Floating the dinar... Will it achieve monetary stability in Iraq?

KTFA:

Clare: Floating the dinar... Will it achieve monetary stability in Iraq?

Moaz Fraihat - Washington May 17, 2024
 
The stability of the Iraqi dinar in recent years has always faced major challenges, as it witnesses price fluctuations, not to mention a gap between what the central bank determines and what is sold in the parallel market.

In order to avoid the “volatility” syndrome and the “gap” in the price of the Iraqi dinar against foreign currencies, some experts believe that the solution lies in a kind of “surgical” operation for the country’s monetary system that may be painful, but it achieves long-term monetary stability for the national currency through... "float".

The cash selling price, according to the Central Bank, is 1,305 dinars per dollar, while the price for transfers abroad is 1,310 dinars per dollar, and the price in the parallel market is about 1,450 dinars per dollar in mid-May, according to local media , while it reached levels of 1,600 dinars per dollar in previous periods.

For months, the Iraqi authorities have imposed restrictions in their efforts to control exchange rates, restricting all commercial transactions within the country to the Iraqi dinar, and established a new mechanism that subjects external transfers to greater scrutiny.

Iraqi economic analysts who spoke to Al-Hurra website, some of them warned against taking a decision that would lead to floating the dinar, while some of them believe that a moderate policy could be taken that suits the Iraqi economy, based on “floating” and “stabilization” at the same time.

Is the flotation policy compatible with the Iraqi economy?

Advisor to the Prime Minister for Financial Affairs, Mazhar Salih, believes that floating the currency price does not suit the Iraqi economy, especially since it is a "rentier economy, dominated by foreign currency reserves."

He explains in statements to the “Al-Hurra” website that “the economic vision that wants to float the Iraqi dinar to end the gap between the official price and the parallel price may be possible in an economy in which the free market alone influences the movement of the balance of payments, and not in an economy in which the rentier government sector is dominant and generates reserves.” Foreign currency".

He added, "The monetary authority in Iraq alone is the main source of supply of foreign currency that meets the desired demand for foreign exchange in the local market."

Saleh believes that the demands for flotation inevitably mean “adopting the prevailing exchange rate in the parallel market, in order to achieve the goal of stability and balance in the official exchange rate itself at a new exchange point that the market will reach at the end of the assumed flotation policy and return to stability again.”

The flotation scenario also means “the withdrawal of the monetary authority as the main central offerer of foreign currency, and its replacement by new forces of free market makers, which certainly have only a weak, limited supply of foreign exchange,” according to Saleh.

He points out that these forces carry “an uncontrolled package of inflationary expectations, and are called in the economic literature (the forces generating inflationary expectations), which will give dominance to the supply forces of speculators” who own limited amounts of foreign exchange, matched by “an open demand for foreign currency from The market side" exceeds what is offered by "at least more than ten times in our estimate."

Chancellor Saleh described this policy as “unruly,” as as long as “the central government supply of foreign currency will be absent from the market, we will not obtain any equilibrium point in the exchange rate that flotation seeks except with a widespread deterioration of the exchange rate as long as it is carried out by forces generating inflationary expectations in a severe rentier economy.” "unilateralism."

He warns that if the exchange rate moves in “a market that is incomplete, in terms of productivity, in its compensation for the required supply of goods and services,” no one “will know how much the new exchange rate resulting from the flotation will be,” which will be accompanied by “a prior wave of inflationary expectations,” the trends of which are difficult to control. , which may push monetary policy makers to “intervene with excessive foreign reserves and unjustified extravagance in foreign exchange to impose a state of stability.”

According to the World Bank, Iraq has 145 billion barrels of proven oil reserves, which are among the largest crude oil reserves in the world.

But Iraq hopes that the country's oil reserves will exceed 160 billion barrels, according to what the Minister of Oil, Hayyan Abdul Ghani, recently announced.

What if the Iraqi dinar was floated?

The claims that have appeared every now and then for years calling for floating the exchange rate of the Iraqi dinar are “strange,” and most of them are made by people who are “not specialized in economics or monetary policy,” according to what Professor of International Economic Relations, Abdul Rahman al-Mashhadani, confirms to the Al-Hurra website.

He asserts in a decisive tone, "Iraq cannot proceed with floating the dinar's exchange rate. The evidence for this is all the agreements concluded with the International Monetary Fund since 2004, and the reviews praised the stabilization of the exchange rate by the Central Bank of Iraq."

Al-Mashhadani added that there was a study by experts at the World Bank during the past years that recommended “raising the exchange rate,” noting that even then, “these recommendations cannot be taken into account because the World Bank is concerned with what is related to economic development, but following up on the recommendations for monetary policies is taken into account if It was from the International Monetary Fund.

In its latest review on Thursday, the International Monetary Fund praised the efforts of the Central Bank of Iraq to tighten monetary policy and strengthen its liquidity management framework.

He explains that “the real gap is in the wheel of production in the Iraqi economy, as the majority of goods are imported from abroad, which means that the flotation will cause a spiral in price rates to become significantly high and affect the marginalized classes,” indicating that such a decision cannot be taken “as a matter of politics.” “Cash” only, as we must “consider the burdens it will impose on citizens.”

Al-Mashhadani confirms that what has been applied in other Arab countries does not “mean that it can be applied to the Iraqi economy,” suggesting that “the exchange rate will become at the levels of 5,000 dinars to the dollar,” as “the Central Bank has lost control over exchange rates, leaving them to float.”

There is a fear that “floating” will cause “social” problems, as “salaries will erode significantly,” which may threaten “new classes to slide into poverty,” while “a class of merchants, politicians, and businessmen will benefit, who will benefit from the state of instability that will result from... This matter".

Al-Mashhadani agrees that floating in the end means “that the parallel market will control exchange rates,” but it will not achieve “the desired monetary stability,” as the central bank will then need to “print more local currency to keep up with demand in the markets,” and the government will need to increase salaries and allocations for aid packages. Social.

"Float with controls" for full "editing".

