Iraq Economic News and Points to Ponder Tuesday 4-2-2024
Tlm724 Administrator Bondlady’s Corner
The Central Bank Warns Against Closing Iraq’s Account With The US Federal Reserve: It Will Put Our Money At Risk (Documents)
Economy breaking Central Bank of Iraq US Federal Reserve 2024-04-01 10:24
Shafaq News/ On Monday, the Central Bank of Iraq revealed the legal basis for depositing oil revenues in the US Federal Reserve. According to documents issued by the bank and viewed by Shafaq News Agency,
“The legal basis for depositing oil revenues in the Federal Reserve Bank of New York in the IRAQ2 account alternative to the DFI account is the expiration of the extension of the Executive Order issued by the US President No. 13303 issued in March 2003.”
According to which immunity was granted to the Iraqi funds deposited in the Iraqi Development Account (DFI) at the time, and the end of the United Nations protection over Iraqi funds that was granted to it under UN Security Council Resolution No. 1483 of 2003 after the issuance of UN Resolution 1956 at the end of 2010.
The documents added, “Accordingly, an IRAQ2 account was opened, which is used to deposit funds from Iraqi crude oil exports, and they are transferred to the account of the Central Bank of Iraq at the Federal Reserve Bank within 24 hours of receiving these amounts to ensure that they are not exposed to the claims of creditors, as they are funds belonging to the Iraqi government derived from the export of crude oil.”
This mechanism was organized through a (memorandum of understanding) signed between the Iraqi Ministry of Finance and the Central Bank of Iraq on 6/2/2014 for the purpose of organizing the work of the IRAQ2 alternative account for the Development Fund for Iraq, and this memorandum is the legal basis for establishing the aforementioned account.
She continued, “The immunity granted in accordance with these two documents includes sovereign funds only and does not include funds used for commercial purposes.”
The documents explained, “With regard to the answer to the third paragraph, foreign reserves may be deposited with several external parties, central banks and financial institutions, and not only in the Federal Reserve Bank, and interest rates vary according to the investment segment, the duration of the investment, and the institution with which the investment is made,
in addition to the fact that the transport company is Orient is the company contracted by this bank to transport dollar shipments from the Federal Reserve Bank to Baghdad International Airport, with an insurance amount of (414,000) US dollars (four hundred and fourteen thousand US dollars per shipment, and transportation fees of (216,310) US dollars (two hundred and sixteen thousand three hundred and ten US dollars, Department of Parliamentary Affairs, Department of Parliamentary Oversight.” She continued,
“It is not possible to transfer the revenues from the sale of oil to the interior due to the impossibility of carrying out financial operations for Iraq if the funds are at home, and
closing our account with the Federal Reserve Bank could expose Iraq to the risk of international claims,
in addition to the inability to settle our payments in US dollars without the presence of… An account at the Federal Reserve Bank or other U.S. commercial bank.
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The Central Bank Of Iraq Clarifies The Mechanism For Depositing Oil Revenues Abroad
Logo of the Central Bank of Iraq Drains Economy News – Baghdad The Central Bank of Iraq revealed the mechanism for depositing oil revenues abroad, in response to a parliamentary question on the subject.
The document stated that the legal basis for depositing oil revenues in the “IRAQ2” account with the Federal Reserve Bank in New York is the expiration of the extension of Executive Order issued by the US President No. 13303 in 2003, which granted immunity to Iraqi funds deposited in the “DFI” account.
Deputy Governor of the Central Bank, Ammar Hamad, explained that the
“IRAQ2” account is used to deposit funds for Iraqi crude oil exports, and they are transferred to the Central Bank of Iraq’s account at the Federal Reserve Bank within 24 hours of receiving them. He stressed that
this mechanism ensures that the funds are not exposed to creditor claims, as they are funds belonging to the Iraqi government derived from the export of crude oil.
He added that a memorandum of understanding was signed between the Iraqi Ministry of Finance and the Central Bank of Iraq in 2014 regulating the work of the “IRAQ2” account, and that this memorandum is the legal basis for establishing the aforementioned account.
