After the electronic platform stopped...Answering questions from Iraqi circles about the new dollar mechanism
Many citizens have raisedIraqisQuestions about the new trading mechanismDollarinIraqHow to withdraw or buy it after stoppingOfficialTo create an electronic platform.
Many citizens wondered about the news of the platform that was established.SumerianNews published on the social networking site "Facebook", about the electronic platform and its work, and what will happen to the dollar, and whether it will witnessIraqA new rise in currency exchange rates.
One citizen said via the comment feature: "What is meant by the electronic platform? Can someone explain?", while another replied that "the blockade will return to Iraq and the exchange rate will be at least 250 thousand dinarsIraqiFor $100.”
Another asked about “the continued arrival of foreign remittances toIraqAnd giving the currency to travelers," while another pointed out that "unemployment will return and food prices will quadruple from their normal levels and famine will return to Iraq."
Others praised the decision to stop the electronic platform, considering it "an effective government achievement that will be beneficial in succession and a transformation process that enhances the economic role and prepares for investment opportunities with complete confidence, and that the government is activating the supervisory role over the markets and exchanges and dealing in the dinar only to raise the value of the Iraqi dinar."
Another pointed out that "the platform was a front for theftDollarThus, imposing control through financial transfer by the bank will contribute to balancing the market and controlling the rise of the dollar,” and another supported him by saying that “this step may have several reasons, such as:
1- Controlling the dollar exchange rate: trying to stabilize the priceDollarIn front of the dinarIraqiBy reducing the flowDollar2-
Preventing dollar smuggling: If there are indications thatDollarIt is used in smuggling operations or there is an inflation in demand for it due to illegal purposes.
3-Strengthening the local economy: reducing dependence onDollarSupporting the local currency by reducing tradingDollarIn the markets.
Possible outcomes: higher prices.DollarOn the black market if there are no alternatives to meet demand. Impact on traders and businesses who depend onDollarIn imports, which may lead to higher prices for imported goods.
Tightening financial controls to try to prevent fraud and circumvention of policies. Therefore, the effects will depend on how this decision is implemented and the extent of alternative plans to provideDollarFor the commercial and service sector.
"Travelers' Dollar"
It is worth noting that "the Central Bank explained that grantingDollarFor travelers, it continues at airports according to the approved mechanism, which is the best in limiting the occurrence ofDollarFor the traveler, noting that "this decision is part of a series of reforms aimed at facilitating financial procedures and stimulating the economy."
What is the "electronic platform"
? The electronic platform for money transfers is a mechanism adopted to ensure the regulation of foreign money transfers and limit manipulation of exchange rates. It works to document commercial operations and transfer funds by banks and financial companies, ensuring more effective control over hard currency flows in and out of the country.
Will the cancellation of the platform affect the dollar price?
The impact of the cancellation of the platform on the priceDollarIt will be reflected in prices as follows:
1- Increased demand forDollarIn the black market, in the absence of an electronic platform, demand may increase.DollarIn the black market due to the absence of control mechanisms, which leads to high exchange rates outside official channels.
2- Weak confidence in the dinar, as canceling the platform may weaken confidence in the Iraqi dinar, especially if effective alternatives are not put in place to ensure market stability. Weak confidence means that citizens and investors may withdraw their money in dinars and transfer it toDollarAs a safe haven.
3- The impact of smuggling and money laundering, as canceling the platform may cancel strict control over dollar smuggling operations, and smuggling and money laundering practices may expand, which increases the demand forDollarSignificantly and affects the central bank's reserves.
4- The market depends on supply and demand. With the cancellation of the platform, the currency market may become more affected by direct supply and demand. This may lead to severe fluctuations in the exchange rate, especially in light of unstable economic and political conditions.
Will the dollar rise?
The government and the central bank can rely on other control tools such as strengthening the role of local banks, imposing strict restrictions on foreign transfers, activating alternative control tools, or pumping more dollars into the market to meet demand and maintain price stability. Investment can also be encouraged and reliance on foreign currencies reduced, to relieve pressure onDollarAnd strengthening the dinar, all these measures can maintain pricesDollar.
With the start of the new legislative session... Discussions between the blocs to resolve the controversial laws
The representative of the Coordination Framework, Mukhtar al-Moussawi, revealed today, Wednesday (January 1, 2025), that there are contacts between the political blocs to decide on voting on controversial laws at the beginning of the new legislative session.
Al-Moussawi told Baghdad Today, "The new legislative session will begin on the ninth of next month, and the House of Representatives has many tasks, most notably amending the budget law, as well as waiting for the arrival of the 2025 budget schedules for the purpose of voting on them, in addition to the controversial laws that have been postponed for a very long time."
