Iraq Economic News and Points to Ponder Wednesday Evening 10-4-23


Iraq Economic News and Points to Ponder Wednesday Evening 10-4-23

The Iraqi Economy And The Risks Of Unsustainability Of Internal Public Debt

 Dr.. Haitham Hamid Mutlaq Al-Mansour , despite the controversy of economists on the issue of internal public debt, and with the increasing social and political pressure on the public spending policies of the Iraqi government to fill the important gaps in the service reality and the practice of economic activity, and in light of the sharp decline in the elasticity of non-oil output with insufficient oil revenues.

Despite its huge size to finance the general budget deficit, the realistic alternative internal public debt practiced by the monetary authority comes through its restriction of this type of financing, including expanding the scope of the money supply with its relevant mechanisms and tools, and based on the economic reality, the size of this debt has become large compared to the sharp decline. In the efficiency of the financial market.

Therefore, it is not surprising that the Iraqi economy is witnessing an increase in the growth of the size of the internal public debt, as it represents the quantitative balance of the financial deficits accumulated since 2004 until now, at an amount estimated at about 70 trillion dinars, according to the latest official statistics of the Central Bank, to be accompanied by raising the monetary policy interest rate from 4-7.5%. The interest rate on Central Bank of Iraq instruments was raised from 3-4% to 7.5%, in addition to raising the legal reserve ratio from 15-18%.

Despite what the Financial Sustainability Index for Internal Public Debt reveals, that its ratio to the gross domestic product in Iraq ranges between 30-35%, which is a fairly acceptable ratio economically compared to the international standard ratio of 60%, the specter of the expected risks of unsustainability remains. Internal public debt is not far off if the relevant specialized policies are not prepared and enabled through the following signs:

1. Risks related to the stability of the relative value of the debt after the growth rate of the real value of the debt is close to or greater than the growth rate of the real GDP, and from there the real value of the government’s financial assets, the debt instrument, will decrease, and with it the government’s ability to repay will decrease.

2. Deepening the rentier economy due to not following macroeconomic policies that attract strategic investments that enhance the growth of non-oil GDP, which means that the macroeconomy does not depend on the traditional general balance, which implies the existence of a real investment sector for goods and services outside the oil sector, including compensating the values of the oil rent through Generating real values is an original source of financing the deficit.

3. Weakening the ability of monetary tools to create an overall balance and compensate for the government deficit by attracting and investing funds, instead of central bank funds. Therefore, the continued rise in the volume of public debt with the ineffectiveness of the interest rate tool indicates a real danger to the efficiency of the financial market.

4. Iraq follows a system targeting a stable exchange rate and low inflation. Accordingly, monetary expansion by restricting public debt by the central bank should be accompanied by coordination between financial and monetary policies to reduce inflation.

5. One of the risks of public debt growth is that it is considered a negative indicator of the performance of economic activity because the government follows a tax policy aimed at increasing the volume of tax revenues to finance the deficit, which leads to higher interest rates, including the emergence of the crowding-out effect.

6. Not pumping loans into real investment projects in a way that makes the speed of output growth greater than the speed of public debt growth.

7. The risks of high levels of government operating spending, most of which is employee salaries, and high levels of government appointments, which burden the general budget and increase the deficit rate, including government debt.

8. The impact of weak public debt management on the independence of the monetary authority. As the size of the public debt increases and its circle expands, this affects the monetary authority’s tools and their effectiveness.

Therefore, fiscal and monetary policies must draw up a coordinated strategy for the sustainability of public debt towards containing all its burdens and negative effects on the practice of economic activity and enabling payment, through comprehensive measures to diagnose the determinants and factors of attracting investment that enhances real values and for the productivity of internal public debt to be an important factor in increasing the growth rate in the domestic product. Total.

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New Parliamentary Comment On The Oil And Gas Law Legislation

Baghdad today – Baghdad   Today, Wednesday (October 4, 2023), the Parliamentary Oil and Gas Committee commented on the latest developments in the legislation of the Oil and Gas Law, which is the most important clause of the agreement between the forces of the State Administration Coalition, to form the Sudanese government.

Committee member Ali Saadoun said, in an interview with “Baghdad Today,” that “the delay in resuming the pumping of Kurdistan’s oil through Turkey has nothing to do with the issue of delaying the legislation of the oil and gas law,” indicating that “the draft law is still with the government technical authorities, and they are working on it.” Completing the draft in agreement with the Kurdistan Regional Government.”

Saadoun stated that “legislating the oil and gas law requires a political agreement, and due to the lack of this agreement, the legislation of the law has been delayed over the past years, despite the importance of the law, but we expect that currently there is almost an agreement to pass this law, despite the reservations of some parties about it within the House of Representatives.” .

Observers say that the essence of the dispute is due to a type of dispute over sovereignty over oil rights, production, and revenues. While Baghdad wants all rights to be vested in the central government, so that the revenues end up in one account subject to the supervision of the central government, the Kurdistan region authorities want to have the right to contract with foreign companies, and for the revenues to go to their own accounts, and not be subject to the Baghdad authorities.

New Parliamentary Comment On The Oil And Gas Law Legislation 55

Representative Firas Al-Muslimaoui said in previous press statements, “There is a real will in the House of Representatives to legislate the law,” noting that “Iraq’s oil is one and indivisible, and there is a movement towards achieving justice in the distribution of wealth to the people, whether in the Kurdistan region, the center, or the south.”

