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Changing the dollar exchange rate enters the political bidding in Iraq
link (Changing the dollar exchange rate enters political auctions in Iraq) another little title
Several sources confirm that this matter falls under the jurisdiction of the Ministry of Finance and the Central Bank
Some Iraqi political forces seeking to form the new government are working to change the exchange rate of the dollar against the Iraqi dinar (the price of one dollar in the market today is about 1470 Iraqi dinars), although this is excluded due to the repercussions of
changing its price again and the state of confusion. Which will be caused to the local market after its stability.
Bidding and tickling the feelings of the street
The Finance Committee of the Iraqi Parliament describes what some are promoting about the possibility of the House of Representatives
issuing decisions that restore the exchange rate of the dollar to what it was in the past, that is, to 1200 Iraqi dinars for every US dollar, which are nothing but auctions and titillation for the feelings of the street. Last Thursday, Representative Uday Awad announced that he had collected the signatures of more than 100 deputies to reduce the exchange rate of the US dollar against the Iraqi dinar. Awad stated that based on Article (61-Seventh-C) of the Iraqi constitution and Article (56) of the internal system, please include the issue of reducing the price of the dollar in the earliest possible session, according to constitutional contexts, and because of the economic repercussions taking place in the country and the collapse of the currency and its impact on the Iraqi citizen. In
turn, the Parliamentary Finance Committee denied what was recently reported about Parliament's efforts to restore the dollar's exchange rate to its previous state.
Committee member Jamal Cougar said, in a press statement, that "it is very difficult to restore the dollar exchange rate to its previous state, and this matter is not among the tasks of the House of Representatives, and it is not true according to a number of reasons, including that changing the exchange rate is one of the exclusive powers of the bank." Iraqi Central Bank and the Ministry of Finance.
Cougar considered that "the economic situation is not as some are talking about, that is, despite the financial surplus achieved from the rise in oil prices, there is a debt owed by Iraq in favor of foreign and internal banks of no less than 100 trillion dinars, in addition to some hateful debts as a result of the Gulf War."
He added, "The rise in oil prices is not a constant matter, but rather came due to the crisis of the war between Russia and Ukraine, meaning when the war stops and things return to their normal state, oil prices will drop."
Cougar continued, "As a government and parliament, we failed to limit the excessive increase in reducing the operating budget, meaning that most of the state's resources go to operating expenses, therefore no matter how much our financial resources increase, they are not enough to fill the operating budget and allocate a good part to the investment budget, and if we change the exchange rate The dollar, this means adding 23 percent to the state budget as a difference in the exchange rate, and this will create an unnatural state of confusion for the market.”
And he added, "Changing the exchange rate will generate compensation claims by the owners of some contracted investment projects in favor of the state, meaning that the affected investor will demand compensation, and therefore what some are promoting about the possibility of the House of Representatives issuing decisions that restore the dollar exchange rate to what it was, what are Except for bidding and tickling the feelings of the Iraqi street."
It is noteworthy that on December 19, 2020, the Central Bank of Iraq officially announced the amendment of the foreign exchange rate (the US dollar) to be 145,000 dinars for every $100, according to the state’s general budget for 2021 approved by the House of Representatives.
In this regard, a member of the Parliamentary Finance Committee, Nermin Maarouf, confirmed that "returning the dollar exchange rate to its previous rate is one of the prerogatives of the Central Bank and not the powers of either the federal government or the House of Representatives." She added that "there are attempts by members of the House of Representatives and the Ministry of Finance to return the dollar exchange rate to its old level," noting that "the actions of the two sides complement each other, but the exchange rate against currencies and changing it is exclusively the prerogative of the Central Bank." Maarouf noted that "this step was unsuccessful, and the reduction in the price of the dinar against foreign currencies came as part of the reform program of the Central Bank in coordination with the Iraqi financial policy in order to raise the financial reserves in the Central Bank and prevent the smuggling of hard currency outside the country, and to combat high rates of poverty and high commodity prices. Food as consequences of the Russian-Ukrainian war.
everything is possible
In turn, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, surprised the Iraqis about the possibility of changing and reducing the exchange rate of the dollar against the dinar. He said in a televised statement, "We need to cook on a quiet fire and monitor prices until the end of 2022, oil prices and foreign reserves," stressing that "a change in the exchange rate is possible, but it requires patience and careful study."
