WOTS TUE NOV 30 21
Claims to return the value of the Iraqi dinar to what it was before Corona
These are the articles I discussed on the My FX Buddies Podcast:
Nov 29 21
The Central Bank activates external banking relations with Arab and regional banks
In 2020, the Iraqi economy suffered from cumulative and complex challenges and repercussions due to the decline in international oil prices and the slowdown in growth in the global economy due to the effects and repercussions of the Corona pandemic.
In addition to Iraq’s suffering, its special circumstances, dispersal of policies, lack of planning, ambiguity and confusion in the methodological vision of managing the economy, which led the government to diagnose the requirements for overcoming that suffering by drawing its strategy for the next three and five years in the white paper. Since the Central Bank is primarily responsible for monetary policy and its applications that contribute to achieving economic stability and overcoming the challenges of instability in the financial system due to the lack of clarity in financial policies, one of the most important tasks of the Central Bank in these two years 2020 and 2021 at the local level was to restore balance in the market Stimulating the economy, revitalizing the economic cycle, and facing the repercussions of reducing the Iraqi dinar exchange rate on low-income groups.
By launching the many financing and lending initiatives and activating the procedures for applying monetary policy and at the external level, building banking cooperation and coordination relations with the banks of Arab and regional countries based on continuous and permanent communication with the governors of banks and financial and banking institutions in these countries, starting with charting a promising economic and financial future with them. Therefore, these relations culminated in activating the banking relations with the Saudi side by visiting the Governor and his accompanying banking delegation and reaching agreements and understandings with the Saudi Central Bank and financial institutions in a way that enhances banking transactions between the two sides and benefit from the successful experiences in both countries.
In continuation of this approach, the meetings of the Governor, the banking delegation formed by the Central Bank, the Association of Banks and a number of heads of boards of directors of private banks continued over the past few days to discuss ways of banking cooperation between the Central Bank of Iraq, the Turkish Central Bank and the Turkish Licensing and Supervision Authority, which had previously been discussed in Baghdad in the presence of the Ambassador The Turkish and the regional managers of the Turkish banks operating in Iraq, which contributed to diagnosing the problems of the daily banking work of the branches of Turkish banks and the efforts of the Central Bank to overcome them and facilitate the work of Turkish banks operating in Iraq. Turkey’s meetings resulted in the following:-
1‐ The necessity of establishing a joint mechanism for cooperation with the Central Bank of Turkey to regulate the control, control and supervision of banking transactions for the broad commercial exchange between the two countries through the banking system.
2‐ The Central Bank expressed its readiness to overcome the observations and difficulties facing Turkish banks in Iraq and to provide them with flexibility and exceptions regarding the instructions issued by the bank in the field of foreign transfers and crude oil credits.
3- Opening channels of understanding and cooperation with Turkish banks to implement banking operations between the two countries.
4‐ Requesting the Turkish Central Bank to cooperate in facilitating the opening of branches of Iraqi banks in Turkey that are nominated by the Central Bank of Iraq, and to be treated in the same way we deal with their branches in Iraq.
The results of the meetings of the two delegations can be summarized by discussing the development of banking and financial relations, the development of banking relations between the two countries, support for the opening of branches of Iraqi banks in Turkey and the opening of mutual accounts, which contributes to the development of trade relations between the two countries on the basis of reciprocity.
Inviting the Turkish Central Bank to provide facilities to Iraqi banks to facilitate the settlement of the trade balance between the two countries and the transfer of funds belonging to Iraqis residing in Turkey.
The Governor of the Central Bank of Turkey praised the efforts made by the Central Bank of Iraq in developing the national economy, stressing that he is ready to open the doors of cooperation and facilitate banking operations between the two countries.
Economic and banking consultant*
To expand in the Iraqi market .. "GMG" announces its strategic plans
After recently announcing a new plan to expand into international markets, GMG, the integrated group in the field of wellness and fitness, specialized in selling, distributing and manufacturing a leading portfolio of international and local brands within the sports, health and food sectors, revealed the launch of its operations in the Iraqi market under the umbrella of "GMG Sports".
Sun & Sand Sports is the first local brand of GMG to make its way to the Iraqi market. It is already the largest sports retailer chain in the MENA region, providing a diversified portfolio of leading sports, fitness and lifestyle brands under one roof. Notable brands available in Sun & Sand Sports stores include Nike, Under Armor, Adidas, Puma, Reebok, Converse, Columbia, Timberland and "Vance".
