Economic policy in Iraq is moving towards implementing the principle of monetary sovereignty
other headlines :
Sudanese Advisor: Reforming the economy begins with the government banking sector
Sudanese Advisor: The currency of a country other than the dinar cannot control pricing within the country
Economic policy in Iraq is moving towards implementing the principle of monetary sovereignty
Saleh told the Iraqi News Agency (INA): “Economic policy in general and monetary policy in particular are moving towards a new principle called (monetary sovereignty), which considers the Iraqi dinar the only refuge for exchange, pricing, and coverage of internal transactions.”
He added, "It is not permissible for the currency of another country whose monetary policy is subject to pricing and trade exchange operations within the Iraqi economy, and the principle of monetary sovereignty starts from this level."
He continued, "The problem in Iraq is the existence of two exchange markets: the first is the regular one in which exchange takes place through the central bank's platforms, which prices the exchange rate at 1,320 dinars to the dollar as a stable and official price and defends monetary policy."
He explained, "The second market is irregular, representing 10% of the trading rate. It is an uncontrolled market controlled by speculators and adds noise to the Iraqi economy as a whole."
He pointed out, "There are two things: The first is commodity diversification, which the government has begun through baskets supporting livelihoods, including the food basket, which has achieved stability in the prices of materials, as well as the medicine basket, a construction basket, and another basket for reserve materials that the Ministry of Commerce will launch soon. These are funded at the official exchange rate and help... Stabilize prices and counteract the noise introduced by the informal market.”
He stressed that "dealing in the dollar (dollarization) and its pricing of the internal economic movement is what is most harmful to the economy, but there is no harm in covering external transactions exclusively and through official platforms."
Saleh pointed out, “On this basis, government policy and the policy of the Central Bank moved towards not relying on one country’s currency in foreign transactions and diversifying those currencies such as the Emirati dirham, the Turkish lira, the Chinese yuan, the British pound, and the euro, in addition to the dollar. This diversification reduces the dollarization of the economy and gives it great independence.”
He stressed, "This diversification can be generalized at the level of selling foreign cash currencies for travel purposes and according to the currency of the country to which one is traveling. This will greatly reduce the demand for the dollar as a single currency in transactions, and the monetary and commodity diversification adds independence to the Iraqi economy."
Regarding Iraq’s steps to provide these currencies, Saleh said, “The monetary authority in Iraq is independent and there is a wide consultation circle between it and the government. This is happening for the first time to open banking arrangements with central banks in countries that have a commercial partnership with Iraq, such as the Emirates, Saudi Arabia, Turkey, and China, and it is possible to cooperate with these countries.” Directly in their national currencies to achieve ease of conversion and exchange to finance trade and the movement of goods, supported by a stable exchange rate of 1,320 dinars, which allows for achieving stability and monetary sovereignty.”
He pointed out, "The demand for foreign currency is linked to the demand for goods and external transactions. It is dangerous to use the dollar to cover internal transactions, and monetary double-dealing has harmed Iraq. This must end, and it does not mean not providing foreign currency to citizens for the purposes of financing foreign trade or for the purposes of travel and tourism. Therefore, there are steps." This is a major regulatory change aimed at achieving diversification through agreement with several countries with which transactions are conducted.”
He stressed, "The state has large commercial arms, and whenever it finds that there are needs affected by secondary market noise, the commercial apparatus intervenes to expand its dealings, supported by a stable exchange rate, as well as in cooperation with Iraqi merchants."
Regarding the government’s steps to strengthen the banking system, the Prime Minister’s advisor said, “There is a large team headed by the Prime Minister that directly supervises the reform of the banking system, and the largest system is the government system, whose assets dominate 85% of the assets of the banking system in Iraq, so the reform begins with government banks.” We are working on this seriously, and during the next 6 months the results of this reform will appear, and there will also be work in parallel to reform the private banking system, and there is a strong movement and cooperation in this direction with the associations of private and Islamic banks.”
He stressed, "The Prime Minister's philosophy confirms that economic reform cannot be achieved without reforming the banking system, and therefore the priority begins with reforming the financial system."
The dinar will recover.. Iraq is approaching an “imminent end” to the dollar crisis before the end of 2023
Today, Monday (November 27, 2023), the Parliamentary Finance Committee commented on the possibility of the Iraqi government succeeding in controlling the dollar by the end of the current year.
Committee member Moeen Al-Kazemi told Baghdad Al-Youm, “The government and the central bank are working to end the dollar crisis once and for all, and there is great progress in this file and there is control over the market, as well as a gradual decline in exchange rates in the parallel market.”
Al-Kadhimi added, "We expect that the new year will witness a significant decline in dollar prices with the rise in the value of the Iraqi dinar, especially with the presence of government decisions and directives to address all the causes of the dollar crisis, and we expect that economic and financial stability will be strongly present at the beginning of next year."
Earlier, a senior official in the Central Bank of Iraq told Reuters that the country will ban cash withdrawals and transactions in dollars as of January 1, 2024, in the latest effort to limit the misuse of the country’s hard currency reserves in financial crimes and evade US sanctions on Iran. .
Mazen Ahmed, Director General of the Investment and Transfer Department at the Central Bank of Iraq, told Reuters that the aim of the step is to stop the illegal use of about 50 percent of the $10 billion cash amount that Iraq imports annually from the Federal Reserve Bank in New York.
This step comes as part of a broader campaign to stop the economy's dependence on the dollar after residents began to prefer the US currency over the dinar.
Ahmed said that people who deposit dollars in banks before the end of 2023 will be able to withdraw money in dollars in 2024. But dollars deposited in 2024 can only be withdrawn in the local currency at the official rate of 1,320 dinars to the dollar.
