Tishwash: MP Hassan Al-Asadi brings good news to a group of those covered by Article 140
Member of Parliament Hassan Al-Asadi announced, today, Thursday (November 21, 2024), good news for a group of those covered by Article 140.
Al-Asadi said in a statement received by “Baghdad Today”, “After continuous follow-up with the Committee for the Implementation of Article 140 of the Constitution of the Republic of Iraq, approval was obtained to promote the transactions of the article for those who have a receipt for the years (2018, 2019, 2020) on Sunday, corresponding to 11/24/2024, at the committee’s office in the city of Nasiriyah.” link
Tishwash: Because it contains a political aspect.. Parliamentary Wealth: The Oil and Gas Law faces difficulties
Member of the Parliamentary Oil, Gas and Resources Committee, Ali Abdul Sattar, confirmed today, Thursday, that the Oil and Gas Law has been facing difficulties since 2008.
Abdul Sattar told Al-Maalouma Agency, “The oil and gas law faces difficulties within the House of Representatives because it contains a political aspect between the region and the center.”
He added that “the law regulates financial matters and oil management for all governorates, especially the governorates producing oil and gas,” noting that “the reason for the law’s suspension is that it contains points of contention with the region.”
He explained that “the law is still in the government’s registry and has not been sent to the House of Representatives, despite the ongoing dialogues and discussions between the Baghdad government and the regional government.”
He added, “The dispute is still ongoing between Baghdad and Erbil over the oil file, and we are waiting for it to be resolved and for the law to be sent to the House of Representatives for discussion and approval.” link
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Tishwash: Economist: Government should exploit rising oil prices and implement sound financial management
An economic expert called on the government to exploit the circumstances of rising oil prices and implement sound financial management.
Rashid Al-Saadi told Al-Furat News Agency: “The rise in global oil prices is due to the impact of political circumstances. With the intensification of the Russian-Ukrainian war and the challenges facing the region, in addition to the decision of the International Criminal Court regarding Netanyahu and his Minister of War, and Israel’s threats to Iraq and the pressure in the region, oil importing companies are being prompted to take precautions and be careful, and the political and security factor is the decisive and influential factor in the rise in oil prices.”
He explained that “Iraq’s benefit from this rise is that every dollar in which oil rises serves Iraq by no less than a billion dollars annually and strengthens its budget according to the size of its production.”
Al-Saadi stressed, “The government must exploit the circumstances and the rise, because as soon as there is stability in the near or distant future, oil prices may drop significantly. This is a call for the government to manage the state’s finances in a rational manner.” link
Tishwash: Dollar-Dinar Exchange Rate Gap: Causes and Treatments
Iraq relies in its monetary policy to monitor the change in the value of its dinar against the dollar on a fixed exchange rate peg system, as the overall policy aims
to reduce the gap between the official and actual exchange rates and stabilize it close to the target exchange rate, curbing inflation, stimulating markets, commercial, financial and investment transactions, and stimulating growth.
Therefore, reducing the exchange gap at the target exchange rate level is one of the prominent issues facing the economic policy maker in Iraq in order to limit the major repercussions that go beyond the economic scope and crystallize significantly in the social stability of the country.
This gap becomes more evident through the variation in the dollar exchange rates and the fluctuation of the real value of the dinar, either positively generating revenue or negatively generating additional costs that cause repercussions on purchasing power without taking into account individuals and economic units, negatively affecting local and foreign savings and investment. The more the gap varies, the greater the economic cost of investment and the higher the levels of inflation, which increases the suffering of the limited-income family sector.
It has become known that the size of the Iraqi economy’s GDP depends very heavily on the oil dollar, which is the main source of the Ministry of Finance’s resources, instead of the non-oil dollar, which is called the non-oil export dollar, which has very low flexibility, resulting in a sharp decline in credit deposits in the accounts of traders exporting goods in Iraqi banks in exporting countries.