The economic expert, Manar Al-Obaidi, recommends following a “currency float” policy, but with controls such that a “managed float policy is used to gradually liberalize the currency until complete liberalization of the exchange rate is reached.”

He said in a post on his Facebook account, "Such a policy could be a successful alternative in Iraq by following a managed float policy where the central bank controls the range of volatility and works to gradually increase it until the currency is completely liberalized."

Al-Obaidi gave the example of “the managed flotation policy followed by Morocco in 2018,” noting that it was accompanied by the abolition of customs tariffs on basic materials and “supporting funds for vulnerable classes,” stressing that this experience can be used to influence “inflation.”

"Reasons for the exchange rate “gap”.

The Iraqi government advisor, Saleh, attributes the reason and existence of a “gap” in the dinar’s exchange rates against the dollar between the official and parallel markets to “external factors imposed by the compliance platform and auditing administrative restrictions on external transfer movements, which is not related to the deficit in the authority’s monetary reserves,” noting that the reserve Iraq's foreign currency is considered the highest in the country's history, as it touches the levels of import coverage for 16 months, compared to the global standard, which does not exceed three months of import coverage.

Financial transfers in dollars through official channels have increased significantly in Iraq, while Iraq continues its reforms of the financial sector in line with international standards, according to a previous report by Agence France-Presse.

In late 2022, the Iraqi banking sector adopted the SWIFT electronic transfer system with the aim of providing better control over the use of the dollar, ensuring compliance with US sanctions on Tehran, and also in order to limit the prosperity of the informal economy. 

The financial standards that were adopted encouraged the emergence of a parallel market for currencies, attracting those seeking to obtain dollars outside official channels.

Saleh pointed out that there is a distortion in support for the prices of some commodities “on the part of financial policy, which is support in which the rich and poor mostly enjoy it equally without discrimination, and it represents an added, imperceptible real income, and it is the product of a financial policy inherited from the consumer welfare state for the rentier resource.”

He continued, "It is inconceivable until this moment that 90 percent of Iraq's population is receiving support for food supplies provided by the state as an extension of the economic blockade phase of the 1990s in light of the changing standards of living and lifestyle, the increasing number of affluent people, and the growth of the middle class."

In mid-May, the Iraqi authorities announced the purchase of 1.5 million tons of wheat since the beginning of the year.

According to the Ministry of Agriculture, Iraq, with a population exceeding 43 million people, needs between 4.5 million and five million tons of wheat annually.

The International Monetary Fund said Thursday that Iraq's internal imbalances have been exacerbated by significant fiscal expansion and low oil prices.

The Fund added that Iraq needs to gradually correct public financial conditions in Iraq to achieve debt stability in the medium term and rebuild financial reserves.

To ensure compliance with US standards regarding money laundering and sanctions on Iran, about 20 Iraqi banks were prevented from making dollar transfers.

Last September, the Iraqi government decided that merchants who deal with Iran are forced to turn to the parallel market to obtain currency, given that Tehran is subject to sanctions and “is not allowed to conduct financial transfers,” according to Agence France-Presse.

"A positive step for the "economy" but!!

The Iraqi economic academic, Nabil Al-Marsoumi, believes that the solution to addressing the discrepancy in the currency exchange rate through “free floating of the Iraqi dinar” may have “some economic positives.”

He added in an interview with Al-Hurra website that "the economy should not be taken in its abstract aspect, but rather in terms of its relationship to people, especially the poor among them."

Al-Marsoumi warns that "the Iraqi dinar may witness a violent collapse and rampant inflation that will cause prices in the Iraqi market to rise to record levels that will harm citizens, especially the low-income classes."

He explains that Iraq lacks "a national private sector that could contribute to increasing the supply of dollars in the local market, and because of the large volume of imports, which reach 67 billion dollars annually, the government is the only party that owns the dollar."

He notes that "if the government decides not to intervene in the exchange market, we are expected to witness consequences that will cause severe damage to citizens' living standards, making the poor even more miserable, and may lead to social tensions and a major rift in the social peace."

For his part, the economic expert Al-Obaidi defined the primary goal of liberalizing the currency as “creating an economy capable of withstanding various economic shocks, and reducing reliance on reserves that are greatly depleted in order to maintain a fixed exchange rate, which could stop once the reserves run out.” .

He added that this also "contributes to supporting the domestic product and changing the consumption pattern, and thus reducing the import bill for Iraq, which rises annually as an indirect reason as a result of the attempt to maintain a fixed exchange rate."

Not to mention, “continuing to try to maintain a fixed exchange rate depletes reserves,” which will lead at a certain stage, “accompanied by a decrease in reserves, followed by either a complete liberalization of the currency or a significant reduction in the price rate, which will have major repercussions on the citizen, and will cause great confusion in "A market that already suffers from a lack of economic stability."

"What is the alternative to floating the currency?

The Iraqi economic expert, Mahmoud Dagher, confirms to Al-Hurra website that what may be the solution for Iraq is a system “between floating and stabilization,” to help stabilize currency exchange rates.

The expert, Dagher, a former official at the Central Bank of Iraq, explains that “the origin of the exchange system is floating, which is what free countries adopt.”

He explains that "the continuity of the gap requires reaching a middle system that solves the problem between free floating and stabilization. This is a system that many developing countries follow, and it helps solve the problems of currency fluctuation."

Financial expert Saleh proposes alternatives to floating, in a way that serves the objectives of monetary policy and limits inflationary risks, through the use of financial tools such as “taxes and customs duties that act as an intermediary to influence the exchange rate to achieve balance and price stability.”

He added, "Instead of resorting to lowering the exchange rate to harmonize the market through flotation, it would be through amending customs tariff schedules and imposing careful, thoughtful controls to protect the national economy."

Saleh called for correcting the defect in the structure of the Iraqi economy as a whole, as it is not possible to continue with “high operating spending in annual public budgets, which has always generated cash income from rentier sources that are matched only by very limited productivity of commodity and service flows, which has made the country It relies mainly on large-scale imported consumer goods.”