While Iraq exports about 3 million barrels of oil per day, the Kurdistan Region was exporting, before the closure of the Ceyhan line in Turkey, about 450 thousand barrels per day.

In this regard, the Prime Minister’s Advisor for Economic Affairs, Mazhar Muhammad Salih, told Al-Arab newspaper, “Adopting a unified national oil policy, and achieving optimal investment and production in Iraq’s oil area, starting from the southern fields up to the northern and regional fields, is an important and strategic matter in the matter of benefiting from Opportunity costs in the optimal and harmonious operation of the Iraqi oil policy currently, not to mention achieving the best financial returns for the country that we all aspire to to finance the construction of the Iraqi economy and the basics of sustainable development.”

Mazhar Saleh: The Law Will Establish A Stable National Road Map For The Oil Sector

The draft oil and gas law available to Parliament stipulates that responsibility for managing the country’s oil fields must be entrusted to a national oil company, and supervised by a federal council specialized in this subject. While the Kurdistan authorities say that the Iraqi government “has the right to participate in the management of the fields discovered before 2005, but the fields discovered after that belong to the regional government.”

According to the official news agency, the consultation committee between the two parties includes “the Minister of Oil, the Minister of Natural Resources in the region, the Director General of SOMO, and the advanced staff in the Ministry of Oil, as well as the oil-producing governorates such as Basra, Dhi Qar, Maysan, and Kirkuk.”

Prime Minister Muhammad Shiaa Al-Sudani said at the beginning of last August that “the draft oil and gas law is one of the basic and important laws, representing a factor of strength and unity for Iraq, and it has been stuck for years, at a time when the country today is in dire need of its legislation and to benefit from this natural wealth, in “All fields and sectors, as well as the contribution of the legislation to solving many outstanding problems.”   Source: Baghdad Al-Youm + Agencies    LINK

Bringing In 11 Local Officials Caused More Than $41 Million In Damage

Economy News – Baghdad  Today, Wednesday, the Federal Integrity Commission announced the issuance of a recruitment order against (11) officials in the Tourism and Antiquities and Heritage Commissions and the Nineveh Governorate. As a result of the violations committed in the Nineveh Hotel (Aburoi) investment contract.

A statement from the Authority’s Investigation Department, received by Al-Eqtisad News, stated that “the Second Karkh Investigation Court issued a summons order against the general directors of the Administrative and Financial Department of the General Authority for Antiquities and Heritage currently, and the Iraqi Fashion House, following violations that caused damage to public funds.”

He added, “The recruitment order also included the former Director General of the Administrative and Financial Department, the Accounts Director, and the former Fund Division Official at the Tourism Authority, as well as the former Governor of Nineveh, two former members of the Nineveh Investment Committee, and 3 of its engineers.”

He pointed out that “the order was issued against the backdrop of violations committed in the investment contract for the (Nineveh Aburoy) Hotel concluded between the Tourism Authority and one of the real estate investment companies,” noting that “those violations caused damage to public funds in the amount of (383,346.41) dollars, representing The total revenue from hotel rooms, and an amount of (886,323,373.3) dinars, representing the total salaries of employees with retirement entitlements.”

He stated that “the Second Karkh Investigation Court issued its decision to bring the accused based on the provisions of Article (331) of the amended Penal Code No. (111 of 1969).

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Parliamentary Finance Committee: The dollar crisis is on its way to a final solution

Economy   12:00 – 2023-09-24   Today, Sunday, the Parliamentary Finance Committee revealed an unannounced government movement to end the dollar crisis and the rise in the exchange rate in the parallel market.

Committee member Moin Al-Kazemi said, “The dollar crisis is on its way to a final solution, because there is a real government movement towards this issue.”

Al-Kadhimi added, “The crisis of the rise in the dollar exchange rate in the parallel market will witness a final solution during the coming period, but this matter needs some time, and the monetary authority in the Iraqi state is working on that, and there will be tangible results in this file.

Points to Ponder From The Seat of the Soul By Gary Zukav:

When we align our thoughts, emotions, and actions with the highest part of ourselves, we are filled with enthusiasm, purpose and meaning. Life is rich and full  -We have no thoughts of bitterness — we have no memory of fear — We are joyously and intimately engaged with our world – This is the experience of authentic power

Your intentions create the reality that you experience — Until you become aware of this – it happens unconsciously – therefore — be mindful of what you project — this is the  first step toward authentic power

The journey to authentic power requires that you become conscious of all that you feel

When seen through authentically empowered eyes – a being with a higher rank in creation is one that has more ability to  see without obstruction, more ability to live in love and wisdom – and more ability and desire to help others evolve into the same love and  Light

When you consciously invoke growing you consciously invoke the parts of yourself that are  not whole to come into the  foreground of your life — With each recurrence of anger – jealousy – or fear — you are given the choice to challenge it – or to give into it — Each time you challenge it – it loses power and  you gain power 

As you choose to empower yourself – the  temptation that you  challenge will surface again and again — Each time that you challenge it you gain power and it loses power

With each choice that you make to align  yourself with the energy of your soul – you empower yourself – Authentic power is built up step by step – choice by choice — It cannot be meditated or prayed into being — It must be earned

By remaining in your power you do not become a static energy system – one that hoards energy to itself — You become a stable energy system – capable of conscious acts of focus and  intention — You become a magnet for those who are illuminated and those who want to  be