Saturday Special Iraqi News Catch up: A year after the decision..a report discussing what to reduce the value of the Iraqi dinar and what it should be
These are the articles I discussed on the My FX Buddies Podcast
December 17, 2021
An advisor to Al-Kazemi bets the improvement in the value of the dinar on several conditions
Mazhar Muhammad Salih, Advisor to the Federal Prime Minister for Financial Affairs, mortgaged the improvement of the value of the dinar with several conditions that must be met and met.
Mazhar Muhammad Salih said that the improvement in the value of the Iraqi dinar is related to the ability of the economy to grow if significant growth is achieved in the economy and not rent growth, pointing out that expectations indicate a current growth of 2.5%, and this growth parallels the growth of the real population.
He added, that this needs the right development, reducing unemployment, increasing job opportunities, and flourishing investment projects, which encourage and generate income that compensates for oil, and gives sustainability in returns and sustainability with the strength of the economy.
He also showed that there are two important matters, the first is monetary policy that maintains the stability of the exchange rate and creates a stable environment for a long period, and the second is to support investment projects for development and growth, because without growth the situation will be bad
Al-Kazemi’s advisor reveals the date for legislating the 2022 budget
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed, on Friday, that the legislation of the 2022 budget depends on the formation of the new government.
Saleh said, to the official news agency, that "the Iraqi fiscal year ends at the end of December 31, 2021, and the effective financial management law begins directly, that is, from the first day of January 2022, with spending at a rate of 1/12 of the actual ongoing expenditures for the year 2021."
He added, "This will continue until the issuance of the Federal General Budget Law for the year 2022, at which point the allocations are modified according to the new entitlements included in the legislated budget," noting that "the legislation of the Budget Law for the year 2022 depends on the date of the formation of the government and the upcoming parliament in all cases.
Iraq.. The government is mortgaging the approval of the 2022 budget with an important matter: this is how the expenses will be spent - Urgent
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed today, Friday, that the legislation of the 2022 budget depends on the formation of .the new government
Salih said, according to government media, that "the Iraqi fiscal year ends at the end of December 31, 2021, and the effective financial management law begins directly, that is, from the first day of January 2022 with spending at a rate of 1/12 of the . ".actual ongoing expenditures for the year 2021
He added, "This will continue until the issuance of the Federal General Budget Law for the year 2022, at which point the allocations are modified according to the new entitlements included in the legislated budget," noting that "the legislation of the Budget Law for the year 2022 depends on the date of the formation of the ." .government and the upcoming parliament in all cases
December 16, 2021
Economist: What The Central Bank Has Achieved From Cash Reserves Requires The Government To Reduce The Exchange Rate
The economic expert Wissam Al-Tamimi said, on Thursday, that the cash reserve achieved by the Central Bank exceeded 64 billion dollars, making it imperative for the government to reduce the dollar exchange rate a year after the decision to raise it by 23 percent.
Al-Tamimi said in a statement to Al-Maalouma, "The Central Bank's assurances on achieving a cash reserve of 64 billion dollars, is only a message to the government regarding issuing a decision either to continue the exchange rate rise or reduce it."
He added, "There are many question marks on the government, especially since there is a great financial abundance achieved from oil revenues and the high exchange rate, at a time when no final accounts have been conducted so that everyone can know the recovered or realized funds for the current year."
Al-Tamimi explained, “The cash reserve achieved by the Central Bank should be faced with a decrease in the exchange rate in the local market, especially since poverty rates have risen according to the statistics of the Ministry of Planning, which needs a quick treatment to remedy what the citizen may resort to to achieve a living, especially that the total prices The purchasing power of the citizen as well as the owners of the markets has increased and decreased, and therefore, continuing with this approach will lead the country to a dangerous slide.”
Mazhar Saleh: Iraq is on the verge of an economic recovery
The financial advisor to the Prime Minister, Dr. Mazhar Muhammad Salih, expressed his optimism about the expected deficit levels in the next year’s budget 2022, stressing that the hypothetical deficit gap (will be automatically canceled) as a result of positive oil revenue differences, especially in the event that the average price of a barrel of oil stabilizes at 70 dollars. At the same time, revealing that the 2022 budget seeks to maximize the optimal spending on investment projects, with the aim of achieving a growth rate in the gross domestic product, which is no less than 5%.