Counselor Saleh revealed, on Thursday, that the loans provided by the International Monetary Fund to Iraq since 2003 totaled no more than $8 billion, confirming that they had been paid in full, according to a report published by the “ INA ” agency.

Last March, the International Monetary Fund stressed “the Iraqi economy’s need for broad structural measures to enhance private sector development and economic diversification, and to raise growth rates in the non-oil sector in a sustainable manner to accommodate the rapidly increasing workforce, and to increase non-oil exports and government revenues, in addition to Reducing the economy's exposure to oil price shocks.

He called for "accelerating the pace of reforms in the financial sector to improve access to financing, by modernizing the banking sector and supporting the ability of banks to establish banking relationships with other banks, and taking steps aimed at merging small-sized private banks," not to mention the need "to restructure the two largest government banks." ".

The Governor of the Central Bank, Ali Al-Alaq, announced in statements in early May that “the banking sector is witnessing major qualitative developments, while calling for cooperation and coordination between Arab central banks, banks and non-banking financial institutions to achieve stability and economic growth,” according to the “ Inaa ” agency.

He continued, "Central banks face new challenges in the interaction between financial and monetary stability, in light of the dominance of general financial policy and the necessity of central banks to facilitate excessive government debts, according to financial control, which requires reducing spending or increasing domestic revenues, or both."

Iraq has begun to recover relatively after years of wars, occupation, and sectarian violence that followed the US-led invasion in 2003, according to an Agence France-Presse report.   LINK

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KTFA Wed. Night CC: “FRANK26……5-15-24……SCORE!!!”

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KTFA Members “News and Views” Wednesday 5-15-2024

KTFA:

Clare: The Prime Minister receives the Vice President of the World Bank for the Middle East and North Africa

5/15/2024- Baghdad

Prime Minister Muhammad Shiaa Al-Sudani received Al-Abaa, Vice President of the World Bank for the Middle East and North Africa.

The Prime Minister's Media Office said in a statement, seen by Al-Iqtisad News, that "Prime Minister Muhammad Shiaa Al-Sudani received the Vice President of the World Bank for the Middle East and North Africa region."  LINK

Clare:  Securities: We are studying the possibility of licensing brokerage companies to trade in shares on international stock exchanges

5/15/2024  Baghdad

Chairman of the Securities Commission, Faisal Al-Haims, confirmed today, Wednesday, that the authority is studying the possibility of licensing brokerage companies to trade in shares on international stock exchanges.

Al-Haims said in a statement received by Al-Iqtisad News, “The Authority has begun studying the licensing of brokerage companies to trade in shares on global stock exchanges through a technical committee within it.”

He added, "The Authority is working seriously to support and develop the stock market by studying the licensing of brokerage companies to enable them to trade in shares on international stock exchanges for the first time in Iraq."

He explained, "This step comes in the context of protecting the rights of citizens to trade through brokerage companies that practice this activity without an official license from the Securities Commission, which seeks to develop the financial markets in the country," noting that "the Commission is working to provide a stimulating and regulated investment environment." “It contributes to enhancing confidence among investors and raising Iraq’s position in global financial markets.”   LINK

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Clare:  The reform process will begin with the government banking sector, which represents 85% - Sudanese Advisor

5/15/2024  Baghdad –

Mazhar Saleh, advisor to the Prime Minister for Financial Affairs, said today, Wednesday, that the government banking sector represents 85% of banking work in Iraq, and there is a reform process that will begin from it, indicating that the sanctions that affected the banks are an opportunity for reform.

Saleh confirmed in a statement to the official agency, followed by the 964 Network , that “Prime Minister Muhammad Shiaa Al-Sudani is keen to protect national capital, in addition to the fact that banking institutions need reform,” indicating that “what happened in depriving some banks of foreign currency is an opportunity to restore Structuring and organizing it.”

He added, “There is a program to reform the banking sector by starting with the government sector because the government banking sector dominates 85 percent of banking work and the rest of the small emerging markets, although their capital constitutes 78 percent of the banking system’s capital, but they need to be reorganized and restructured to transform into Correct market institutions integrate with the global economic system and have a role in finance and economic development.”

He pointed out that “there is a reform process in Iraq that begins with the government banking sector and then the private sector,” pointing out that “the injustice that happened to the banks is an opportunity for reform.”  LINK

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Clare:  Al-Sudani briefs Washington on economic and financial reform efforts and calls on its companies to invest in Iraq

5/15/2024

On Wednesday, Prime Minister Muhammad Shiaa Al-Sudani briefed US Assistant Secretary of State for Energy Resources Affairs Jeffrey Payette on the government’s efforts and steps in the field of economic and financial reform, calling on American companies to work and invest in Iraq.

In the meeting, which was attended by the US Ambassador to Iraq, the most prominent files of cooperation in the field of energy, in all its forms, and ways to develop it were reviewed, in a way that contributes to achieving common interests, according to a statement issued by Al-Sudani’s office and received by Shafaq News Agency.

During the meeting, Al-Sudani stressed the government’s keenness to implement its executive approach within the axis of achieving energy self-sufficiency, in the areas of exploiting locally produced natural and associated gas, generating electricity, providing petroleum derivatives, and producing chemical fertilizers and petrochemical materials, pointing to the memorandums of understanding that were signed during his visit to The United States of America last April, which is being implemented on the ground.

Al-Sudani pointed to the government's efforts and steps in the field of economic and financial reform, especially in the areas of tax, customs, and the banking sector, and completing the elements of the ideal investment environment, calling on American companies to work and invest in Iraq.

For his part, Payet praised the efforts of the Iraqi government in developing the energy sector. He also referred to the joint statement of the Prime Minister and US President Joseph Biden, which represents a road map and framework for fruitful work and cooperation, stressing the desire of American companies to invest and expand their activities inside Iraq.  LINK

Frank26:  "AN EXTRAORDINARY SESSION... FOR AN EXTRAORDINARY ANNOUNCEMENT!!!".....F26

 Sudanese directs to hold an extraordinary session next Sunday to discuss the 2024 budget schedules

- Baghdad

Today, Tuesday, Prime Minister Muhammad Shiaa Al-Sudani directed that an extraordinary session of the Council be held next Sunday to discuss the federal budget schedules for the year 2024.

