support the acquisition of Covid-19 vaccines, investments in schools, hospitals and roads and other priorities, Ncube said. Revolving funds will also be set up to help manufacturers and mining companies buy new equipment, and to revive the horticulture industry by encouraging the cultivation of roses, macadamia nuts and blueberries, he said.
The IMF injected a record $650 billion of reserve assets to build confidence and foster resilience and stability in the global economy in the wake of the devastation caused by the coronavirus pandemic. The reserves are allocated to all 190 fund members, with about 70% going to the Group of 20 largest economies and just 3% to low-income nations.
Zimbabwe won’t use any of its reserves to pay down the more than $8 billion in external debt it owes, even though its arrears have effectively blocked it from borrowing more money from multilateral lenders.
Ncube also confirmed the government was considering borrowing money from private creditors to compensate the White farmers. Bloomberg first reported on the funding option on Aug. 16.
Farmers’ Compensation
Zimbabwe has agreed to pay the farmers $3.5 billion, half of which is due in July next year, to settle the two-decade old dispute that’s soured relations with Western countries, including the U.S. and the U.K.
“The idea is a special-purpose vehicle out of which we can then raise resources on the back of some escrowed tax revenues from specific sources that are ring-fenced,” Ncube said, adding that the tax could be in the form of mining royalties.
Zimbabwe exports platinum, gold, nickel and chrome. Another proposal under consideration is the local sale of a U.S. dollar bond, the minister said.
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Tishwash: Iraq signs an "agreement of principles" with China to establish solar power plants
Under the patronage of the Iraqi Prime Minister Mustafa Al-Kazemi, an agreement of principles took place today, Wednesday, between the Ministry of Electricity and the Chinese Power China Company, to establish solar power plants with a capacity of 2000 megawatts, to be implemented with a capacity of 750 megawatts as a first stage, up to a capacity of 2000 megawatts.
The Director General of the Investments and Contracts Department at the Ministry of Electricity Maha Hamoudi Abdul-Jabbar was signed on behalf of the Iraqi side, according to a statement by Al-Kazemi's office, which was received by Shafaq News Agency, while the Chinese side was signed by the Deputy Director General of the company, Li Dzhi.
The statement promised that the solar energy project is one of the first pilot projects in Iraq and is being implemented for the first time, and the project will contribute to increasing the production of electrical energy, to supply the system with clean renewable energy.
The signing of the principles agreement was attended by the Undersecretary of the Ministry of Electricity for Production Affairs, Adel Karim, and the Vice President of Power china, Jiu V. link
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Tishwash: Statistics: Iraq is the third largest oil exporter to China during July 2021
The Chinese Customs Administration showed that Iraq ranked third as the largest oil exporter to China during the month of July 2021.
The administration said in its statistics, which it monitored independently today, Tuesday, that "Iraq came as the third largest oil exporter to China during the month of July, with 4.670 million metric tons of crude oil, equivalent to 32.690 million barrels per month, equivalent to 1,054 thousand barrels per day, an increase of 34.1% over the month Last June, which amounted to 3.480 million metric tons.
The Chinese customs added, "Saudi Arabia came first with exports to China, as these exports amounted to 6.670 million metric tons, or the equivalent of 46.690 million barrels per month, while Russia came second, with exports amounting to 6.640 million metric tons, or the equivalent of 46.480 million barrels per month."
She pointed out that "Kuwait came fourth, with exports amounting to 4.160 million metric tons, or the equivalent of 29.120 million barrels, while Oman came fifth, with exports amounting to 3.670 million metric tons, or the equivalent of 25.690 million per month."
Iraq exports most of its crude oil to East Asia, especially China and India, at a rate of 67%, while the rest is exported to Europe and America. link
Tishwash: Al-Nusairi: Monetary stability represents the starting point for economic stability
Adviser to the Association of Iraqi Private Banks, Samir Al-Nusairi, confirmed, on Wednesday, that stability in the monetary system is the main step for moving towards economic stability.
Al-Nusairi said in an interview with "Al-Iqtisad News", that the monetary system faced, during its long march, challenges, the most prominent of which are the deficit in non-oil revenue, the deficit in the balance of payments, the deficit in public budgets, and the lack of clarity in financial policies due to the lack of regulation of the customs and tax sectors and the automation of border crossings, which requires adoption as a goal. Central to the reform of fiscal policy, in addition to the confusion of the systematic vision of macroeconomic management from the relevant authorities.
He pointed out that monetary policy was and still constitutes a fundamental theme in the economic process in the country, as it is a reflection of the general performance of the state and the extent of its seriousness in avoiding difficulties, dilemmas and crises and making it consistent with the goals set.
He added that in light of the economic changes after 2003, the need arose for radical reform of the Central Bank, and the new law was issued, which confirmed its independence and established its primary role in protecting the country's resources. Concern for the safety of monetary operations through the foreign currency sale window is also essential in the bank’s performance and to establish the principles and rules of legitimate dealing in a sound atmosphere of control and supervision.
Al-Nusairi explained that the process of selling foreign currency needs a deep understanding in light of the major accusations against the Central Bank without evidence proving the existence of suspicions of corruption, money laundering or currency smuggling. And the proposition that says that selling currency is a waste of public money, this description has nothing to do with economic science.
He noted that the Central Bank of Iraq exercises multi-dimensional functions, as it is concerned with financial stability, managing the payments system, managing foreign reserves, licensing and controlling banks and financial institutions, and is responsible for setting preventive controls, in addition to other tasks related to monetary issuance and dissemination of data, indicators and economic forecasts.
And he indicated that the main tasks carried out by the Central Bank are managing monetary policy, which aims to control inflation, stimulate the economy, balance the balance of payments and achieve monetary stability. link
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