Iraq Economic News and Points to Ponder Late Monday Evening 12-4-23
Tlm724 Administrator Bondlady’s Corner
Obstacles To Adopting The “Dinar-Toman” In Trade Exchange.. What Does Tehran Do With The Accumulated Dinars?
Politics/Economy |Yesterday, 17:09 |Baghdad today – Baghdad Many questions have been raised since the Central Bank and the Iraqi government announced that they had concluded agreements with a number of banks and other countries to deal in local currencies in commercial exchange, but the most prominent question raised is what will be done or how will other countries, especially those that export large sums of money to Iraq annually, benefit from the Iraqi currency, the dinar, Which is supposed to be paid by Iraq or merchants for the purpose of importing goods instead of the dollar.
The Central Bank of Iraq concluded agreements with banks in Turkey, the Emirates, and China for the purpose of dealing in the local currency instead of the dollar, as well as dealing with Iran in the binary (dinar-toman) for trade exchange,
but this problem will emerge clearly with countries with which trade exchange between Iraq is “non-existent or non-existent.” From one direction,” meaning that Iraq imports more from it than it exports to it, especially Iran and Turkey.
Economic expert Abdul Rahman Al-Mashhadani reviewed today, Sunday (December 3, 2023), the obstacles to adopting the national currencies of Iraq and Iran in trade exchange.
Al-Mashhadani said in an interview with “Baghdad Today”,
“Iran exports to Iraq more than 10 billion dollars annually, while
Iraq exports to it only approximately 570 million dollars, meaning that
the latter’s percentage in the exchange process reaches 5%, meaning that
trade between Baghdad and Tehran is unequal.” In terms of import volume. He added,
“The lack of parity will lead to the accumulation of the dinar among the Iranians, which is not a leading currency and faces many restrictions in the process of exchanging it, even in some neighboring countries, which means that the
Iranians will be forced to buy the dollar from the parallel market in Iraq through the financial liquidity they have because they need He is desperate to cover their needs for paying money in foreign transactions.” He added,
“Even the Iranians are not in favor of the idea of proposing dealing according to the (dinar-toman) principle.
They are looking for any leading currency or one that has a large scope of dealing, as is happening now in the Emirates by adopting the dirham due to the parity of the trade process between Abu Dhabi and Tehran.” He pointed out that
“the problem between Baghdad and Tehran can be solved by agreeing to adopt an acceptable third currency that bypasses all complications,
in addition to the possibility of increasing the export of black oil in exchange for gas, which was approved months ago because Tehran urgently needs it to operate many of its factories, and
through an agreement, the private sector can be covered and accounts opened.”
It addresses the principle of creating balance in trade exchange.
The problem of banks
Economic 12/05/2023 Yasser Al-Metwally
There has been a lot of talk about banking reform and the importance of the banking system returning to the banking services for which it was established.
In an unprecedented manner, the government is urging steps to achieve this goal after realizing the importance of the banking sector in achieving comprehensive development programs,
so that international investment companies wishing to enter the Iraqi market cannot do without solid banks that provide advanced services to facilitate the work of companies and as the strong arm of the Iraqi private sector in dealing and partnership. With external and internal investments.
From this standpoint, the government seeks to activate this role and achieve the desired reform, but what are the challenges facing achieving this goal?
The most prominent challenges facing the banking sector are (loss of confidence) depositors’ confidence in banks and, in return, banks’ confidence in their customers.
Of course, this phenomenon has many causes that are inherited from the time of the era preceding the period of change and extended more widely during the transitional period and up to the present day.
It is known and declared axiom that the legally issued monetary mass exceeds 100 trillion dinars.
It is also known that 70 percent of this mass is outside financial circulation, outside the financial market, and hoarded by the public.
Efforts are being made to attract this mass, or at least part of it, to deposit it in banks with the aim of investing it and recycling it in construction and development,
but there is a reluctance among the public to deal with banks.
The reason, as I mentioned, is lack of trust.
Here, with the aim of achieving reform of the banking system and making it effective in performing its duties and providing banking services, the steps that must be followed from our point of view are:
First: To correct and activate banks in performing their duties by providing real banking activities and services, urgent government measures must be taken to restore the confidence of the public and the depositors.
Secondly – The larger goal of engaging banks in implementing sustainable development programs requires attracting the public’s accumulated cash mass so that it can be invested in implementing development programs.
To achieve these two goals, the government must:
1 – The agreement between the government and Parliament to sign a code of honor not to expose and attack banks in the media in a way that harms the banks’ reputation and leads to the public’s reluctance to deposit their money in them, because conflicting statements contribute to deepening the loss of confidence in banks.
2 – The government and the Central Bank must amend the banking law to provide protection and guarantees for banks when financial crises occur, which is what is done in countries of the developed world, and this is what encourages the public to go to banks and deal with them.
3 – Obliging banks to carry out their true banking activities and services with full transparency and clarity by devising various and well-known means of encouragement.
4 – The Central Bank and the government must push towards stimulating free competition between banks to attract depositors.
It is noted that whenever the curtain falls on the phenomenon of lack of confidence in banks and things are going well, this confidence collapses quickly with any fluctuation in the exchange rate that occurs for reasons that can be addressed by monetary policy,
but the media attack by Iraqi officials and parliamentarians at various levels with all the accusations confuses the market and the effect of this is stronger.
Many rumors hinder the procedures, so we call for a code of honor not to discuss matters and leave them to those responsible for monetary policy and handle them without chaos and side effects.
This is one aspect of achieving banking reform
Which is targeted by the government and gains priority to advance an advanced reform program.
Al-Sudani: The government has placed economic reform among its five priorities
Saturday, December 2, 2023 10:18 AM Baghdad / National News Center
Prime Minister Muhammad Shiaa Al-Sudani confirmed today, Saturday, that the government has placed among its five priorities reforming the country’s economy.
In his speech during the Industrial Partnerships Forum in Basra Governorate and followed by the National News Center, Al-Sudani welcomed: “the investment companies in the Industrial Partnerships Forum,” indicating that
“the government has placed reform of the economy among its five priorities.” He added,
“The economy cannot be reformed except by supporting industry, agriculture, tourism, and trade,” pointing out that “
the natural resources we have enable us to establish an advanced Iraqi industry that meets our local needs and from which we can export.”
“we cannot remain spectators while Iraq remains a consumer market.” The Prime Minister explained that
“the state cannot employ all the huge numbers of graduates,” stressing that
“it is time for the Iraqi economy to be linked to the global economic cycle.”
Provoking Points To Ponder:
Disappointment — too many people miss the silver lining because they are expecting gold
–– Maurice Seltter
Fortunes made in no time are like shirts made in no time; its ten to one if they hang long together — Douglas Jerrold
Disappointment to a noble soul is what cold water is to burning metal; it strengthens, tempers, intensifies, but never destroys it — Eliza Tabor
Man must be disappointed with the lesser things of life before he can comprehend the full value of the greater — Edward G Bulwer-Lytton