Al-Sudani’s media office stated in a statement received by Mawazine News, “The Prime Minister directed that an extraordinary session of the Council be held on Sunday.” Next, corresponding to May 19, to discuss the federal budget schedules for the year 2024.

He added, "Al-Sudani also directed the formation of a committee headed by a representative of the Ministry of Planning and membership of representatives of the Ministry of Finance, the Council of Advisors, the General Secretariat of the Council of Ministers, and the Federal Public Service Council, which will undertake a re-examination of (the draft law on the Public Service Institute), and submit its recommendations within a working month to the Council of Ministers for consideration." "The appropriate decision."  LINK

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Frank26:  "SHOULDER TO SHOULDER!!!"...........F26

The Prime Minister and Barzani stress the continuation of dialogues at various levels

5/14/2024  Baghdad - 

The Prime Minister, Muhammad Shiaa Al-Sudani, and the President of the Iraqi Kurdistan Region, Nechirvan Barzani, stressed the continuation of dialogues and meetings between the two sides at various levels.

The Prime Minister's Media Office stated in a statement received by the Iraqi News Agency (INA), that "Prime Minister Muhammad Shia al-Sudani received, today, Tuesday, the President of the Iraqi Kurdistan Region, Nechirvan Barzani, and during the meeting, the general conditions in the country and a number of issues at the national level were discussed." As well as the situation in the Kurdistan region of Iraq, and the government’s actions in implementing its strategic plans, which relate to strengthening the Iraqi economy and achieving development and prosperity for all the Iraqi people.”

He added: "The meeting also witnessed discussion of a number of common files, and an emphasis on continuing dialogues and meetings between the two sides at various levels, within the framework of reaching sustainable solutions within the constitution and the law."  LINK

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Clare: A deficit exceeding 75 trillion, and this is the date of its arrival.. Parliament’s finances talk about the 2024 budget

5/13/2024   Baghdad

Today, Monday, the Parliamentary Finance Committee expected the schedules of the general budget law from the government to reach the House of Representatives this week, while it determined the expected deficit percentage.

Committee member Faisal Al-Naeli said, in an interview followed by Al-Iqtisad News, that “the House of Representatives is awaiting the arrival of the budget schedules and the start of discussing its provisions and making the necessary amendments to them by the Finance Committee to ensure the proper implementation of the government curriculum.”

He pointed out that "indicators confirm that the schedules will reach the House of Representatives this week in order to proceed with their approval as quickly as possible."

In turn, a member of the Parliamentary Finance Committee, Moin Al-Kadhimi, revealed the expected deficit in the current year’s budget, indicating that it may exceed 75 trillion dinars.

Al-Kadhimi said, “The current year’s budget amounts to 228 trillion dinars, with a planned deficit of up to 75 trillion.”

He added, "The budget included total revenues and spending in the amount of 150 trillion dinars, indicating that the government seeks for actual spending to be 228 trillion."

He pointed out that "the committee will amend the budget schedules during the second reading." LINK

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DeepWoodz:  snippet..”Al-Kadhimi said, “The current year’s budget amounts to 228 trillion dinars, with a planned deficit of up to 75 trillion.”

A “PLANNED DEFICIT” is very telling. To me, an uneducated electrician, this means they plan on adding 75 billion more dollars to their re-construction efforts once the rate changes. 

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Paulette:  IMO.......Iraq is on the UN Agenda for tomorrow.......again on 5/30..........and, UNAMI mandate is scheduled to end 5/31

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Clare:  International Development opens a new branch in Times Square in Basra

5/15/2024

The International Development Bank announced the opening of a new branch in the Times Square Center in Basra Governorate, confirming its adoption of a new strategy to enhance banking services and stimulate investment in southern Iraq.

He said in a statement received by Shafaq News Agency, “The first day of yesterday (May 13), the International Development Bank opened its second branch in Basra Governorate, in Times Square Mall, to provide its banking services to citizens and businessmen in this vital region of southern Iraq.”

He stated that this opening comes within the bank's strategy to expand and modernize its effective network of branches, with the aim of providing high-quality and convenient banking services to customers.

The bank's authorized director, Saad Faiq, said that this branch will be an important tributary to economic development in Basra and will enhance investment and growth opportunities in the region. LINK

KTFA Tues. Night CC: “FRANK26….5-14-24….LESS OF ME”

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Some “Tuesday News” Posted by Clare at KTFA

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Clare: Al-Sudani announces the imminent formation of a directorate concerned with the affairs of the Iraqi community in the world

5/14/2024

Prime Minister Muhammad Shiaa Al-Sudani announced, on Tuesday, the imminent formation of a directorate in the Prime Minister’s Office concerned with the affairs of the Iraqi community in the world.

This came during his meeting with the delegation of the General Synod of the Evangelical Seventh-day Adventist Church, headed by Pastor Magdel Izer Schulz, Assistant President of the Church in the World, and his accompanying delegation.

Al-Sudani explained that the goal of forming this directorate is “in order to maintain communication (i.e., the Iraqi community) with their country, and to benefit from their experiences in construction and reconstruction.”

The Prime Minister also expressed the government's readiness to cooperate in reopening the Seventh-day Adventist Church in Baghdad, as part of its care for the members of this sect and other sects.   LINK

Clare: Nechirvan Barzani makes a new visit to Baghdad to meet with Al-Sudani

5/14/2024

The official spokesman for the Presidency of the Kurdistan Region, Dilshad Shihab, said that Nechirvan Barzani, President of the Kurdistan Region, is visiting Baghdad today, Tuesday.

Regarding the visit program, Shehab indicated in a statement published on the official website of the regional presidency today, that President Nechirvan Barzani will meet with the Federal Prime Minister of Iraq, Muhammad Shia al-Sudani, to discuss Erbil-Baghdad relations and issues of common interest.