In this context, Mohammed Baqer, Vice Chairman and CEO of GMG, said: “Iraq is home to a growing number of young people who lack so far the availability of many services, especially in the sports retail sector. Over the past four decades, we have been constantly challenging ourselves to find out what and how to improve people's lives by promoting active lifestyles. Today, we believe that there is a great opportunity for GMG to introduce some of the world’s leading sports brands through our successful local brands and make a tangible contribution to the social and economic development of the State of Iraq.”
The first “Sun and Sand Sports” store in Iraq had opened its doors within the famous “Zayona Mall” in the capital, Baghdad, while “GMG Sports” intends to open seven other stores in vital locations in Baghdad, Erbil and Basra over the course of the four years. coming. The company also plans to launch an independent store in the future to sell manufacturers' products directly to customers.
Baqer added: “In the near future, we would like to introduce more of our popular local brands to our growing portfolio in Iraqi markets with a focus on promoting active lifestyles, good health and offering the best nutritious products. At GMG, we seek to continuously expand our operations and presence by acquiring new international brands, developing local brands or entering new markets. However, we are still adopting an approach similar to that of startups.
The Sadrist Movement wins 73 seats in the Iraqi elections and leads the blocs in Parliament
The Independent Commission for Iraqi Legislative Elections announced on Tuesday that the Sadrist movement led by Muqtada al-Sadr won 73 seats, to be the largest bloc in the Iraqi parliament for the next four years
A statement by the commission stated that "the Sadrist movement won 73 seats in the legislative elections" out of 329 seats (total seats in the House of Representatives). The "Al-Fateh Alliance", which objected to the preliminary results, claiming fraud had taken place, won 17 seats
There is a change in one seat" in five governorates, compared to the preliminary results announced on the eighth of this month, Commission Chairman Jalil Adnan said during a press conference.
Iraq's final election results: Al-Sadr first and 5 seats changed
The final results of the legislative elections that took place in Iraq on October 10 (2021) confirmed the ranking of the winning coalitions in the country.
Today, Tuesday, the Independent Commission for Iraqi Legislative Elections announced the final results of the poll. "There is a change in one seat" in five governorates, compared to the preliminary results announced on the eighth of this month (November), the head of the commission, Jalil Adnan, said during a press conference, adding that the voter turnout reached about 44%.
He also stressed that the Commission committed itself to the highest levels of professionalism, explaining that all final results were published on the Commission's website.
5 seats changed
The results, which Al-Arabiya/Al-Hadath correspondent reviewed, showed that the change affected only 5 parliamentary seats, in the governorates of Baghdad, Basra, Erbil, Kirkuk and Nineveh.
In light of the new results, the Sadrist movement , led by Muqtada al-Sadr, remained in the first place, winning 73 parliamentary seats, followed by a coalition that advanced with 37.
The State of Law coalition ranked third with 33 seats, the Kurdistan Democratic Party with 31, followed by the Kurdistan Alliance with 18 seats.
Al-Fateh Alliance.. 17 seats
While the number of seats for the Al-Fateh Alliance became only 17 seats . Then came the Azm alliance with 14 seats, the New Generation with nine seats, and the extension movement with nine seats, then Ishraqa Kanon with six seats, the Design Alliance with five seats, and the National Contract Alliance with four.
It should be noted that the total number of independent seats in the new parliament reached 30, which is a good result in light of the polarization in the country and the influence of parties.
The factions affiliated with the Popular Mobilization Forces , represented in the Al-Fateh Alliance, had previously announced more than once their questioning of the integrity of the elections, asking for their cancellation. Which led several times to clashes in the capital , Baghdad , between the security forces and supporters of those factions, who demonstrated for weeks in front of the Green Zone, and also set up tents to express their rejection of the election results, which showed that they had suffered a resounding loss and relegated to the third place under the dome of the next parliament.
In many cases, the matter even came with threats of unimaginable consequences. Two days ago, the leader of Asa'ib Ahl al-Haq, Qais al-Khazali, considered that the elections, objections, and problems would make the country "for the worst!"
While many Iraqis are waiting for the new parliament to open a door of hope, even a small one, in order to bring about change in the country, away from the quotas and corruption of many parties.
Claims to return the value of the Iraqi dinar to what it was before Corona
Popular demands in Iraq are escalating to restore the value of the Iraqi dinar to what it was a year ago, with the rise in oil prices that revived the Iraqi budget treasury for the next year. The poor and low-income classes, due to the high prices of consumer goods.
Revaluation of the dinar will have the opposite effect
And the Iraqi Ministry of Finance revealed in a statement that "although the devaluation of the currency last year and the restoration of oil prices helped improve the financial situation of Iraq, it is necessary to take into account that the country is still very weak."