He added that "there are fixed facts on the ground, the exchange rate of the dinar against the dollar follows stability, and it is not arbitrary, but rather a contract between the Central Bank of Iraq and the Ministry of Finance because the foreign currency supply comes from the Ministry of Finance 100 percent, which is the only source for it in the country." Saleh added, "But the Central Bank deals in dollars to maintain cash reserves and prevent inflation. The modern Iraqi financial history is witnessing cooperation in determining the dollar exchange rate between the Central Bank and the Ministry of Finance."
He stressed that "it was agreed with the Ministry of Finance to set the dollar exchange rate for a period of three years, but changing it
became a surprise and within the shock policy. There are limits to the change in the dollar exchange rate and it is not a political or populist issue."
And he added, "The first limit is according to commodity prices and the market, and at that time the central bank will defend the stability of prices according to the reserve, which is the highest in its history now, and we have an encouraging surplus for the end of the year from 8 to 10 percent."
He pointed out that "if prices break down and the fiscal policy does not defend the livelihood of the poor and social protection salaries, the central bank will intervene by raising the purchasing power of the central bank through its foreign reserves."
"It is logical that the fiscal policy has a package to defend the livelihood, alleviate the poor, and provide social care and compensate farmers for the differentials in grain prices, and the government keeps fuel prices and government services fixed. This stability is a kind of subsidy that has risen to 15 percent of GDP," Saleh added. .
And regarding changing the dollar exchange rate, the Prime Minister’s advisor said, “Everything is possible, but we need patience in changing the dollar exchange rate in the event that prices rise and the financial policy is unable to cover the dinar,” noting that “
On a quiet fire" .. a surprising and important statement by the Prime Minister's advisor about changing the dollar exchange
Economist: The Ministry Of Commerce Did Not Provide A Suitable Platform To Reduce The Exchange Rate Of The Dollar
The economic expert, Dr. Mustafa Akram Hantoush, stressed that the current situation does not allow to re-reduce the exchange rate of the dollar and return it to its previous era, pointing out that the Ministry of Trade and because of corruption does not have the ingredients to re-lower the exchange rate and address the consequences of that.
Hantoush told "The Information", "It is impossible to restore the dollar exchange rate to its previous position, especially since Iraq does not have a Ministry of Trade that has central markets, an effective strategic storage and a large dealership circle, so that it addresses the consequences of changing the exchange rate in a way that does not cause any harm to the citizen."
He added that "the central markets and the corruption of the Ministry of Commerce will divert these markets for investment and sale and put bribery in the pockets of officials of the Ministry of Commerce, in addition to the fact that the government's merchants circle is present in other countries, while there is no such episode in Iraq, especially since the government is working against the merchant."
And he indicated that "returning the exchange rate needs an effective Ministry of Trade to deliver the citizen to the new rate, but under the current ministry, corruption dominates the scene and the money goes into the pockets of merchants and spoilers.
The rentierism of the Iraqi economy between financial abundance and investment challenges
After the noticeable decrease in the levels of the global pandemic, the world’s economies witnessed a recovery in activity and exchange movement, which was reflected in the situation of the Iraqi economy after the contraction reached more than 11% in 2020, which was confirmed by the World Bank in its last report in June that the Iraqi economy began to be active Gradual stagnation affected by the rise in global oil demand and high rates of oil revenue, and despite the optimistic expectations of the same report that the average growth rate of GDP would reach 5.5% for the next two years, the Iraqi economy is in fact facing a major challenge as it is a rentier economy in the first place as it depends on Its revenue from export 4.5 million barrels per day to finance 90% of public spending, which does not enable it to diversify the sources of total income from other sectors because private and public investment spending is extremely low, but almost non-existent in most items of the general budget in favor of operational spending, which prevents the activation of Operations that modify imbalances, restore overall balance and break the deadlock in the income cycle, especially in the service sector.