At the end of last April, the President of the Region made a visit to the federal capital, Baghdad, and held meetings with the Presidents of the Republic, the ministers, and a group of political party leaders. He also participated in a meeting of the State Administration Coalition.  LINK

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Clare:  The automobile trade announces a new mechanism to open production lines with international companies

5/14/2024 Baghdad

The General Company for Automotive Trading revealed today, Tuesday, that it is adopting a new mechanism to open production lines with international companies, while indicating a move to equip the departments with vehicles and equipment.

The Director General of the company affiliated with the Ministry of Commerce, Hashim Al-Sudani, said in an interview with the Iraqi News Agency, followed by Al-Eqtisad News, that “theGeneral Company for Automotive Trade seeks to equip state departments with
machinery, equipment, and vehicles of various types and from well-known international origins.”

He added that "contracts were concluded with state departments, in addition to participation in tenders announced by the ministry," indicating that "the company's future plans aim to achieve real partnerships with the manufacturer directly and not with the middle merchant or agent, so that the company is the official representative of the manufacturing companies." Inside Iraq, visits were made to automobile factories in Brazil and Europe, in addition to Spanish, Italian and French companies.”

He pointed out that "the company's plan is moving towards agreement with these companies and seeking to open production lines in agreement with the Ministry of Industry and Minerals and opening factories to produce these machines and equipment inside Iraq, especially after the decision to implement the development path, as it will open horizons and facilitate trade, and Iraq will be the focus of the world's attention."   LINK

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Clare:  Iraq increases its possession of gold by more than three tons, bringing the total to "145,661" tons

5/14/2024

Iraq's gold reserves witnessed a noticeable increase during the month of February 2024, as International Monetary Fund data showed that "Iraq has increased its possession of the precious metal by 3,079 tons, bringing the total to 145,661 tons."

This increase indicates "Iraq's continued strategy to diversify its foreign reserves and enhance financial and monetary stability in the long term."

Gold is a traditional safe haven for investors, especially during periods of economic and geopolitical uncertainty.

This step by Iraq comes at a time when the world is witnessing a rise in gold prices, as the price reached its highest level in its history last month above $2,400 per ounce.

Iraq is among the countries that possess large amounts of gold reserves in the Arab region, as it ranks fourth after Saudi Arabia, Algeria, and Morocco.

In general, this increase in Iraq's gold reserves is considered a positive indicator of the health and strength of the Iraqi economy.  LINK

DeepWoodz:  Just a heads up. This should read 145 tons. The comma is a decimal. But yall prolly knew that. 

Clare:  Sudanese directs to hold an extraordinary session next Sunday to discuss the 2024 budget schedules

5/14/2024

 Today, Tuesday, Prime Minister Muhammad Shiaa Al-Sudani directed that an “extraordinary” session of the Council be held next Sunday, to discuss the federal budget schedules for the year 2024.

This came during his presidency of the twentieth regular session of the Council of Ministers, during which the general situation in the country was discussed, and a number of vital files included within the government’s program were discussed, in addition to considering the topics on the agenda and taking the necessary decisions regarding them.

A statement from Al-Sudani’s office, a copy of which was received by NRT Arabic, stated that the Prime Minister directed that an extraordinary session of the Council be held next Sunday, May 19, to discuss the federal budget schedules for the year 2024.

He directed the formation of a committee headed by a representative of the Ministry of Planning and membership of representatives of the Ministry of Finance, the Council of Advisors, the General Secretariat of the Council of Ministers, and the Federal Public Service Council, which will re-examine (the draft Public Service Institute Law) and submit its recommendations within one working month to the Council of Ministers to take the appropriate decision.

Based on the directives of Prime Minister Muhammad Shiaa Al-Sudani, issued in February 2023, the Council of Ministers approved proceeding with the procedures for evacuating and opening the military zone (known as the Fifth Division) in the city of Kadhimiya, and converting its land into recreational, educational and cultural facilities, hotels, hospitals, health and medical centers, sports stadiums, and a defense center.

 The city and cities for visitors, according to an integrated architectural vision, and a special conference will be held on this topic, and specialized international companies will be approved to implement these vital and important projects, which will serve the city’s people and visitors. As part of implementing the government’s approach, which aims to restart lagging projects and address the problems and obstacles they face, the following was approved:

Firstly, changing the name of the project (Rehabilitation of the Martyr Othman Al-Obaidi Hall) to become (Rehabilitation of the Martyr Othman Al-Obaidi Hall - Method of Implementation: Secretariat), and increasing the total cost of the project.

Secondly: Increasing the total cost and the amount of reserve for the project (constructing the second corridor of the road leading to the Tarmiyah District, with a length of 15 km).

Third: Increasing the total cost of the project (equipping, installing, inspecting and operating the Al-Kahla secondary mobile in Al-Kahla district). Fourth: Creating a component (the remaining works for the project to expand the Tourism Department building in Holy Karbala/the Center).

In the field of the educational sector, and in order to speed up the process of printing textbooks and provide them at the required times, the Council of Ministers approved the recommendations of the Audit Committee regarding the printing of textbooks as follows:

1- Authorizing the Ministry of Education to assign (Al-Nahrain General Company) to complete the work of printing school books and notebooks, and excluding it from the contracting methods stipulated in the Instructions for Implementing Government Contracts (2 of 2014) before holding any tender, in order to exploit its full production capacity and rely exclusively on its machines. Provided that the aforementioned Ministry shall provide full support to the company from the Central Education Fund to Al-Nahrain General Company in providing the necessary amounts to purchase the raw materials involved in the printing work at the specified times, in a way that ensures the completion of contracts from the company, in light of the instructions and controls, and is spent from the Fund’s funds.

2- Referring the remainder and surplus capacity of the Al-Nahrain General Company, using the public tender method, to the public and private sector printers at an amount of (50%) for each, provided that a schedule worth two billion dinars is allowed for each company, without being restricted by the number of titles, and that the books reach the students within the timings. Determined before the start of the school year.