Despite the level of optimism expressed by the government advisor, the economist, Manaf Al-Sayegh, believes that estimating the selling price of a barrel of oil in previous budgets is not subject to the standards of the global market, and this leads to the adoption of an inaccurate hypothetical price that pushes towards building spending with an unclear deficit, pointing out That Iraq's budgets are item budgets, and this pattern was abandoned by most countries of the world due to its inefficiency in achieving annual spending requirements, calling for work on balancing goal-oriented programs.
A precautionary deficit
, Saleh said in a statement that "there are developments in the features of the expected general budget for 2022, which approved an oil price of about $50 per barrel, for the purposes of calculating average oil revenues throughout the next year in light of a daily export capacity of more than three million barrels of oil." In the event of an increase in the spending ceiling by 10% over the current ceiling in the 2022 budget, this means that there is a precautionary deficit that will be approved by the budget to avoid undesirable fluctuations in oil prices during the next fiscal year.
According to the foregoing, the financial advisor to the Prime Minister believes that “the hypothetical deficit will be 20% of the total total spending ceiling, and about 8% of GDP, but the average price of a barrel of oil, if it continues to remain stable at $ 70, the budget will be in Mostly an equilibrium situation, and the default deficit gap will be automatically canceled from the positive oil revenue differentials.
An investment budget and
despite the "cautious" optimism shown by Saleh, which is closely related to fluctuating oil prices, with the aim of reaching a budget without a fiscal deficit, the next year's 2022 budget in its other aspects, according to the government advisor, "will be distinguished by introducing a medium-term program for investment projects, With commitment to the program costs for important and strategic projects, and according to their social priorities, especially those that affect the well-being of society and its economic priority, being income-generating and operating the business cycle in the economy.
The next budget will also seek, according to Saleh, to maximize the optimal spending on investment projects with the aim of achieving a growth rate in the gross domestic product that exceeds the population growth rate, and not less than 5% or more, which will lead to an accelerated reduction in unemployment rates as well, stressing These steps will lead to economic recovery in the country.
Items and programs
, in turn, the economic expert, Manaf Al-Sayegh, identified, during a statement, a set of imbalances. He said: The previous budgets suffered a lot, putting at the forefront of these imbalances the budget’s dependence on the principle of items that most countries of the year left, and now depend on the budget of goals-oriented programs, as well as the lack of The issue of estimating the selling price of a barrel of oil in the general budget is subject to international market standards, which pushes towards building spending with an unclear deficit level.
Al-Sayegh hinted that “most budgets since 2014 have witnessed the status of investment spending in them, equal in their expenditures to the value of the planned deficit in the budget, noting that any financial returns that come from selling oil in the event of an improvement in its prices, through which investment expenditures are covered, This means that the government canceled investment spending and mortgaged it to the budget deficit."
Expenditure levels
The economist believes, "The circumstance that Iraq is going through requires a change in the way and pattern of thinking of those who build public budgets in the classical way, which depends on guesswork in determining spending levels, and thus increases in most cases what public spending units need, and leads to higher levels of spending. Operational spending at the expense of annual investment spending, with a decrease in the efficiency level of spending, which leads to waste of public money and encourages corruption. Suggesting in this matter, "transition to a pattern of prioritizing according to the available spending levels, without the need for spending that leads to a deficit, with an emphasis on building budgets on the basis of annual programs subject to measurement, follow-up and modification to turn at the end of the fiscal year into existing projects
that serve the community and the state
One news Website https://1news-iq.com
December 18th, 2021
The Central Bank: The 2022 budget may assume an oil price of $45 a barrel
The Governor of the Central Bank, Mustafa Ghaleb, confirmed, on Saturday, December 18, 2021, that Iraq’s foreign exchange reserves rose to 64 billion dollars from 48 billion dollars since it devalued the dinar about a year ago.
Ghaleb added in a press interview, which was followed by the obelisk, that “the devaluation of the currency helped increase the reserves, and that the Iraqi economy became much better than it was in the middle of the Corona virus pandemic, when oil prices fell and Baghdad was in preliminary talks with the International Monetary Fund to obtain a possible loan.”