Therefore, the macroeconomic balance lacks the revitalization of the investment sector and its expansion and deepening in a way that compensates for the leakage in the income cycle in favor of economic growth.
And because of the fundamental distortions in the structure of the Iraqi economy that affect aggregate demand and the investment structure and the social and institutional restrictions that are affected by it, they have serious repercussions on the business sector and the investment environment and their impact on the levels of marginal efficiency of capital and their direct reflection on the preferences and decisions of institutions and individuals to initiate their financial and investment activities Parliament is called to expedite the formation of the government to approve the general budget and make necessary adjustments in the allocations of investment contracts for the public sector, create the appropriate legal and administrative environment for the development of the private sector, and start the structural and macro-financial treatments required to reduce the obstacles to attracting foreign direct investment necessary to demarcate the strategic framework infrastructure and to overcome the difficulties facing the prospects of investment and financing.
Therefore, five important points can be identified to break the deadlock in the investment sector, which are:
The first: represented in the financial abundance due to the high rates of Iraqi oil revenues, due to the rise in international prices, and the cancellation of production cuts (OPEC +), where the rates of exports of oil output witnessed a remarkable increase in the second half of 2021 to reach 3.244 million barrels, at an average price of $110 per barrel. ., which increased the surplus of public financial balances and the total external balances of Iraq, but we do not find this financial abundance any presence in the aspects of investment spending so that the stagnation in the flow of money and investment continues. Despite the approval of the recent food security law, what it included of subsidies and direct financial transfers did not support the movement of investment capital, but rather targeted a number of short-term social and economic activities, to reduce the effects of the lack of government formation and the delay in approving the budget, especially on a number of necessary operational activities that touch life citizen and achieve minimum food security.
The second: It was represented in the absence of an investment policy that supports the local product, as it is strange in spite of what the world is witnessing of a significant rise in global inflation rates resulting from the sharp rise in the levels of the commodity price index of food and the prices of energy sources globally and despite the increase in internal demand as a result of high levels Urban and population growth, if we do not find any economic orientation towards encouraging and developing national production from the food basket that has the potential to produce locally.
The third is concerned with the rentier economy and the fluctuating nature of world oil prices and their volatility. The financial abundance consisting of the rise in oil product revenues is considered by many economists as an exceptional leap to initiate structural treatments to build and develop the minimum important infrastructure to attract foreign capital.
Fourth: It relates to the internal and external financing structure for compensating operations for the severe shortage of capital formation necessary for growth. The financial sector faces internal and external indebtedness that poses a real challenge to fiscal and monetary policy makers towards coordinating the objectives of investment financing to diversify sources of income in projects in the agricultural and local industries sectors to raise the flexibility of paying installments The internal debt, estimated at 50 billion dollars, and the external debt, which decreased to 20 billion dollars, and thus reducing the weight of the public debt on the economy.
Fifth: It is possible to build an investment map to manage the economics of the oil sector towards reducing rentierism by following the policy of substituting imports in both oil derivatives and natural gas and deepening some strategic petrochemical industries for the service sector and infrastructure necessary to attract foreign investment and rebuild the structure of the oil industry, to ensure increased supply flexibility. For oil and gas.
The mentioned five points can contribute to achieving a macroeconomic balance for the movement of investment and money, in the light of building the formulation of a macroeconomic policy that reduces the rentier phenomenon.
World Bank: Small and medium-sized companies provide 60% of job opportunities in Iraq
The representative of the World Bank in Iraq, Ramzi Numan, confirmed that 60% of job opportunities in Iraq are carried out by small and medium enterprises.
Noman said at a conference on supporting small and medium-sized enterprises in Baghdad that "Iraq is gradually emerging from the deep recession that it experienced in the year 2020 due to the Corona pandemic," adding that "Iraq achieved economic growth of 2.2% in the year 2021 after the economy had contracted by 11% in the year." 2020".
He pointed out that "Iraq has a unique opportunity to start rapid reforms and redirect government spending towards programs that improve growth, which is very important and address the problem of human capital in Iraq."
