Emergency Cell for Financial Reforms
The Iraqi government’s 95-page White Paper was formally approved by Iraqi Prime Minister Mustafa Al-Kadhimi’s cabinet on October 13, 2020. With more than 200 actionable reform measures, the document offers an ambitious three-year plan for how Iraq’s financial predicament can be reversed.
Deputy Prime Minister & Minister of Finance Dr. Ali Allawi discusses with representatives of ministries & relevant authorities the stages of implementing the White Paper for economic & financial reform, to ensure that the reform program proceeds according to the approved plans.
The Iraqi government adopted the White Paper for Economic Reform prepared by the Crisis Cell for Financial and Fiscal Reform in October 2020. For more information about the White Paper you might want to watch the video link below.
Evaluating Iraq’s new White Paper on economic reform – Atlantic Council
The White Paper is a comprehensive programme that sets out a clear roadmap to reform the Iraqi economy and address the accumulated, decades-old serious challenges that confront it.
The White Paper identified two overarching strategic objectives. The first is to initiate an immediate reform programme to address the budget deficit to create a fiscal space to give time for the process of implementing the other wider reforms over the medium term.
The second objective is to put the economy and the federal budget on a sustainable path, after which Iraqis can decide and choose the economic direction of the country.
The Iraqi government is preparing to begin the implementation phase of its reform program known as the White Paper for Economic Reform.
This phase will focus on the implementation mechanisms and on the fulfilment of the objectives and the vision outlined by the White Paper.
The implementation phase consists of:
- Putting in place governance, oversight, monitoring and evaluation mechanisms to ensure that the reform process is administrated and managed effectively under the direction and guidance of strong and competent leadership which will have a direct link to the Prime Minister, with the aim of equipping the implementation team with the necessary authority to carry out the reform programme, providing vigorous oversight of the implementation process, and ensuring coordination between different governmental institutions
- Translating the vision of the White Paper for Economic Reform into a practical program for delivering 64 projects and for ensuring their implementation in an integrated and coherent manner by specifying detailed procedures for each project, setting a specific timeline for progress and identifying the state entity which will be responsible for carrying out each project.
The White Paper for Economic reform enjoys the support of the international community as reflected by the establishment of the Iraq Economic Contact Group (IECG) whose mission is to provide the support needed for the economic reform process in Iraq within the framework of the White Paper. The IECG includes, in addition to Iraq, the G7 group of industrialised countries, the World Bank, the International Monetary Fund, and the European Union.
So, what do we know about the “White Paper” and how can this be used to try to detect a timeframe for the revaluation (reinstatement) of the Iraqi dinar? That is the million dollar question (literally) and the answer lies in understanding the timeframes for the implementation of each category of the White Paper.
When trying to tackle these kind of problems I always like to write down exactly what I know first, then back into where each item may take us. So what do I (we) know?
1.We know that the project to delete the zeroes is NOT in the White Paper perse but it is a critical part of the financial reforms.
You can access the complete version of the White Paper pdf in the link below.
2. We know that by implementing the project to delete the zeros it will lead to the reinstatement of the Iraqi dinar on FOREX. We then know that this leads us to the bank to exchange our Dinar. We can not exchange until the rate is reinstated and OFAC sanctions are lifted off the dinar. OFAC sanctions are put on the Iraqi currency by the US Treasury so to say they are now just waiting to “go ahead” (for almost 7 years now) is a lie, as they must first lift the sanctions. Can they do this simultaneously. Yes and it could happen quickly.
3.We know they just told us in this week’s news August 10th 2021 articles update that they fully intend to implement EVERY item within the White Paper and do it in 5 years. That does not mean it will take 5 years for every item just that they will need 5 years to complete all items.
4.We know that they just told us in this week’s news August 10th 2021 that they are phasing out the implementation and are now chunking our the items in priority. The White Paper anticipates that the short and medium-term objectives and associated reforms will require between 3 to 5 years to implement.
5.We know that over the last decade the CBI has told us multiple times that they were going ahead with the project to delete the zeroes only to “postpone” (not cancel) the project later and set a future date for it. Again the future date gets postponed again. So we know this project is important and is a higher priority item on the White Paper.
So, this draws us to a few conclusions:
1.We must first know the categories and timeframe they are chunking out the implementation of the White Paper, thus getting our hands on the most recent copy of the White Paper.
2.Then follow the news in Iraq to get a handle on how they are implementing it. Of course, having an updated implementation schedule would be our best case.
Lets review the following two recent articles:
THE IRAQI FINANCE MINISTER SUPPORTS THE FLOATING OF THE CURRENCY
Finance Minister Ali Abdul Amir Allawi confirmed on Thursday that he supports floating the currency in a flexible manner.
Allawi said in response to a question by Shafaq News Agency, “The Iraqi currency is floating, but the central bank intervenes from time to time until it places it within a certain bar, for example, plus minus 5 percent.”
He added, “Personally, for me, the best kind of flotation is flexibility in pricing so that the price is not sacred as it was before when it entered people’s minds without change, and thus economic problems accumulate and explode.”
The Minister of Finance continued by saying, “There must be some kind of flexibility; it is not the flexibility with which you lose control over it, but the flexibility that stabilizes the price and setting a range of 2 to 3 percent for both parties.”
Allawi pointed out that “the central bank’s policy is to maintain this price and put the gap between the official price and the market at an acceptable level,” noting that “it has also proven that the stability of the exchange rate is important except in the case of economic indicators that push you towards change.” Floating the currency is fully or partially liberalizing the currency exchange rate so that the government or the central bank does not interfere in determining it directly, but rather it is automatically released in the currency market through the supply and demand mechanism that allows determining the exchange rate of the national currency against foreign currencies.
********************************************************************************************************
PROPOSAL TO DIGITALLY REINTRODUCE SMALL DENOMINATIONS
The expert in economic affairs, Dr. Hussein Al-Khaqani, suggested to the Central Bank to digitally reintroduce small denominations, which would provide sums for the public, after amending the digital banking system.
Al-Khaqani said that {small cash denominations, which are less than 250 Dinars, if they are collected and accumulated annually, the citizen will get good savings from them, instead of wasting them on buying goods that are not worth their real value.
The 250 Dinars. He pointed out that the records of government departments used to contain parts of the 250 Dinars currency, but they were settled and made into the currently circulating cash denominations, as imposed by reality, transactions and the public’s acceptance of them.