He added, "With the start of the legislative session approaching, there are contacts taking place between the political blocs in order to decide on the vote on the controversial laws, to hold extended meetings after the New Year's holiday, so that the political blocs enter in agreement on passing the laws in advance, and the sessions are not disrupted due to the lack of agreement on the laws and their inclusion on the agenda."
The Fatah Alliance confirmed on Friday (December 27, 2024) that the controversial laws that have been suspended for a long time will be voted on at the beginning of the new year.
The coalition’s representative, Waad Al-Qaddo, told Baghdad Today, “There is a parliamentary determination to settle the vote on the controversial laws at the beginning of the new year, with the beginning of the new legislative session, especially since all the paragraphs of the laws were voted on earlier, and all that remains is to vote on the compelling reasons, so that the law can be legally enacted.”
Al-Quddo explained that "the remaining political and legal disputes over the laws can be resolved and agreed upon through negotiation, and therefore at the beginning of the legislative session, those laws will be voted on, in order to move towards legislating other laws. It is not correct for the legislative role to remain paralyzed due to some laws and leaving others."
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Closing the Dollar Selling Platform.. US Directive Raises Concerns About Market Stability and Rising Prices
The Central Bank announced the closure of the dollar selling platform at the end of the fiscal year, a measure that comes within the ongoing directives of the US Treasury to tamper with the Iraqi economy.
However, this decision raises growing concerns about its potential impact on demand and dollar prices in the local market, especially in light of the current economic conditions.
The closure of the platform is expected to lead to an increase in demand for dollars in the parallel market, as many importers and traders rely on buying hard currency to meet their needs.
In the absence of the usual supply through the official platform, these people may resort to alternative markets to obtain dollars, which will lead to increased pressure on prices.
Economic observers point out that the increase in demand accompanied by a decrease in supply will inevitably lead to an increase in the price of the dollar against the dinar, and this increase may be directly reflected in the prices of goods and services, which adds an additional burden on citizens, especially with the decline in purchasing power as a result of the rise in inflation rates.
Regarding the subject, economic expert Safwan Qusay said in an interview with Al-Maalouma Agency, “The Central Bank of Iraq announced the termination of the electronic platform for banking transactions starting from the beginning of the new year, after notifying all Iraqi banks of the cancellation decision early on."
He added that "13 Iraqi banks were able to adapt to this change, as they expanded their dealings with real merchants, so that the percentage of transfers and credits that take place through direct relations between Iraqi banks and supplier banks reached more than 95%." "
He explained that "these operations are carried out in accordance with strict compliance standards that ensure knowledge of suppliers and payment mechanisms."
He continued, “As for the 5% of transfers that were made through the electronic platform, traders who wish to continue importing operations at the official price can open bank accounts within these banks.”
He pointed out that "the Central Bank issued a circular on September 30th allowing traders to import directly after opening bank accounts, without the need for a waiting period that previously extended to six months."
He explained that "the market may witness some fluctuations, but he ruled out the possibility of achieving large profits from importing irregular goods, in light of the Iraqi economy, which relies heavily on the dollar and its high value globally."
He pointed out that "the Iraqi economy will not face major concerns as a result of this change, stressing the importance of adhering to banking procedures to ensure market stability and facilitate import operations."
Closing the dollar selling platform may be a technical measure related to the end of the fiscal year, but it raises economic and social challenges that must be dealt with carefully.
Maintaining market stability and the exchange rate requires effective coordination between the Central Bank and the government, with proactive plans to avoid a worsening of the economic crisis.
Al-Sudani confirms that the government has taken practical steps to diversify the economy
Prime Minister Mohammed Shia al-Sudani confirmed today, Thursday, that the government has put in place clear practical steps aimed at diversifying the Iraqi economy away from total dependence on oil revenues.
Al-Sudani said in a speech during the opening and launch of several projects in the oil sector in Baiji district in Salah al-Din Governorate, which was followed by the / Al-Maalouma / agency, that “the government has worked since the first days of assuming its duties to reconsider the philosophy of the Iraqi economy based on rentierism, and to put in place practical steps, not theoretical ones, in the matter of diversifying the economy."
He pointed out that "Iraqi competencies have begun to manufacture and establish units in refineries, which gives value to the product and drives market stability. A country that produces more than 4 million barrels per day cannot continue to import oil and gas derivatives."
He added: “We have started several strategic projects that are being implemented for the first time in the country and in the history of the oil industry, and we have made great strides in solving the problems, especially in the issue of gas flaring, through The contracts and agreements concluded, and we have set a ceiling not exceeding 2028 to stop gas flaring and a zero percent rate in flaring associated with gas, and we are continuing to promote the patches and fields for free gas.”
He pointed out that "the projects that were opened and construction was launched today are important to achieve a shift in the oil industry," directing "the Ministry of Oil to complete the studies for the petrochemical project and the FCC project in Baiji."
He announced "a plan to make Baiji the largest oil industrial city in Iraq and the region," noting "work to adopt international standards and environmentally friendly quality."