Official price
Ahmed said, "You want to transfer money? To do so. You want a card in dollars? Here you are. You can use the card inside Iraq at the official rate, or if you want to withdraw cash, you can at the official rate in dinars... but don't talk to me about dollars in cash anymore."
Iraq has already created a platform to organize bank transfers that make up the bulk of demand for dollars, and which has served as a hotbed for counterfeit receipts and fraudulent transactions that have leaked dollars to Iran and Syria, which are under US sanctions.
Ahmed stated that this system, which was put in place in coordination with the authorities in the United States where Iraq's reserves of $120 billion from oil sales are kept, is now almost airtight and provides dollars at the official rate to those who engage in legitimate trade activities such as importing food and consumer goods.
But he said that the misuse of cash withdrawals continues in ways that include travelers who are officially entitled to $3,000 but are looking for ways to circumvent the system.
Iraq relies heavily on its good relations with Washington to ensure that the country's oil revenues and funds are not subject to American oversight.
Dollar shortage
Many local banks have already limited cash withdrawals in dollars over the past few months, exacerbating shortages that have caused the exchange rate to continue to rise in the parallel market.
Ahmed said that some banks are suffering from a shortage of dollars because many people are trying to withdraw at the same time in light of a feeling of unease about the financial system, while some banks are also suffering from a shortage because they provided loans denominated in dollars that were then repaid in dinars.
He added that the Central Bank of Iraq also limited the amount of dollars it provides as part of an agreement with the US Central Bank to limit cash liquidity and shift to electronic payments.
Ahmed pointed out that the Iraqi Central Bank expects the dinar to lose more of its value as the new measures enter into force, but he added that this is an acceptable side effect of formalizing the financial system, noting that the Iraqi Central Bank provides dollars at the official exchange rate for all legitimate purposes.
He said that the cost that Iraq is bearing today is not compared to the value of achieving this goal.
Ahmed stated that the financing operations that are carried out transparently and legally through the bank and at the official rate are the most important and therefore nothing else matters, even if the exchange rate reaches 1700.
He continued, saying, "The cost we bear now is nothing compared to achieving this goal, in all honesty, as long as the legitimate channels are established. What matters is even if the exchange rate reaches 1,700... because the legitimate purpose is the official price."
We will bid farewell to the cash.” The Sudanese talks about switching to the electronic payment system
hopefully they will put out English version
Al-Rasheed directs its branches to stop credit activities
they do this every year it doesn't mean the RV is happening
Al-Rasheed Bank, today, Tuesday (November 28, 2023), directed all its branches to stop credit activities for the purpose of starting to prepare the final budgets.
The bank stated in a statement received by “Baghdad Today”, that “due to the approaching end of the current financial and credit year and for the purpose of directly preparing the final budgets, Al-Rasheed Bank directed all its branches to stop receiving and promoting transactions for all credit activities and for all sectors, as of Thursday, corresponding to 11/30/2023, provided that it is completed.” Suspension of grants to all credit sectors at the end of official working hours on Thursday, 12/10/2023.
The bank indicated, according to the statement, that “promotion and granting of credit will resume early next year.”
Iraq intends to reduce dollar dealings with Türkiye
The visit of the Iraqi government delegation to Turkey aims to reduce dollar transactions in trade between the two countries, in exchange for promoting dealing in other foreign currencies such as the euro and the lira.
According to a source in the Central Bank, this step comes within the framework of reforming the bank’s financial sector.
The Iraqi government delegation includes a financial advisor to the Prime Minister, three central bank officials, and directors of 12 Iraqi banks. Today, Monday, talks will be held in Turkey with a number of Turkish financial and banking institutions.
A source at the Central Bank said that the Iraqi delegation will discuss with Turkish financial officials the use of currencies other than the dollar in trade between the two countries, as Iraq and Turkey have a lot to ease pressure on the dollar and resort to other currencies.
The source added: In addition to the dollar, the delegation will also discuss trade in the Turkish lira, the euro and other foreign currencies.
According to official Iraqi media, the delegation will visit Turkey for three main issues: opening transfer accounts in Iraqi banks in various foreign currencies and facilitating the use of electronic currency cards for Iraqi tourists and citizens residing in Turkey, in addition to organizing trade between them.
The source added that the Iraqi delegation will discuss how to facilitate financial transactions between the two countries within the framework of the central bank reform plan.
Finance: Calculating additional working hours for employees after official working hours
The Ministry of Finance informed all ministries of calculating additional working hours for employees after official working hours, and during rest days and working days on official holidays for employees that the Ministry needs to work during these times for no more than 21 hours per week
JP Morgan expands its corporate banking activities in Abu Dhabi
JP Morgan Bank said, on Monday, that it is working to expand its payments and corporate banking activities in Abu Dhabi, the capital of the United Arab Emirates, after obtaining regulatory approval .
The UAE is competing with Saudi Arabia to be the preferred destination for economic activity as the region gradually moves away from dependence on oil .
The bank said that the Financial Services Regulatory Authority granted initial approval to JP Morgan Bank to upgrade its license to the first category .
Jamie Dimon, the bank's CEO, said in statements from New York that were broadcast at the Abu Dhabi Finance Week forum in the Emirates, on Monday: “We continue to add to the team this year and have submitted an application to upgrade our license to a full Category 1 bank... The size of the opportunity is here. ”
JP Morgan said it plans to take deposits and provide payment processing services to wholesale banking clients from Abu Dhabi Global Market, the financial center of the emirate of Abu Dhabi .
The bank had established a legal entity in the Abu Dhabi Global Market in 2021 under the name JP Morgan Middle East, and has had a physical presence in the UAE for more than ten years
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