Bondlady’s Corner – Iraq Economic News and Points to Ponder Wednesday Evening 11-8-23


Iraq Economic News and Points to Ponder Wednesday Evening 11-8-23

Tlm724 Administrator Bondlady’s Corner

Financial Exchanges And Trading

Economic 11/08/2023  Muhammad Sharif Abu Maysam  In light of the procedural developments witnessed by the financial and monetary policies and the movement at the level of decision and consultation between those in charge of them, and the practical applications that these developments produce at the level of structural policies and the introduction of technologies, and the applied developments that electronic payment systems are witnessing in the banking arena,  there are potential transformations that will be witnessed in the arena of exchanges.

Financial transactions in the next few months will move toward a business environment that is compatible with the possibility of engaging in the banking industry system in the world,

which will have a significant impact on the overall features of the financial and monetary landscape in the country,

starting with the applications and practices of the tax system and customs tariffs, passing through exchange methods, all the way to the existence of a parallel market.

Exchange rates are able to finance its exchanges without relying on a single source.

The features of these potential transformations have become apparent since the relevant authorities were forced to abandon the approved methods of financing foreign trade and begin adopting electronic payment methods on the “SWIFT” platform, and

the resulting confusion led to the recovery of the speculative market and the growth of black market parasites before they became organized.

Procedural operations in accordance with the regularity of the infrastructure for electronic payment tools, and

since the international company Visa began the first steps of its work in Iraq in early June of last year, and the Vice President of the American “JP Morgan” Bank expressed his readiness to support Iraqi trade financing operations during his meeting with the Governor of the Central Bank.

The Iraqi Bank last June, promising to provide the necessary support to facilitate the opening of an office for JP Morgan Bank in Baghdad to establish a banking sector that rises to the level of the banking industry in the world.

After that, the features of the transformations became clearer with the procedural steps taken by the authorities in charge of monetary policy, starting with the procedural steps in the restructuring project, which culminated in the Central Bank’s decision to increase the capital of banks to no less than 400 billion dinars during a maximum period of 12/31/2024.

Then in the axis of introducing technologies that culminated in the recent introduction of the (Visa Direct) service in one of the banks to transfer money abroad in a maximum time of five minutes,

thus facilitating the work of small merchants and large companies simultaneously,

 which will have an impact on the movement of funds to and from Iraq, and enabling…

End users, whether companies or individuals, are able to transfer money quickly and safely around the world, in addition to  the direct impact on the exchange rate in the speculative market due to the expected decline in demand and consequently the decline in prices according to the supply and price equation, while the lack of control over currency smuggling will remain the biggest challenge facing them. The relevant authorities.

Experts: We Lost Billions Of Resources Due To Lack Of Seriousness In Investing In Natural Resources

 Economic 11/06/2023    Baghdad: Ali Muwafaq   Experts in the field of geology have warned that if the sulfur and phosphate production fields are stopped and the rest of the mineral elements and resources spread in most governorates, especially in the western region, Iraq will lose billions of resources that could be an alternative or a major support for oil wealth.

The head of the Iraqi Geologists Syndicate, Saad Obaid, said during a symposium entitled (Mineral wealth is a support for the national economy and an alternative to oil wealth), which was attended by “Al-Sabah”:

The union is trying to shed light on the issue of mineral wealth and invest it optimally, as it is an important tributary to the national economy, as it can save millions of dollars. It contributes to reviving the national industry if exploited correctly.  He added that

the aim of the symposium is to urge decision-makers in the country to pay attention and develop this wealth in an attempt not to make Iraq an oil station only while adding material value to this wealth, in addition to focusing on the importance of localizing the mineral industry in the country. He stated that

the union calls on the government to support the Geological Survey to carry out its work and invest and explore this wealth in an effort to truly benefit from it, as well as to learn about the experience of Saudi Arabia, which has allocated millions of dollars for mineral exploration.

For his part, geological expert Dr. Khaldoun Subhi Al-Bassam told “Al-Sabah”:

Iraq possesses quantities amounting to 600 million tons of free sulfur, 60 percent of which is extractable, as production did not exceed one million tons annually and there is no serious move to reactivate the Mishraq and Al-Lazza fields in Nineveh Governorate.

 He continued that Iraq also has a wealth of phosphate in the Akashat region in Anbar Governorate, where available industrial reserves are estimated at 10 thousand million tons, and production does not exceed, in the best circumstances, two million tons annually from one site that has been out of work for years.

 Al-Bassam stated that Iraq stands behind Morocco in phosphate reserves, but this is not the entire reserve.

If exploration work continues, it is possible to find larger quantities. He stated that  there are natural elements and resources that Iraq possesses in large quantities, and  they are used in important industries, including sedimentary iron, amounting to 60 million tons, which is used in the cement industry, and sodium sulphate, amounting to 22 million tons, which is used in the manufacture of vegetable oils and glass, but its factory is out of service, and investigations are underway.

It indicates that there are 8 thousand million tons of untapped limestone in the governorates of Anbar, Muthanna, Najaf, and the Kurdistan Region.

 He pointed out that the Western Desert contains an amount of 7 thousand million tons of silica sand, while production does not exceed 50 thousand tons annually, as it is used in the manufacture of glass, ceramics, refractories, and modern silicon industries,

in addition to the presence of 16 million tons of quartz in Anbar, and quantities of lead and copper in Dohuk and Sulaymaniyah are not yet exploited.