He pointed out that "the market for small companies is still small and limited, because Iraq suffers from the absence of an environment incubating entrepreneurship and most of the small and medium companies are not registered," noting that "small and medium companies provide 60% of the job opportunities available in Iraq."
He pointed out that "the small and medium-sized companies sector suffers from low services and financial intermediary, which made it the smallest sector in Iraq and the region.
A strong partner"... America: We are working to develop the economy in Iraq and the Kurdistan Region
The US ambassador, Alina Romanowski, revealed today, Wednesday, that her country is a "strong" partner for Iraq, while indicating that the US presence in Iraq is working to develop the economy and the private sector in all parts of the country, including the Kurdistan Region.
US Ambassador Alina Romanowski said at the "Access to Finance" conference, which was held in Baghdad in the presence of Central Bank Governor Mustafa Ghaleb Mokhive and attended by Shafak News Agency, that "the United States of America is a strong partner for Iraq and we help Iraq's economic development and prosperity," noting that "the development of the sector The Iraqi private sector is very important to us and we are trying to provide investment opportunities for companies."
She added, "Holding this conference came to access financing, as well as access to the private sector and companies and open the door for investment."
And the US ambassador continued, "We are in Iraq to work on developing the Iraqi economy and the private sector in all parts of Iraq, including the Kurdistan Region, and our efforts are joint with the Iraqi side to work in particular to provide financing and achieve prosperity in Iraq."
Romanowski stressed "the necessity of financing start-ups and small projects, which are an essential lifeline," pointing out that "convening this conference came to confront these challenges."
The Central Bank of Iraq announced, today, Wednesday, that it saved the Iraqi economy from collapse in 2014, while the United States stated that it had contributed $40 million in aid to Iraq to develop the Iraqi economy.
Central Bank Governor: We saved the Iraqi economy from collapse
The Central Bank of Iraq said, on Wednesday, that it saved the Iraqi economy from collapse in 2014, while America said that it contributed 40 billion dollars in aid to Iraq to develop the Iraqi economy.
Central Bank Governor Mustafa Ghaleb Makheef said during the “Access to Finance” conference: “The bank was able to stop the collapse of the Iraqi economy during the year 2014 with the collapse of security conditions and the drop in oil prices globally through a package of financing operations,” noting that “the tasks of the Central Bank are Addressing challenges at critical times for the economy.
He added that "the bank was able, through launching financing initiatives, including liquidity support for government banks and initiatives to finance farmers' dues," noting that "the financing of these initiatives has currently reached 18 trillion dinars."
He pointed out that “the bank intensified its efforts in the field of clean energy through the initiative to finance one trillion dinars to purchase electricity generating units operating on solar energy,” explaining that this financing was “launched in cooperation with the Association of Banks, a social initiative that contributes to linking the banking sector with society to develop some shrines.” religious, tourist facilities, job opportunities, and others.
For her part, the US Ambassador to Iraq, Alina Romanowski, confirmed that “the United States government is proud to launch the activities of the conference to build a thriving private sector on the basis of transparency,” pointing out that her country “continues to support the development of the Iraqi private economy, and during the last period it contributed 40 billion dollars to strengthen the Iraqi economy.” “.
And she added, "I announce today an important partnership project to build the first gas separation plant between the private sector and the Ministry of Industry and Minerals. The project creates more than 30,000 job opportunities."
Parliamentary Economy talks about (space for investment) within the Food Security Law
The Parliamentary Investment and Economy Committee spoke, on Wednesday, about an "investment space" within the Food Security Law.
Committee member Briar Rashid told Mawazine News that "the emergency food support law included huge financial allocations estimated at 8 trillion Iraqi dinars, which may provide space for investment projects."
Rasheed added, "These sums were allocated to projects for the development of the regions, and they are huge sums of money that could be sufficient for investment or the advancement of the investment reality through the gateway to the development of the regions."
A deputy reveals what Al-Sadr City will “benefit” from the Food Security Law
Today, Wednesday, MP Mohan Al-Saadi confirmed that the food security law will include Sadr City in all its unserved sectors, while noting that the work will be supervisory and executive
Al-Saadi said in an interview with Alsumaria News, "The Emergency Support Law for Food Security and Development is one of the most important upcoming development points forBaghdadespecially andIraqIn general.
