Iraq Economic News Highlights and Points to Ponder Wednesday AM 11-1-23

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Iraq Economic News Highlights and Points to Ponder Wednesday AM 11-1-23

Parliamentary Warnings About The Consequences Of The Decline In The Value Of The Iraqi Dinar

Information/Baghdad..  On Wednesday, the representative of the Kurdistan Democratic Party, Sharif Suleiman, warned of the consequences of the continuing rapid decline in the value of the Iraqi dinar against the dollar, while calling on the government to adopt a new reform package to stabilize the value of the Iraqi dinar.

Suleiman said in an interview with the Maalouma Agency, “The value of the Iraqi dinar witnessed a noticeable decline against the US dollar during the past days.”

He added, “It is the responsibility of the government and the central bank to take quick measures to preserve the value of the Iraqi dinar as it affects people’s pensions and the Iraqi market.”

He pointed out that “the procedures followed by the government and the Central Bank are below the required level,” calling on the Central Bank to “take new steps to address the crisis of the decline in the value of the Iraqi dinar.”

Independent MP Raed al-Maliki confirmed the failure of the government and the central bank to control the dollar against the Iraqi dinar. Ended / 25 h  LINK

Parliamentary Wealth Rules Out Legislation Of The Oil And Gas Law In The Current Session

The first  11/01/2023  ula Wathiq  The Oil, Gas and Natural Resources Committee in the House of Representatives ruled out approving the oil and gas law during the current parliamentary session, while the Ministry of Oil clarified that the government is proceeding with its approval and that it is subject to consensus.

In an interview with Al-Sabah, committee member Aso Fereydoun described the law as “a political-legal-technical file that needs major work,” explaining that it was one of the provisions of the political agreement between the forces that participated in forming the current government.

He pointed out that there are different drafts of this law, but the Kurdistan Region was not satisfied with the draft presented by the Ministry of Oil, indicating that the region is completely unable to export oil according to the decision of the Federal Court, which requires it to deliver 400 thousand barrels per day to Baghdad, in addition to the ruling of the Paris Court, which He acknowledged the need for the central government to personally control oil exports from a region Kurdistan.  https://alsabaah.iq/86532-.html

Hoarded Money And Stimulating Depositors

Economical  11/01/2023  Metwally    Official estimates indicate that 85 percent of the issued monetary mass, amounting to more than 100 trillion dinars, is outside the banking system and is called money hoarded outside banks.

This means that this huge amount of monetary mass is disabled from performing its role in development, and since the banks are the driving tool for the wheel of development through their credit (lending) policies, they are unable to perform this role for this reason. Therefore, you find our economy unable to advance due to the decline in the development performance of the banks. .

Meanwhile, monetary policy is moving towards motivating the depositor public to deal with banks. The Central Bank’s latest circular last week urged banks to facilitate procedures and create incentives at attractive interest rates for the purpose of attracting depositors.

What Is The Challenge Facing This Trend?

The trust factor is the most difficult number and the basic indicator for the success of the process of attracting the public’s hoarded funds to deposit them in banks.

Banks in all countries of the developed world are the primary engine of the economy through their role in implementing development through their lending policies that contribute to generating interest that accrues to depositors and bank owners with lucrative profits by investing money and making profits. They also contribute to the implementation of projects and thus contribute to the circulation of funds.

But the problem with Iraqi banks, in all frankness and transparency, is that they suffer from a loss of public confidence, which is a deep-rooted, inherited problem due to the actions of some banks due to the weakness of their management and the alienation of depositors from them.

How Do We Restore Confidence In Light Of The New Trend?

The public is looking for a guarantee (an insurance policy) in order to be encouraged to deposit their hoards, and this requires facilitating deposits and withdrawals in an easy way without tedious routine complications. However, the poor banking behavior of some employees and the complexities of police-style instructions contribute to the public’s reluctance.

(Insurance policy) means the body that officially guarantees the public’s deposits in the event of the collapse of a particular bank, and here comes the role of the Deposit Insurance Company, which was recently established for this purpose.

Here I have an assessment of the Deposit Insurance Company, with all transparency and clarity, that its performance is weak, inactive, and unknown, and it requires the formation of a regular and influential media unit to market its activity on an ongoing basis, and for the company to take the initiative to give guarantees to depositors by guaranteeing their money with a signed official paper distributed among all depositors in any bank, in light of which it bears responsibility. Legal information about deposit insurance, otherwise why was it established?

Thus, it can provide partial security that encourages the public to deposit in banks and gradually restore confidence.

The fluctuation of the dollar exchange rate cannot be overlooked in creating chaos and mistrust.