Ghalib said: We used to hold meetings twice a day sometimes with the International Monetary Fund and the World Bank, but the Iraqi government’s financial situation is much better now.
He continued, “The central bank’s dollar reserves would have fallen to the level of the thirties if we had not increased the dollar exchange rate … The increase in oil prices helped improve the situation as well.”
Ghaleb said he expected “Iraq’s budget for 2022 to be based on an oil price of about $45 a barrel. Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC), gets about 95 percent of state revenues from oil sales.”
Ghaleb added that “Iraq currently owes Iran about five billion dollars in value of energy imports, which are necessary for continued operation, but Baghdad abides by US sanctions that prevent it from paying any money to Iran.”
And he indicated, that Iraq “paid some of these energy debts in the form of goods and supplies, as it, for example, purchased $250 million worth of Russian Sputnik’s anti-Corona vaccines, as well as wheat for Iran.”
Ghaleb confirmed, “The validity of reports that Iraq opened an account with the Chinese-backed Asian Infrastructure Investment Bank, saying that it had deposited about $100 million in the account to pay potential costs for infrastructure projects in the future.”
Iraq digs a new oil well
The Iraqi Drilling Company affiliated to the Ministry of Oil announced, on Saturday, the start of drilling a new well in Maysan Governorate.
The company said in a statement received by Shafaq News Agency, that its technical and engineering cadres have started today the operations of drilling the oil well "Building 19" in the Amarah field for the Maysan Oil Company.
She indicated that the well is carried out using the "IDC 23" drilling rig with a horsepower "2000 HP" and the planned depth of the well is 3290 meters to form the supervisor.
The Director General of the Maysan Oil Company, Ali Jassim Al-Bahadli, had said last June that the company's national effort is working to develop the Amarah field and seek to expand oil facilities, in a move aimed at increasing its production capacity and the capabilities of its oil equipment, and for that, a crude oil tank with a capacity was installed. 5000 m3
The exchange rate of the dollar again.. the previous financial committee is pessimistic about paying the salaries of Iraq's employees
former Finance Committee member Jamal Cougar confirmed today, Saturday, that if , the 2022 budget is not approved, the next government will be a semi-caretaker .government
Cougar said in a statement to (Baghdad Today), "The new government will not be able to implement its government program without a budget, and this means that a quarter of its life will pass without implementing its program and it will be almost a ".caretaker government
Cougar suggested, "Approval of the 2022 budget, despite the differences and problems that may arise with regard to restoring the exchange rate, because the new government will be unable to pay 1 over 12 of the operating budget, and ".therefore there will be serious moves to approve the budget
A year after the decision..a report discussing what to reduce the value of the Iraqi dinar and what it should be
On such days and a year ago, the Central Bank of Iraq approved on December 19, 2020, the devaluation of the Iraqi dinar from 1200 dinars per dollar to 1460 dinars per dollar, equivalent to 22%.
The Central Bank of Iraq attributed the reasons for the devaluation of the dinar at the time to what it described as structural distortions in the Iraqi economy that impoverished public finances and restricted the reform capacity sought by the government and the Ministry of Finance.
The devaluation of the dinar caused a great shock to the Iraqi street, which was not expecting such a step, especially as it came at the height of the spread of the Corona pandemic, which caused business interruption, study disruption, market closure and health curfew, as well as the collapse in oil prices that Iraq relies on. Its sales to supplement the general budget by 95%.
A full year after the devaluation of the dinar, Iraqis and economists are wondering about the most important pros and cons that have been achieved.
What are the pluses?
Iraq's decision to devalue the national currency coincided with the Iraqi government's presentation of the economic reform project, which it called the "white paper" at a time when the government confirmed that it was necessary to reform the structural system of the country's economy.
Regarding the advantages of devaluing the currency, the financial and economic advisor to the Iraqi government, Mazhar Muhammad Salih, confirms that the benefits achieved from devaluing the Iraqi currency are great and cannot be neglected, and that the talk about returning to the old exchange rate has become a thing of the past.
And he added - in a press statement - that changing the exchange rate gave strength to many of the country's economic joints, which is consistent with the statements of the Central Bank, which confirmed that raising the exchange rate led to an increase in the competitiveness of the local product, as well as reducing expenditure pressure on the Ministry of Finance by 23%, which is This enabled the Ministry of Finance to overcome the crisis resulting from the drop in global oil prices during 2020 and the first months of 2021.