This dependence exposes the exchange gap to fluctuations in the global oil market. When global oil prices rise, we witness a decrease in the exchange gap due to the increase in the supply of the dollar, while in contrast, during periods of economic recession or when oil prices fall, the gap increases significantly when the government is unable to provide an adequate supply of dollars in the official window for buying and selling dollars. In such cases, traders are forced to search for alternatives through the parallel market, which exacerbates price pressures on the weakest groups.
Referring to the reasons that widened the exchange gap, they are multiple. In addition to what was mentioned above, the reasons can be traced according to the axis of indirect reasons that are linked to the country’s trade policy and the problems of border crossings related to dollar smuggling, including those related to activating the role of crossings as an authentic source of revenue. There are also indirect reasons that have a political and security nature and medium- and long-term repercussions on the movement of money and investment.
While economic and monetary reasons stand out at the forefront of direct or technical reasons, some of them are related to the nature of the banking system and the extent of its credit capacity and the level of banking compliance with the monetary and credit conditions of the Federal Reserve, which affects the levels of supply of the petrodollar.
Therefore, we find that many international banks refuse to work as correspondent banks due to the low credit rating of our banking system as a result of smuggling operations, money laundering and sanctions that affect a third of Iraqi banks. Therefore, we find that they do not stand up in this regard, except for banks that have external partnerships with Arab banking capital. They derive international acceptance from the quality of the credit rating of those countries, which facilitates the process of opening accounts with correspondent banks. Therefore, there is fear that pressures on the dollar exchange rate will increase, widening the gap.
It is also noted that among the technical reasons that led to the widening of the gap are the successive changes in the official exchange rate threshold taken by successive government administrations.
The gap witnessed a transition at the end of 2020 from the stable situation in which the gap between the official exchange rate of 0.118 dinars per dollar and the actual exchange rate of 1,200 dinars narrowed, to raise the threshold in 2021 to 1,450 due to the decision of the Central Bank at the time. Then the threshold rose this time after the Council of Ministers approved in February 2023 the decision of the Board of Directors of the Central Bank of Iraq to amend the official exchange rate of the dollar against the dinar, to the threshold of 1,300 dinars per dollar.
By following the parallel dollar exchange rate in November of this year 2024, we find that it has reached the limits of 1500 dinars per dollar and exceeded it, and that the Central Bank’s selling price for cash dollars, transfers, documentary credits, and international settlements for electronic cards is at the threshold of 1300 dinars per dollar. Therefore, it is concluded that the gap in the dollar exchange rate against the dinar is still widening despite the pressures of the Federal Reserve and the Central Bank’s efforts towards compliance.
Therefore, dealing with the gap between official and actual spending should require comprehensive, integrated policies that target technical and non-technical treatments within medium- and long-term planning, the most important of which are:
Reforming the structure of the banking system, developing its efficiency, and raising the levels of its credit capacity and the flexibility of its banking compliance.
Developing tools for targeting inflation and exchange rates, which would help reduce the exchange gap and achieve price stability.
Implementing solid reforms in the financial and monetary sectors to enhance the flexibility of banking performance in accordance with the SWIFT global financial settlement system.
Coordination between fiscal and monetary policies to achieve the target exchange rate by rationalizing government spending and tightening control over the money supply.
Economic policy should enhance transparency in all financial and banking operations, by implementing clear and strict control systems to contain opportunities for corruption and exploitation of the exchange gap.
Deepening the mechanisms of border control and combating administrative corruption to increase total revenue.
Government authorities must maintain and enhance security and political stability to contribute to building confidence between local and foreign investors on the one hand and the investment environment on the other, which will stimulate further stability and growth.
Formulating an economic policy that targets technical solutions to expand the non-oil production base, and serious planning on how to diversify sources of income for the overall economy. The path of developing the agricultural and industrial sectors will be the decisive factor in reducing imports and stimulating the growth of fixed capital accumulation for the private sector. Hence, the demand for the dollar for consumer import purposes will decrease. link