But we are talking about the national currency, which is still strong, and there is no problem in depositing and withdrawing it with the company’s guarantee. https://alsabaah.iq/86507-.html

Parliamentary Finance: The Measures Taken By The Central Bank To Change The Exchange Rate Are Weak

Posted On 2023-11-01 By Sotaliraq  Bright news  Yesterday, Tuesday, member of the Finance Committee, Saad Al-Toubi, revealed evidence of clear corruption violations by some banks, stressing that the measures taken by the Central Bank to change the exchange rate are “weak” and have been of no benefit.

While the government is talking about measures it intends to implement to contain the dollar crisis, which may include penalties for individuals and private banks whose involvement in the manipulation process has been indicated, while demands are emerging for the necessity of following up on the implementation of these measures to ensure positive results are achieved.

Observers believe that the process of controlling the causes of the crisis is necessary to put an end to rampant corruption, and economists consider that these measures need careful follow-up of their implementation by the competent government agencies, as well as supporting them with a number of other steps to create a state of economic stability.

Useless Plans

Financial Committee member Saad Al-Toubi explains in an exclusive interview with Al-Mada: “As a financial committee, we made demands several times from the Central Bank, the Governor of the Central Bank, and government banks, and we discussed many matters, including changes to the exchange rate, and how to maintain it at the established price, and we believe that the procedures The measures taken by the Central Bank, whether new or previous, have not been of any benefit, such as imposing sanctions on some banks and other measures it has taken because they are very weak measures and do not rise to the level of ambition in a country that is experiencing an unnoticeable change in exchange rates.

 He notes, “This results in a weakening of the Central Bank’s oversight of most government banks and government platforms.”

Corruption Rates

Al-Tobi adds, “There is an example of weak monitoring, which is when an Iraqi citizen travels outside the country and goes to the platform to obtain the exchange rate of “one hundred and thirty-two thousand” for one hundred dollars, and this process is unregulated, and as a financial committee we have evidence of violations that contain clear corruption from some banks, as The Central Bank tried to break the rate of corruption, but it was unable in the past periods, so we gave the Central Bank a week to carry out some reforms, but it is incapable of any banking measures and reforms and has not adjusted the exchange rate.”

He concludes by saying: “There are promises made by the Central Bank due to government pressure by the Prime Minister on the Central Bank for certain periods in order to provide a settlement or reforms. Therefore, we hope in the coming days for an end to this crisis.”

Questions

Financial and economic expert Safwan Qusay Abdel Halim explains, “The process of improving the value of the Iraqi dinar requires a long-term strategy, supporting local production and creating a model environment to know who is requesting hard currency, and what are the purposes of this request, as well as knowing the import destinations through which it is made.”

Importing goods into Iraq, and what are the opportunities for local growth to reduce the demand for the dollar for import purposes?

A Common Account

The expert added, speaking to Al Mada, that “we need a clear map of the relationship between the demand for hard currency and the possibility of increasing local production capacity to cover these demands,” noting, “There are medium and short-term solutions, and the more we allow the international trading system to deal with… Directly with local production and consumers through the Amazon website or through the Alibaba website, which can open a window for marketing international goods for sale in Iraqi dinars inside Iraq in exchange for the Ministry of Commerce and the Ministry of Finance purchasing the Iraqi dinar from these sites and converting them to the US dollar at the official rate.

The fewer opportunities we have to deal with informal suppliers, and if we cannot control the dollar in the informal market, there are other solutions related to the possibility of having a joint account to purchase goods from the punished side, whether it is Iran, Syria, or some Turkish companies, in exchange for settling these dues on behalf of the government.

Through this joint account, similar to the process of purchasing Iranian gas or other commodities that the American government allowed to be purchased in exchange for paying dues to Oman or Qatar, so that the Iranian side can benefit from this joint account in purchasing all types of humanitarian goods, and thus reduce the demand for the dollar in the informal market. We allow demand to grow through the legitimate platform.”

Inability

Abdel Halim continues by saying: “The Central Bank’s procedures will not be able to control the dollar in the informal market unless the border crossings are controlled, and the movement of official and unofficial imported goods is tracked to ensure that they reach consumers at official prices without speculation or selling them outside the Iraqi market, and the introduction of cash dollars from outside the Iraqi market.”

Iraq into its country for the purpose of benefiting from the price difference, as there is an urgent need to work on twinning monetary policy with fiscal policy for the purpose of controlling commodity prices and financial transfers.”

The dollar and its price fluctuations constitute a major problem for citizens because the matter is linked to the movement of the commercial market and the prices of goods. It is a crisis that may worsen unless solutions are put in place to ensure people’s livelihood.   LINK

Provoking Points to Ponder on Endurance:

Our strength often increases in proportion to the obstacles imposed upon it — It is thus we enter upon the most perilous plans after having had the shame of failing in more simple ones — Rapin

There is no royal road to anything — One thing at a time – and all things in succession — That which grows slowly endures — J G Holland