3- Obliging the Ministry of Education to adhere to the financial allocations included in the 2024 estimates tables upon contracting, and the Ministry of Finance must provide funding to ensure the Ministry of Education’s commitment to fulfilling its contractual obligations and delivering books to students within the specified times before the start of the academic year. 

4- Continuation of implementation of Cabinet Resolution (23424 of 2023) so that the period between referral and signing of the contract will be (5) working days for textbook printing contracts, without the need to issue a warning to the printing press that is reluctant to sign the contracts. 

The Council of Ministers approved the following:

1- The Ministry of Oil contracted with the Military Industrialization Authority to purchase machinery from its financial allocations, provided that the amount required for purchase, amounting to (76.150) billion dinars, would be divided among its extractive companies benefiting from the service of the Energy Police Directorate, in two stages:

 -The first phase (43.65) billion dinars.

 -The other stage (32.5) billion dinars, regarding the request for an M4 (Babylon) rifle weapon, will be considered later. The Ministry of Oil will gift these mechanisms to the Ministry of the Interior for the purposes of the tasks of the Energy Police Directorate, in accordance with the provisions of the instructions to facilitate the implementation of the General Budget Law, as an exception to the requirement that these goods be not purchased during the current year, and surplus to the need of the concerned department, according to the authority stipulated in the aforementioned instructions. above.

2. Excluding profitable, self-financed oil companies from work, from the decision of the Committee for the Restructuring of Public State-Owned Companies No. (1 of 2024), provided that the Ministry of Interior is responsible for the integrity of the procedures, the formation of opening committees, the analysis of bids, and the preparation of estimated costs for the subject of the research decision 

A vote was also taken to stop the exceptions granted to the Ministry of Electricity pursuant to Council of Ministers Resolution (24049 of 2024), and any text that conflicts with this decision shall not be implemented.

The Council of Ministers reviewed the financial data tables for the state’s account, based on the provisions of the amended Federal Financial Management Law (6 of 2019).

The Council also reviewed the annual report for the year 2023 of the Iraq Assets Recovery Fund, based on the provisions of Article (7) of the amended Iraq Assets Recovery Law (9 of 2012) .LINK

KTFA Mon. Night CC: “ FRANK26…5-13-24……LIGHTS….CAMERA….ACTION !!! “

KTFA

Monday Night Conference Call

FRANK26…5-13-24……LIGHTS….CAMERA….ACTION !!!

This video is in Frank’s and his team’s opinion only

Frank’s team is Walkingstick, Eddie in Iraq and guests

Playback Number: 605-313-5163   PIN: 156996#

What Frank’s suit color’s mean…. FRANKS SUIT COLORS FOR CC'S..... WHITE = NEW INFO…. SILVER = INTEL FROZEN…. RED= HIGH ALERT… PURPLE=GUEST WITH US…. BLUE = AIR FORCE…. BLACK = GROUND/FF’S…. GREEN= MR OR FAB 4 ... GOLD = CHANGE… ORANGE= IMPLEMENTATION

https://www.youtube.com/watch?v=18BC5q12d-0

KTFA Sun. Night CC: “FRANK26……5-12-24……MY MISTAKE”

KTFA

Sunday Night Conference Call

FRANK26……5-12-24……MY MISTAKE

This video is in Frank’s and his team’s opinion only

Frank’s team is Walkingstick, Eddie in Iraq and guests

Playback Number: 605-313-5163   PIN: 156996#

https://www.youtube.com/watch?v=Ey2NOUru-HI

KTFA Sat. Night CC: “FRANK26…..5-11-24…..FIL ME UP “

KTFA

Saturday Night Conference Call

FRANK26…..5-11-24…..FIL ME UP

This video is in Frank’s and his team’s opinion only

Frank’s team is Walkingstick, Eddie in Iraq and guests

Playback Number: 605-313-5163   PIN: 156996#

https://www.youtube.com/watch?v=_pEFKWAqNcY

KTFA Friday Night CC: FRANK26….5-10-24…..ITS BEEN RIGHT IN FRONT OF YOUR FACE

KTFA

Friday Night Conference Call

FRANK26….5-10-24…..ITS BEEN RIGHT IN FRONT OF YOUR FACE

This video is in Frank’s and his team’s opinion only

Frank’s team is Walkingstick, Eddie in Iraq and guests

Playback Number: 605-313-5163   PIN: 156996#

https://www.youtube.com/watch?v=ECpyWjcDxc4

KTFA Members “News and Views” Friday 5-10-2024

KTFA:

Clare: Urgent... The House of Representatives extends its legislative term by 30 days

5/9/2024

 The Presidency of the House of Representatives decided to extend the current legislative term for a period of 30 days

 The Parliamentary Finance Committee had previously expected an extension of the legislative term with the imminent arrival of the budget schedules to the House of Representatives.

There is also a political movement to elect a new speaker of the House of Representatives, which requires the continuation of Parliament's work.   LINK

DCDriver:  Don’t recall them ever extending sessions for that long IMO. Interesting

DeepWoodz:  I for one am glad for this news. Authority or not, they need to play their part. Iraq is all out of excuses for not releasing a “worth more than a dollar” rate. They have been making fools of all the gurus up to this point. We all know this should have been finished years ago. 

DMcCall:  Many felt disappointment about the lack of confirmation regarding the status of Iraq's WTO membership. I too felt some frustration.

I felt May 9th had some value. I tried to find reliable information but drew a blank.

 I personally felt that a lack of information didn't change what Frank told us some time back, and told us tonight. The requirements were met, period. The rate doesn't have to be exposed to receive all the advantages of being a member.

As many reasons there are to make the change right now, there are reasons that this is taking this time frame.

They are at a crossroads in time. And quite frankly, they can go in any direction. Their citizens are ready to enjoy what they see the UAE is enjoying. They want to enjoy what Saudi Arabia is enjoying, and others.