He pointed out that the immunity granted in accordance with the memorandum of understanding includes sovereign funds only, and does not include funds used for commercial purposes.
He explained that Iraq’s foreign reserves are deposited with several external parties, including central banks and financial institutions, and are not limited to the Federal Reserve Bank.
He pointed out that the interest rates on these deposits vary according to the investment segment, the duration of the investment, and the institution with which the investment is made.
Finally, he explained that the company transporting the dollar from the Federal Reserve Bank to Baghdad International Airport is Orient, and that the insurance amount for one shipment is 414,000 US dollars, and that the transportation fees are 216,310 US dollars.
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Why Lift Partial Government Support?
Economical 04/01/2024 Yasser Al-Metwally
Why lift partial government support? Is it linked to public finance reform?
The recent government decision to raise gasoline prices sparked widespread controversy and analyzes went in various ways.
Let us discuss the matter from the economic point of view of the decision, and based on our first reading of it, it became clear that
it was consistent with the vision and requirements of the International Monetary Fund, which stipulates that in order to achieve reforms, increasing government support by adopting tax policies that help diversify sources to enhance annual budgets.
From this standpoint, on which all capitalist and socialist theories are based, the process of capital turnover aims to redistribute income fairly among segments of society.
This requires
imposing tax policies and
enhancing and
diversifying state revenues,
but these procedures are applied in countries that enjoy high stability.
Therefore, the timing of this decision may be considered inappropriate for the complex circumstances that the country is going through, especially market instability and structural distortions in the image of the Iraqi economy.
This is accompanied by a weakness in the economic culture that makes any decision regarding support face dissatisfaction.
Perhaps the reason for this weakness in the economic culture is due to the lack of transparency in the directions of tax revenues and their spending.
It is known that the capital cycle is based on the adoption of tax revenues, as I mentioned above, and
it goes in two important areas, the first of which is the
redistribution of income among citizens according to their standards of living, and the second is that one of the
government’s duties is to provide services in exchange for the amount of taxes it receives from taxpayers.
This is how economic theory works in all countries of the world.
The lack of transparency means the lack of clarity about the
size of tax revenue in the budget and the
ways of distributing it among services, as well as its
support for vulnerable segments.
This absence resulted in a weakness in the economic culture and its depth among the citizen,
which makes him not accept any decision related to increasing taxes or removing government support because
he is not aware of the directions of spending this money, which should go towards providing the best services to him.
The instability of the exchange rate along with the stability of wages and salaries leads to an impact on purchasing power.. How?
This is because the Iraqi market is accustomed to exploiting rumours.
Any decision is exploited by some merchants, thereby raising prices, and
the effect of this is to create dissatisfaction,
which is sometimes exploited by some at a time when the government has begun to find preliminary solutions, gain the satisfaction of the citizen, and talk about truly tangible achievements.
Therefore, we see the necessity of postponing the implementation of this decision until another time when
market stability and prices are achieved and the
standard of living improves and until the
citizen witnesses the results of the government’s efforts in implementing broad government service projects on the ground, which is nothing more than a point of view.
Then we, the economic media community, can convince the citizen that these projects require that he contribute to their perpetuation through his compliance with correct and sound economic decisions.
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Provoking Points To Ponder On Failures and Mistakes
War is a series of catastrophes that results in victory.- Georges Clemenceau
Victory goes to the player who makes the next-to-last mistake.- Anonymous
A man finds he has been wrong at every stage of his career, only to deduce the astonishing conclusion that he is at last entirely right.- Robert Louis Stevenson
One loss is good for the soul. Too many losses are not good for the coach.- Knute Rockne
In all science, error precedes the truth, and it is better it should go first than last.- Hugh Walpole
In the game of life it’s a good idea to have a few early losses, which relieves you of the pressure of trying to maintain an undefeated season.- Bill Vaughan
http://famousquotesandauthors.com/topics/failures_and_mistakes_quotes.html
