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More Iraqi News Tuesday PM 11-3-20

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The Banking Sector In The White Paper

Articles  Samir Nasiri *  While we appreciate the effort made by the government and the Financial Reform Cell in preparing and issuing the white paper, which is the road map for economic reform desired for the coming years, and the white paper on pages 56 and 57 identified the main objectives of reforming the banking sector in the medium and long term between (35) years, which are in The truth is a general diagnosis of the problems and challenges of the banking sector, which have already been diagnosed by the Central Bank and the World Bank, and urgent and strategic solutions and mechanisms have been developed for them, as is evident in the Central Bank’s strategy (2016-2020) and strategic banking projects for the years (2019-2023). The paper is on the general goals of banking reform and as follows: –

First – Allowing the private banks to take their role as a lever for the economy and ending the role of government banks as an arm of bank financing.

Second – Tackling bank default, the forced merging of troubled banks, and restoring confidence with the public.

Third – Providing an appropriate environment to encourage banks to lend to stimulate the economy. Practicing the real business and not relying entirely on the currency window, guarantee fees and other bank fees.

Fourth – Completing the application of international accounting standards (IFRS) and developing the banking business using modern banking technologies.

However, what clearly indicates on the paper is that it did not specify solutions, mechanisms and urgent procedures to contribute to addressing the challenges and repercussions that the governmental and private banking sector suffers from. It is also noticed that the private banking sector was not involved in discussions of preparing the paper, so the reform goals were general and were not based on detailed observations about what the banks are suffering from. There are current problems and work obstacles that stand in the way of achieving the goals of reform.

Therefore, we believe that the white paper needs to clarify the urgent solutions, and at least the year 2021 should be devoted to achieving them for the purpose of building a real basis for reforming the banking sector. The procedures and urgent solutions for banking reform as I see it can be identified as follows:

First ‐ Take Immediate decisions to restore balance between government and private banks in terms of capital, activity and tasks, and focus on starting to restructure the Rafidain and Rasheed banks according to what has been agreed with the World Bank several years ago.

As it is noted from my analytical readings of the official data and statistics issued by the Central Bank until 2019. The structure of the Iraqi banking sector consists of 7 government banks that account for 86% of the total deposits of the government and the public and 78% of the total assets, and private banks constitute 72 commercial and Islamic banks and invest 78% Of the capital of the Iraqi banking sector and did not get only 13% of the total annual profits achieved at the total level, and this is very problematic.

Secondly, through an analytical view of the reality of the Iraqi economy and the challenges facing the financial and monetary policies, in particular stimulating and revitalizing the economy through bank financing and banking facilities, inequality and balance between government and private banks in government support and activity stand as an obstacle to that, and this confirms that private banks Urgent and immediate need for government support by studying its problems in the current situation in the Emergency Cell for Financial Reform, in the presence of representatives of the private banking sector.

Third: Take immediate measures by redistributing the banking density of private banks in line with the actual need of the Iraqi economy and towards stopping the granting of new licenses to establish new banks and starting to rehabilitate troubled banks, whose number exceeded 20 banks, and to study the economic feasibility of continuing to operate or integrate them in accordance with the consolidation guide issued by the Central Bank In the year 2019, however, that requires special efforts and requirements in the work environment in Iraq.

Third ‐ The nature of bank activities depends on the nature of the activities of other economic sectors, and as long as the economic activity is concentrated in trade (imports), the banking activity remains focused on external conversion, and this means that the problem of the currency window is not in the supply of dollars from the central bank, but the reason is the demand for the dollar. Therefore, unless other sectors (industry, agriculture, tourism, etc.) move, we will not expect banking activity to diversify.

It is worth noting that without controlling imports, these sectors will not rise, because without support for the local product, the demand for the dollar cannot be reduced.

Fourthly, the legal environment must be provided and the authority of the law extended in order to eliminate the phenomenon of default in repayment of loans, as bad debts amounted to up to (5 trillion dinars), 70% of which are government bank debts and 30% of private bank debts, which constitute a large proportion of the total Granted cash credit, and thus banks ’reluctance to provide loans and banking facilities.