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Clare:  {Al-Furat News} publishes the text of Al-Sudani’s request to Guterres to end UNAMI’s work in Iraq

5/10/2024

the request of the Prime Minister, Muhammad Shiaa Al-Sudani, to the Secretary-General of the United Nations, Antonio Guterres, to permanently end the work of the United Nations mission in Iraq. 

 "the justifications for the presence of a political mission in Iraq are no longer available, especially after more than 20 years have passed since the democratic transition and overcoming great and diverse challenges."  LINK

Deep Woodz:  I don’t know about y’all but I’m loving this! First Plaschart and now Guterres. LEAVE ALREADY!

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Clare:  Floating the dinar" returns to the forefront.. Will the Central Bank of Iraq resort to it and what are its risks?

5/9/2024

From time to time, calls for floating the Iraqi dinar float on the surface of the Iraqi financial market, in order to bridge the gap between the prices of the dinar and the dollar, and these calls meet every time they return to the forefront, with supporters who see it as saving the Iraqi economy, and opponents who see it as the most dangerous stage that Iraq will pass through because of its Of risks to his economy.

Floating currencies is known as liberating the exchange rate of the currency, so that it becomes completely liberated, so the government or central banks do not interfere in determining its value directly, but rather it is automatically sorted into the currency market through the supply and demand mechanism that allows determining the exchange rate of the national currency against foreign currencies. 

Critical vision

Financial expert Safwan Qusay said in an interview with Al-Ahed News, “The Central Bank of Iraq adopted a fixed price policy, that is, so that every dollar became equal to 1,320 dinars, and there are calls to release the price and not fix it at a specific rate. This means that demand and supply are what determine the exchange price.” ".

He added that "the measure, in light of the absence of economic diversification, will harm the Iraqi market and will reflect negatively on economic stability," noting the necessity of "diversifying the economy first and then liberalizing the fixed price later and providing a basket of different currencies for the exports of different countries."

Qusay stated, “We can have a price that is proportional to export, supply, demand, need, processing, and consumption, as such measures are far from the Iraqi economy,” considering that “activating flotation will create a market of speculation that cannot be controlled.”

In turn, financial expert Saif Al-Halafi saw the necessity of “supporting the Iraqi dinar instead of floating, but in a way closer to the language of floating.”

He explained in an interview with Al-Ahed News, “There is a possibility for the central bank to follow the same mechanisms as the American Federal Bank. Strengthening the dollar in the market is determined by the American Federal Reserve, and it depends on the market mechanisms of supply and demand.

Therefore, the Central Bank of Iraq and its law allow the strengthening of the dinar, because Monetary policy is under his authority and he is responsible for the value of the dinar against the dollar.”

Al-Halafi notes, “Raising the value of the dinar against the dollar will put the government before another test, which is raising the value of the dinar again to protect the citizen from rising prices,” adding, “This incident occurred when Iraq fixed the price of the dollar at 1,320 dinars, and it was compensated by the export of goods in a manner Huge waves from neighboring countries to Iraq, and the government and the central bank took responsibility for controlling the dollar.”

He points out the possibility that “there will be two exchange rates for the dollar against the dinar and it will change according to the actual need of the daily situation,” explaining that “the Iraqi market has two exchange rates, the first at the central bank, which is 1,320 dinars to the dollar, while the second price is the market price or the parallel price.”

He shows that “all attempts carried out by the Central Bank and the government to control and curb the parallel price have failed, and that this price emerged due to the geopolitical challenges surrounding Iraq, and the distancing of importing merchants from Iran, Syria, Russia, and other countries subject to sanctions from America, who cannot enter their goods through Transfers and credits.

Al-Halafi confirms that “raising the value of the dinar will have an advantage, as it will provide a large labor market in Iraq due to the price difference, so raising the value of the dinar’s price against the dollar, even if only slightly, will protect Iraqi workers,” pointing to “the possibility of the influx of large foreign workers due to the size of the projects.” in which the government will work.

Crazy risks

For his part, researcher in financial affairs, Nabil Al-Marsoumi, believes that “the decision to float the dinar has some economic positives, but the economy should not be taken in its abstract aspect, but rather insofar as it relates to people, especially the poor.”

The decree says in a Facebook post, “In light of Iraq’s lack of a national private sector that can contribute to increasing the supply of dollars in the market and because of the huge volume of imports, which reach 67 billion dollars annually, the only party that owns the dollar is the government.”

He adds: "If the government decides not to interfere in the exchange market, it is expected that the dinar will witness a violent collapse and rampant inflation that will cause prices to rise to insane levels that will cause severe damage to citizens' living standards. The poor will become more miserable and will later lead to social tensions and a major rift in the social peace."

Previous experiences

In this regard, financial expert Manar Al-Obaidi points out, “The experience of floating the currency was successful in one of the Arab countries and supported its economy positively.”

He added in an interview with Al-Ahed News, “In 2018, Morocco adopted a new monetary policy represented by what is known as the managed float policy. This policy is a combination between the fixed rate policy and the floating rate policy, through which central banks set minimum and upper limits for movement by determining the exchange rate against... currency or a group of foreign currencies, and one of these banks was the Central Bank of Morocco.”

Al-Obaidi explains, “The managed float policy aims to gradually liberalize the currency until complete liberalization of the exchange rate is achieved.

Indeed, the Central Bank of Morocco has begun to set a fluctuation range, which is known as the margin of rise or fall in the exchange rate, which initially reached 0.3%, meaning that the Central Bank is allowed to rise above the specified exchange rate.”

By 0.3% or decreasing according to supply and demand until it reached a fluctuation range of 5% in March 2020, and this policy was accompanied by a support policy represented in canceling customs tariffs on some basic materials such as food and supporting funds that support vulnerable classes.”

Al-Obaidi believes that “this policy may be a successful alternative in Iraq by following a managed float policy that controls the range of volatility and works to gradually increase it until the currency is completely liberalized,” noting that “there is no study linking inflation rates to the exchange rate.” In the parallel market, the best way to know the effect is through a deliberate experiment with a managed float of the exchange rate.”

