Bondlady’s Corner – Iraq Economic News and Points to Ponder Thursday AM 2-15-24


Iraq Economic News and Points to Ponder Thursday AM 2-15-24

Tlm724 Administrator Bondlady’s Corner

Reduced Gas Burning By 38%

 Economical 02/15/2024   Baghdad: Al-Sabah    A government source expected that approximately 95% of flaring gas would disappear during the year 2027, stressing the

continuation of significant government support to reduce flaring gas and work to exploit it optimally.

 These confirmations come a day after the Dutch Shell Company submitted an official apology to the Ministries of Oil and Industry for continuing to work on the Nebras Chemical Industries Project, indicating the

continuation of its partnership with the Basra Gas Company in order to provide support for the project, while the  Prime Minister directed the Ministries of Industry and Oil to study other options.

More responsive to the new gas reality after signing the investment contract with the French company Total, as well as re-studying the size of the project, its design capacity, and other technical details.

The government source stated in a press statement that

“the steps taken by the Ministry of Oil, with the continued support of the Prime Minister, have reduced gas burning by about 38%,” suggesting that

“gas burning during the current year will decrease to 32%.”  He added,

“The phenomenon of gas burning may disappear by 95% in 2028,” pointing out that

75% of Iraqi gas reserves are gas associated with oil.

Rentier Economy And Market Need

 Economical 02/15/2024   Muhammad Fadel Al-Khafaji     The rentier economy refers to a type of economy that relies on the export of natural resources such as “oil or natural gas” and reliance on the revenues generated from those resources to finance the state’s needs.

However, you find that the heavy reliance on the rentier economy is not enough to meet the state’s needs.

 We point out that the rentier economy is unbalanced and unsustainable, as

 it depends heavily on the rise and fall in the prices of natural resources, which causes great economic instability.

When the prices of natural resources are high, government expenditures rise, and

when prices fall, government revenues decline.

This fluctuation in revenues It constitutes a major challenge to the state’s financial sustainability, and

urgent solutions must be developed for this economic situation.

The maintenance of the rentier character of the economy leads to enhanced dependence on imports.

The vast majority of countries with a rentier economy follow an approach that relies on importing most of the basic goods and products that citizens need.

This means that the state spends a large portion of its revenues on importing basic products, which reduces the available resources. To invest in other sectors such as education, infrastructure and health.

The step required to enhance the reality of the economy requires building factories and attracting investment,

which are the only solution to achieve economic and social development in the country, as

building factories leads to

     opening new doors for employment,

     providing job opportunities for young people, and

     reducing unemployment rates, as building factories also leads to

     increasing production and

     diversifying local products, which It

     enhances the country’s ability to export goods and increase national revenues.

Attracting foreign direct investment is necessary to enhance economic growth, as

attracting foreign investment results in improving infrastructure and

developing public services in the country, which attracts more new investments and enhances economic stability, in addition to the fact that

“foreign investment” contributes to the transfer of technology and knowledge to the host country. Which contributes to developing local capabilities and raising the level of skills among workers.

In this way, building factories and attracting investment can contribute to promoting comprehensive development and achieving prosperity and economic and social stability in countries.

We know that a rentier economy leads to a lack of economic diversification.

When economies rely heavily on one type of resources, they become vulnerable to economic shocks,

which requires us to think clearly about the diversification of financial revenues in light of the availability of the elements of economic development.

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Points To Ponder on Anxiety about the Future

We fear our highest possibility (as well as our lowest one). We are generally afraid to become that which we can glimpse in our most perfect moments.  – Abraham Maslow

We fear the thing we want the most.  – Dr. Robert Anthony

We should not let our fears hold us back from pursuing our hopes.  – John F. Kennedy

The ambitious climb high and perilous stairs, and never care how to come down; the desire of rising hath swallowed up their fear of a fall.  – Thomas Adams

It is not death that a man should fear, he should fear never beginning to live.  – Marcus Aurelius