The ministry added in its statement that "the current surpluses could turn into deficits with the return of oil prices to normal in the medium term, and another contraction in the oil market could easily lead the country back to the brink of crisis, in order for the Iraqi economy to regain its full strength and be sustainable. That economic policies be geared towards improving resilience in the face of oil price fluctuations through building fiscal buffers and diversifying the economy.
The ministry stressed that "the revaluation of the dinar will have the opposite effect. There are good reasons for the scarcity of revaluation of fixed exchange rates. For example, in 2005 China revalued its currency in response to intense pressure from the United States, which threatened to impose tariffs on imports."
A huge controversy continues to this day
The writer specializing in political and economic affairs, Saleh pointed out that there were “many countries that preceded Iraq and floated their currency according to supply and demand, removing the hand from direct control of the currency exchange rate or devaluing the currency relative to other currencies, although they did not face economic crises such as China and Japan”, but the decision to reduce the value of the Iraqi dinar is still causing a great controversy going on so far, and the question raised by the objectors is about the economic feasibility of devaluing the currency in a rich country like Iraq, and the usefulness of this step, which reminds of the years of international economic sanctions that caused a great collapse In the national currency, its declining purchasing value, huge inflation in the markets, famine and widespread poverty, according to his gesture.
He added, "Voices have increased demanding the return of the currency exchange rate to what it was before the Corona crisis, especially after the rise in international oil prices and Iraq's overcoming the fear of the lack of large cash liquidity, and the increase in the exchange rate of the dollar against the dinar is one of the measures taken by the government to achieve economic reforms Or what is known as the White Paper, the aim of which is to address the imbalance in the Iraqi economy, which led to the decline in services provided and the rise in the state’s public debt, due to the total dependence on oil as a main source in the budget, and it is subject to the direct management of the Iraqi government represented by the Ministry of Finance and also the Central Bank, and they stated On more than one occasion, "the dinar exchange rate will not change at the present or near, and therefore the rise in oil prices will not affect the current monetary policy.
Lafteh believes that "if the necessary measures are taken to protect the poorest classes, improve their living conditions and not increase their suffering, and food prices are within reach and there is no inflation in their prices, and new job opportunities are offered that the poor can easily obtain, the rise in the dollar exchange rate will be Its benefits outweigh its harms, and the country will gradually be freed from fluctuating oil prices.”
Lafta believes that "there are other benefits to devaluing the dinar in the long run, to reform the trade balance and reduce the deficit, encourage local industry and demand it and reduce imports, thus preventing the escape of money from the country and the entry of investors to the markets, as well as to increase economic growth."
The exchange rate is a political decision
As for the researcher in economic and political affairs, Nabil Jabbar Al-Ali, he stressed that “in light of the current conditions and oil prices that have witnessed a recovery during the past months, Iraq was able to secure good revenues equivalent to the expenditures it approved in its last annual budget for the year 2021, in which the amount of the deficit was close to 20 billion dollars." Adding, "This was followed by another frightening deficit of approximately 10 billion that was supposed to be covered by expanding the circle of non-oil revenue collection, of which no more than 25 percent of what was planned in the last budget was achieved, bringing the total budget deficit to approximately $30 billion. (45 trillion Iraqi dinars), high oil prices were able to cover it during the last period.
He adds, "But if we assume the oil market will continue to rise or the optimistic stability in oil prices for the coming year, which is very likely, and the extent of its impact on the Iraqi dinar exchange rate, the answer is that monetary policy in Iraq and the exchange rate policy can be greatly affected by the economic shocks resulting from the decline State revenues, as happened in 2020, and the value of the dinar has become a victim of the state’s failure to hedge and protect its economy, but the exchange rate may not be among the state’s priorities in the years of prosperity and prosperity.
He continued, "This is due to the fact that the Iraqi state, with its successive governments, has adopted high spending policies for political reasons primarily without paying attention to investment development spending, and has exhausted itself with internal and external debts and obligations related to the implementation of stalled service projects, which may require spending $100 billion to complete them, which requires it to continue. With the current exchange policy, which enables it to secure additional amounts of approximately 25 percent additional to its revenues, but from a political point of view, the victory of some political forces (the forces of the state of law and the forces of the coordination framework) that raised the slogan of rejection of the recent exchange rate change policy may be the beginning of work on adopting measures To change the exchange rate towards raising the value of the dinar against the dollar, if it manages to control the joints of the next government that we are experiencing the throes of its establishment these days, in implementation of part of its government program and electoral slogans, and also to fix the effects of this policy, which was one of the reasons for the increasing rates of poverty in Iraq.Monetary policy and exchange rate policy remain primarily a political decision before it is an economic decision.
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