He pointed out that "work is underway to complete the strategic integrated southern project, which is being implemented for the first time in the field of oil development and gas investment, and to establish a power station, refinery and petrochemical plant in one place."
Mazhar Saleh: No salary crisis and financial reserves cover liquidity completely
Saleh said in a press statement that "there have been speculations recently about oil prices, a liquidity crisis, etc." He added that "at the end of the fiscal year, a financial audit takes place, and therefore there may be a slight delay in issuing salaries for a few days, according to accounting reconciliations."
The Prime Minister's advisor confirmed that "there is no salary crisis, and what is happening here and there in this regard is nothing more than fantasy."
The monthly salaries of employees were delayed in the last month of 2024, while it is customary for the Ministry of Finance to pay the wages of self-financing companies starting from the middle of each month, as well as for the members of the ministry and banks, while the salaries of other ministries are released starting from the 23rd of each month.
Regarding the size of the money supply outside the Central Bank, Mazhar explained that it is “around 100-105 trillion dinars,” noting that “the size of the money supply inside the banking system is less.”
He stressed: "We have large foreign exchange reserves that completely cover this liquidity, which is estimated at about $105 billion."
Iraq, OPEC's second-largest oil producer, relies heavily on oil revenues, with the hydrocarbon sector accounting for the vast majority of export earnings and about 90% of state fiscal revenues.
Iraq raised its budget in 2024 even after record spending in 2023 when more than half a million new public sector employees were hired.
The 2024 budget rose to 211 trillion dinars ($161 billion) from 199 trillion dinars ($153 billion) in 2023, with a deficit of 64 trillion dinars.
The government has adopted in the budget $70 per barrel as the price of oil in 2024, which is about $6 less than the weighted average price.
Iraqi Central Bank Streamlines International Transfers
The Central Bank of Iraq (CBI) has announced the successful transition of external transfers from an electronic platform to direct operations by Iraqi banks through their international correspondent banks.
According to a CBI statement, this milestone, fully achieved at the end of December, aligns with global best practices, promoting a stable and secure financial system.
Key highlights include:
- Modernisation Journey: Transfers evolved from a currency sale window to an electronic platform and now to correspondent banking systems.
- Diverse Currency Support: Iraqi banks can now enhance balances with correspondent banks using various currencies, including USD, INR, CNY, EUR, AED, SAR, and JOD.
- Global Integration: The system improves efficiency and aligns Iraq's financial operations with international standards, boosting regional and global financial relationships.
- Investment and Trust: This achievement strengthens Iraq's appeal for investment and enhances international financial confidence.
The CBI attributed this progress to extensive technical planning, governmental support, and the contributions of its staff, Iraqi banking institutions, and international partners.
The bank reaffirmed its commitment to fostering good governance, compliance, and anti-money laundering measures, further solidifying Iraq's financial system.
KRG blames Baghdad for unpaid salaries
The Kurdistan Regional Government (KRG) on Thursday blamed the federal government for the unpaid salaries of its civil servants, accusing Baghdad of violating the constitution.
“The federal government is violating the constitutional rights of the people of the Kurdistan Region and is not ready to send the financial entitlements of the Kurdistan Region in full,” read a statement from KRG’s finance ministry.
KRG, which mostly relies on its share of the federal budget, has failed to pay November and December salaries of civil servants.
The ministry added that the Region’s 2024 budget allocation is approximately 11.5 trillion dinars, but it requires 12 trillion dinars to meet its needs. Iraq has sent 10.7 trillion dinars, creating an 823 billion dinar shortfall.
“The federal government wants to make the Kurdistan Region’s civil servants victims of its problems and excuses,” the Kurdish ministry claimed.
The statement also addressed claims that the issue stems from the KRG not transferring domestic revenues to the federal government, referencing a February ruling from Iraq’s Federal Supreme Court, saying that the arguments are misunderstood.
The Region’s October salaries for civil servants faced a 239 billion dinar shortfall, which was covered using domestic revenue, said the ministry. It further detailed that the KRG requested nearly one trillion dinars for November and December salaries, but the federal government only sent around 631 billion dinars and decided to allocate 441 billion dinars, for each month respectively.
“As the finance ministry and the KRG, we are insistent on obtaining the December salary, which is the responsibility of the Iraqi government to provide,” the ministry said.
Iraq’s Prime Minister Mohammed Shia’ al-Sudani last month told lawmakers that the KRG would not receive the full amount of money it needs to pay its civil servant salaries, attributing the shortfall to insufficient funds in the Kurdish government’s share of the federal budget.
Article 12 of Iraq’s three-year federal budget bill, passed in June 2023, obliges the KRG to hand over the non-oil revenues to the federal government, in return for the Region’s share in the budget which is 12.6 percent.
KRG has said it pays half of its local income to Baghdad.
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