And he continued: “AmenBaghdad Ammar Musa KazemHe confirmed during our meeting with him that the Food Security Law will includeASSADAR cityIn all of its unserved sectors, as well as the serviced sectors in all of its open projects
Al-Saadi pointed out, "The main point that Amin focused onBaghdadThe work should be supervisory and executive with a unified and successful team for a better futureASSADAR city".
World Bank: Iraq has an opportunity to diversify its economy and address the crisis of its human capital
The World Bank confirmed, on Wednesday, that Iraq has an opportunity to diversify its economy and address the human capital crisis.
The Special Representative of the World Bank in Iraq, Ramzi Neiman, said during the "Access to Finance" conference, which was attended by Shafak News Agency, that Iraq began to gradually emerge from the crisis after the contraction of its economy in the year 2020 following the decline in oil prices, noting that "the Iraqi economy grew in the year 2021." With the rise in oil prices and the increase in oil revenues.
He added, "The World Bank believes that Iraq has an opportunity to reorient the government program, diversify the economy, and address the human capital crisis in the country," noting that "the World Bank sees that the solutions lie in supporting small companies and establishing and supporting projects and companies through electronic support."
And the Iraqi state’s continuation of relying on oil as the only source of the general budget makes Iraq at risk of global crises that occur from time to time due to the impact of oil on it, which makes Iraq turn every time to cover the deficit through borrowing from abroad or inside, which thus indicates the inability to manage Effectively state funds, and the inability to find alternative financing solutions.
The Central Bank: We saved the Iraqi economy from collapse.. America: We contributed 40 billion
The Central Bank of Iraq said, on Wednesday, that it saved the Iraqi economy from collapse in 2014, while America stated that it contributed 40 million dollars in aid to Iraq to develop the Iraqi economy.
Central Bank Governor Mustafa Ghaleb Makheef said during the "Access to Finance" conference, which was attended by Shafak News Agency, that "the bank was able to stop the collapse of the Iraqi economy during the year 2014 with the collapse of security conditions and the drop in oil prices globally through a package of financing operations," noting that " The task of the central bank is to address challenges at critical times for the economy.
He added, "The bank was able through launching financing initiatives, including liquidity support for government banks and initiatives to finance farmers' dues," noting that "the financing of these initiatives has currently reached 18 trillion dinars."
He pointed out that "the bank intensified its efforts in the field of clean energy through the initiative to finance one trillion dinars to purchase electricity generating units operating on solar energy," explaining that this funding was "launched in cooperation with the Association of Banks, a social initiative that contributes to linking the banking sector with society to develop some shrines." religious, tourist facilities, job opportunities, and others.
For her part, the US Ambassador to Iraq, Alina Romanowski, confirmed that “the US government is proud to launch the activities of the conference to build a thriving private sector on the basis of transparency,” noting that “on the 18th of last May, the US Agency for Development attracted more than $40 million in private investments. seeking to support economic growth and promote greater prosperity throughout Iraq."
"I announce today an important partnership project to build the first gas separation plant between the private sector and the Ministry of Industry and Minerals, and the project creates more than 30,000 job opportunities," she said.
"Years" before Paypal, Stripe etc can Operate in Iraq
The President and Chairman of the Trade Bank of Iraq (TBI) has said that he expects it will be "a number of years" before payment processing services such as Paypal and Stripe will be able to operate in Iraq.
Responding to a question from Iraq Business News (IBN) at the Iraq Britain Business Council (IBBC)'s recent Spring Conference in London, Dr Salem Chalabi added:
"Next year the Iraqi banking sector is going to be analysed by the Financial Action Task Force [FATF], and ... one of the key conditions will be to get positive feedback from the FATF. Then we will hopefully be able to get clearer timing for something like this."
Entrepreneurs in Iraq frequently complain about the difficulties in accessing international e-commerce services and platforms, and say that this limits the creation of new businesses in the country.
The FATF is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.
The Iraqi economy between exposure and openness
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