Government advice 

The Advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Saleh, had previously explained the danger of the exchange rate becoming unstable if the demands to float the dinar were achieved.

 Saleh said in a statement followed by Al-Ahed News, “Calls for floating the dinar to end the gap between the official exchange rate and the parallel market may be possible in an economy in which the free market alone influences the movement of the balance of payments, and not in an economy in which the rentier government sector is dominant and generates currency reserves.”

Foreign currency, as the monetary authority alone is the main source of supply of foreign currency that meets the desired demand for foreign exchange in the money market, to provide stability in this market and achieve a desired and homogeneous exchange rate through the interventionist role played by monetary policy.

He added, "Claims for flotation mean in all cases adopting the prevailing exchange rate in the parallel market to achieve the goal of stability and balance in the official exchange rate itself at a new point reached by the market at the end of the supposed flotation policy and returning to stability again.

Also, the flotation scenario means in all cases the withdrawal of the authority." Cash from being an essential central supply of foreign currency, to be replaced by new forces supplying foreign currency from free market makers, which only have a weak, limited supply of foreign exchange, and at the same time they carry an uncontrolled package of inflationary expectations and are called in economic literature the forces generating expectations. Inflationary

He continued, "The hypothetical new supply forces for foreign exchange adopted by the exchange market in that scenario will mean the dominance of supply forces from speculators with very limited quantities of foreign exchange available for supply in the parallel market

Matched by an open demand for foreign currency on the part of the market that undoubtedly exceeds that limited parallel supply." of foreign exchange, perhaps by more than 10 times at least in our estimation, and such a policy of floating to achieve a homogeneous equilibrium exchange rate would be an open and perhaps unruly situation, as long as the central government supply of foreign currency would be absent from the market

And we would not then obtain any equilibrium point in the exchange rate. An exchange rate that is sought to float except with a widespread deterioration of the exchange rate as long as it is controlled by forces that generate inflationary expectations, as we noted in a highly unilateral rentier economy, and it is an exchange rate whose mechanisms will move in a market that is incomplete in terms of productivity in compensating it for the required supply of goods and services.

Saleh warned, “Then no one knows how much the new exchange rate resulting from the flotation will be, which will undoubtedly be accompanied by a prior wave of inflationary expectations, which is a dangerous wave whose directions are difficult to control, which may force monetary policy according to this floating scenario by intervening in foreign reserves.”

 It is an unjustified extravagance in foreign exchange to impose a state of stability in the general level of prices again just to adopt it when exchange rates reach low rates, and no one knows how much they will reach.”  LINK

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Deep Woodz:  Talking about the float again. Frank must be right. That’s what’s coming or these guys wouldn’t be putting their two cents in. Some of what they say is true, some not.
Even Saleh commenting on not knowing where it will end is a load of crap. The CBI can start/stop, change, maneuver the rate any way they like at any time. Frank has mentioned a cap many times. OF COURSE they can do whatever they want! They are a sovereign country again. Pretending like they have no control. Gets on my nerves. 

~~~~~

Paulette: IMO.....it is great to see more articles regarding the "Float"......I strongly believe this is the early stages of the last push by the CBI to educate the Citizens prior to implementing the "Delete the Zeros" project.....Patience all.....this is slowly coming together.......

Clare:  WHO HAS BEEN TELLING US ABOUT A MANAGED FLOAT !!!    WALKINGSTICK & FRANK.... WAY BEFORE THEY EVEN TALKED ABOUT IT IN THE ARTICLES imo

Al-Obaidi believes that “this policy may be a successful alternative in Iraq by following a managed float policy that controls the range of volatility and works to gradually increase it until the currency is completely liberalized,” noting that “there is no study linking inflation rates to the exchange rate.” In the parallel market, the best way to know the effect is through a deliberate experiment with a managed float of the exchange rate.”

~~~~~~~~~~

Clare: Post #32:  The dollar is reeling from a fatal blow and there are fears of a collapse of the dinar LINK

UNDERSTAND POST #32 IS DIFFERENT OPINIONS.......

"Deputy Chairman of the Parliamentary Finance Committee, Ahmed Mazhar Al-Janabi, said {to Al-Furat News} that “the Central Bank’s decision to cancel the currency auction at the end of the year will open space for exploitation and a problem will occur. If the auction is canceled and ends, the exchange rate in the markets may double, and if the Central Bank goes towards this option, the dollar exchange will "It will reach 200 thousand dinars," according to his opinion."       

 FROM PARLIAMENT - THIS IS NOT GOING TO HAPPEN!! THEY DON'T KNOW AS MUCH AS SUDANI, ALAQ & SALEH DO! 

"The Central Bank of Iraq's cancellation of the currency {auction} window at the end of 2024" 

WE KNOW THIS ... SUDANI & ALAQ HAVE ALREADY AGREED WITH DC ON THIS! IT IS TRUE

Saleh stated, “As for the developments taking place in the gold commodity market or gold filigree, especially the sudden price developments therein, up and down, they are not considered an alternative directly affecting the improvement of the exchange rate because they are limited in impact and impact on the movements of the parallel exchange market, and that the main gold trade is financed as foreign trade through Transfers from the banking system and the official exchange market.

THEY (ARE) AND WILL BE ASSET BACKED....  WILL FLOAT AND THERE WILL BE A MANAGED CAP... LIKE WS & FRANK HAVE BEEN TELLING US IN THEIR OPINION..   IMO

~~~~~~~~~~

Cal and LQ: I could be 100% wrong, partially correct or totally right, but IMO this reads like a final announcement or precursor if you will, to what many are expecting. It’s like they are explaining what’s about to happen. WS told Frank who told us they will put out a slew of detailed information to the citizens and again IMO this reads like a precursor to that information. Just my two cents. I’d love to hear your positive thoughts/perspectives if anyone care to share. Also, thanks for sharing your thoughts Clare. I find it insightful. 

Anyway, wishing you ALL a great day!