 The symposium came up with recommendations that included the importance of developing a strategy for mineral investment policy and opening the way for the private sector and international companies to carry out mineral exploration operations due to the government’s lack of serious desire to invest in them, as well as the importance of legislating laws that encourage investment in minerals.

Restricting Cash Reserves

 Economic 11/06/2023  Yasser Al-Metwally   In order to distinguish between the advantages (benefits) and disadvantages (risks) of the cash reserve, we must understand the simplified definition of it, which means (all the foreign currencies that countries own and keep in their central banks).

 Among the benefits of these currencies (cash reserves in foreign currency) is using them to

 finance their foreign trade first, and then to

pay their debts second, and also more importantly,

maintaining the stability of their local currencies, and third,

dealing with financial crises and monetary inflation.

As for its risks, it is determined by restricting it (restricting its use by the countries that own it (i.e., exporting it).

 We offer this simplified definition to those who do not know the importance of monetary reserves and their impact on economies, especially those who confuse monetary policy with useless statements, and of course those who are not specialists in economics and its risks.

There is no doubt that the dollar is still the strongest currency in the world despite all attempts to find a competitive alternative to it.

 The United States of America accounts for nearly a quarter of the global gross domestic product, which makes it the largest and strongest economic power in the world.

 What adds to this strength is that it has the largest financial institutions and banks in the world, and that  most of the global trade financing between countries is denominated in dollars, especially oil wealth, and dollar transactions constitute approximately 70 percent compared to other currencies combined.

Perhaps the weapon of sanctions that America imposes on countries that oppose its policy is through restricting its monetary reserve and not allowing it to use it.

The two closest examples of this are Russia because of its war with Ukraine and before that Iran because of the failure to resolve the nuclear file between them.

Notice the size of the impact of restricting the use of its foreign exchange reserve.

What an impact?

In their economic problems, especially the collapse of the local currency of the two countries, albeit at different rates.

Here, most of the countries that were dissatisfied with the strict American policy of using the dollar as a weapon to undermine their economies turned to the BRICS group in the hope that it would be able to mitigate the effects of the dollar.

Returning to Russia and Iran, the reason for their resistance to the dollar sanctions is that they possess solid economic bases that allow them to endure for longer periods of time because they possess solid production bases.

The question is: Is the Iraqi economy able to endure if America decides to restrict its monetary reserves?

The Iraqi economy depends on imports for everything and does not have a solid production base, whether industrial or agricultural.

Other than that, our cash reserves are subject to old decisions in the hands of America.

We do not want to delve into the merits of the decisions and their effects.

Rather, we only draw the attention of some gentlemen from the legislative and executive sectors.

Do not put more pressure on the Central Bank, let it act in the language of approved monetary policy. In countries of the world, which are based on previously agreed upon international standards.

The chaos of statements makes matters worse, confuses the market, and pushes for wrong decisions,

thus paving the way for specialists to deal with the dollar problem to find the appropriate solution.

Oil Prices Fall To Their Lowest Level In More Than 3 Months

Economy | 11:43 – 08/11/2023  Baghdad – Mawazine News  Oil prices fell on Wednesday to their lowest levels in more than three months, after data showed a significant increase in US crude supplies, while conflicting Chinese economic data raised concerns about global demand for crude.

Brent crude futures fell 25 cents to $81.36 per barrel by 0001 GMT, while US crude futures fell 35 cents to $77.02 per barrel. Both fell to their lowest level since July 24 in early Asian trading.

Market sources said late yesterday, Tuesday, citing figures from the American Petroleum Institute, that US crude oil inventories rose by about 12 million barrels last week.

The US Energy Information Administration will postpone the release of weekly inventory data until the week of November 13.

The administration said yesterday that crude oil production in the United States will rise this year slightly less than previously expected, while demand will decline.

The Energy Information Administration currently expects that total oil consumption in the United States will decrease by 300,000 barrels per day this year, a decline from its previous forecast of an increase of 100,000 barrels per day.

Data from China, the world’s largest oil consumer, also raised doubts about demand expectations.

The world’s second-largest economy’s imports of crude oil increased sharply in October, but its total exports of goods and services contracted faster than expected, raising fears of a decline in global energy demand.

Adding to the pressure on oil prices is the modest recovery of the dollar from its recent lows, making oil more expensive for holders of other currencies.


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Provoking Points to Ponder on Common Sense:

Common Sense is, of all kinds, the most uncommon — It implies good judgment, sound discretion, and true and practical wisdom applied to common life — Tryon Edwards

One pound of learning requires ten pounds of common sense to apply it — Persian Proverb

Fine sense, and exalted sense, are not half as useful as common sense — there are forty men of wit to  one man of sense — He that will carry nothing about him but gold, will be every day at a loss for readier change — Pope

To act with common sense according to the moment, is the best wisdom I know ; and the best philosophy is to do one’s duties, take the world as it comes, submit respectfully to one’s lot; bless the goodness that has given us so much happiness with it, whatever it is; and despise affectation — Walpole

Common sense is the knack of seeing things as they are, and doing things as they ought to be done — C E Stowe

“Knowledge, without common sense,” says Lee, is “folly; without method, it is waste; without kindness, it is fanaticism; without religion, it is death” But with common sense, it is wisdom; with method, it is power; with charity, it is beneficence; with religion, it is virtue,and life, and peace — Farrar