What did the government gain?
In this regard, the economic expert Hammam Al-Shamaa explained - during his speech to Al Jazeera Net - that changing the exchange rate has positives for the government and greater negatives for the Iraqi people, indicating that the government benefited from the currency devaluation in strengthening its financial budget by providing 23% of the salaries of employees who They receive salaries from the government such as retirees and daily wage earners.
On how, he explained that the salaries of Iraqi employees were spent in dinars, while the state’s oil imports were in dollars, and therefore, instead of the state reducing the salaries of state employees and retirees and the possibility of facing a popular reaction, it decided to reduce the value of the currency, which enabled it to avoid the reaction that would have occurred Although the result is the same in both cases.
In this context, the Iraqi government is the biggest winner from the reduction of the dinar by 90%, according to a member of the Finance Committee in the former parliament and the deputy winner of the recent elections, Jamal Kougar, who indicated that the government saved between 20 to 23 trillion dinars as a result of the decrease in the real value of employee salaries. Which rebounded to the benefit of the operational and investment budget in the country.
Speaking to Al-Jazeera Net, Cougar believes that changing the exchange rate was a rescue for the Iraqis, despite their immediate damage, especially since Iraq's economy depends almost entirely on the state with the absence of an active private sector, and that popular benefit may be in the long run.
As for the increase in the size of the monetary reserve in the Central Bank, he explained that the change in the exchange rate led to an increase in the volume of the reserve by an estimated 15 billion dollars to reach nearly 65 billion dollars.
What are the negatives?
Among those who praised the exchange rate change and those who criticized the government move, Al-Shamaa believes that the negatives were significant and led, days after the devaluation of the dinar, to an increase in overall prices in the country, indicating that real estate prices rose by about 50%, in addition to that some foodstuffs increased their prices by more. than 23%.
He attributed this to the reaction and the decline in confidence in the government economically and the fear of a new change in the currency exchange rate, which, within a year of the government move, led to a rise in the unemployment rate and the level of inflation to large numbers that Iraq has not witnessed since 2003, according to Al-Shamaa.
Al-Shammaa’s talk is consistent with the statements of the Iraqi Ministry of Planning, which came through its spokesman, Abdul-Zahra Al-Wandawi, who indicated - in a press statement - a few days ago that the annual inflation rate increased by 6.8% last November compared to the same month last year 2020.
As for Jamal Cougar, he identified the damage to the Iraqis in 3 points, the first of which is the decline in the value of the Iraqi people’s revenues in the public and private sectors by 23%, in addition to the Iraqis’ loss of confidence in the government, which was reflected in the rise in the prices of consumer goods by a much greater rate than the change in the exchange rate.
With regard to the third point, which is represented in the parliamentary demands during the past months to restore the exchange rate to its previous position, which led to the withdrawal of hard currency from the black market and the instability of commodity prices so far, according to what Cougar confirmed.
What are the economic goals?
Professor of Economics at the Iraqi University Abdul Rahman al-Mashhadani believes that the government planned two goals to support economic development by devaluing the national currency; The first is to support industry and agriculture, and the other is to maintain the reserves of the central bank.
Changing the exchange rate alone is not sufficient to achieve economic development, according to al-Mashhadani, who explained that Iraq lacks agriculture and industry, in addition to opening the Iraqi borders wide to the goods of neighboring countries, especially from Iran and Turkey, whose currency is witnessing a significant decline that enhances their export capacity, considering that The devaluation of the Iraqi dinar was wrong in light of Iraqi data indicating that 90% of Iraq's consumption needs are imported, and that the government should have exempted raw materials (which are not available locally) entering the local industry from taxes and customs.
With regard to the reserves of the Central Bank, Al-Mashhadani indicated - to Al-Jazeera Net - that the increase in reserves by an estimated 15 billion dollars during the current year did not come as a result of changing the exchange rate, but rather due to the recovery of oil prices globally, pointing out that any collapse of oil prices for many months will ultimately lead to The monetary reserve has declined again, especially since the size of the state's large cash reserve does not necessarily mean the strength of its economy in the absence of industry and agriculture.
No comments:
Post a Comment