Fifth Immediately start implementing the decisions of the Council of Ministers and the Economic Affairs Committee in the Council of Ministers, which were previously issued to support the banking sector, in particular private banks, opening accounts for ministries and government departments, accepting certified instruments, and opening documentary credits to the government in the amount of 50 million dollars without going through the Ministry of Finance and the Iraqi Trade Bank And other decisions related to borrowing for investment projects, the collection of taxes and customs fees, and the settlement of salaries.

Because on the contrary, it will hamper the business and activities of private banks and greatly affect their liquidity, revenues and deposits, and delay the transfer of banks from the role of banking to the developmental role, as confirmed in the white paper.

Sixth: Activating the Financial Services Court formed according to the Central Bank Law 56 of 2004, and the court may refer cases that need to be referred to the competent courts in accordance with the applicable penal code.

Seventh, considering bad debt claims owed by customers in private banks as urgent and excellent debt cases, similar to government debts.

Eighth: In addition to the efforts made by the Central Bank, the government must also work to create conditions and take measures to help private banks obtain an internationally approved credit rating, and thus strengthen international banking relations with correspondent banks.

* Banking expert  Number of observations 97 Date added 11/3/2020

Al-Morshedy: There Are No Real Figures For The Money Available And The Real Storage With The Government

08:51 – 11/03/2020   Information / private   The deputy from the coalition of Iraqis Asaad Al-Morshedy indicated that there is a lack of clarity and a loss of the truth about the correct figures about the amount of money available to the government and the real storage in the Central Bank, pointing out that what the government requires of money in the borrowing law is very exaggerated.

Al-Morshidi said to “the information”, that “borrowing will create major economic problems in Iraq , especially that the money the government requested is exaggerated.”

He added that “borrowing must be according to the limits of the numbers required to pay salaries and necessities, as there is a problem with the credibility of the statements produced by the government.”

And that “the government and its institutions, especially the Central Bank, do not give the real numbers about the available funds and their financial storage, which causes parliament to distrust what the government demands and question its credibility.”

Anti-Corruption Committee Arrests Al-Kazemi Advisor

Author: Ahad5 On 11/3/2020 – 11:39 p.m. 138

Today, Tuesday, the Anti-Corruption Commission arrested the advisor to the prime minister, Mustafa Al-Kazemi.

A brief, circulating statement, a copy of which was shared with Al-Ahed News, stated that “the Corruption Commission has arrested Raad al-Haris, the advisor to the current prime minister and the former undersecretary of the Ministry of Electricity, on charges of corruption and wasting public money.”

The Supreme Judicial Council had issued against Waad Al-Haris an arrest warrant from the judiciary in accordance with Resolution 160 of 1983.

Al-Kazemi Directs The Ministry Of Finance To Pay The Salaries Of Employees And Retirees

A Follow-up Tuesday, 03 November 2020 04:00 PM   Today, Tuesday, Prime Minister Mustafa Al-Kazemi directed the Ministry of Finance to find solutions to disburse the salaries of retirees.

A spokesman for the Prime Minister, Ahmed Mulla Talal, said in a tweet on Twitter that the Prime Minister, at the beginning of the cabinet session, today, directed the Ministry of Finance to urgently find solutions to disburse the salaries of retirees.

Mulla Talal added, “We are awaiting the approval of the law to cover the fiscal deficit by the House of Representatives to start disbursing employees’ salaries.”   LINK

NATO Is Likely To Extend The Stay In Iraq For An Additional Five Years

NATO Secretary-General Jens Stoltenberg said that he might stay in Iraq for another 5 years until the security reform program is activated.

Stoltenberg added, in a press conference, after the meeting of NATO defense ministers in Brussels, which took two days, that “the meeting dealt with the issue of expanding NATO’s training mission in Iraq.”

He stressed that “NATO helps Iraq build an army capable of fighting terrorism on its own, and that the alliance aims to enhance stability in Iraq and completely eliminate ISIS.”

Stoltenberg said, “NATO ministers have assigned their soldiers to expand the mission of training in Iraq, and to continue consultations with the international coalition and the Iraqi authorities on how to proceed with that.”

Iraq Is Preparing To Launch A New Type Of Oil

Energy   Economy News _ Baghdad  The Iraqi Oil Marketing Company (SOMO) has informed its customers that it plans to launch a third grade for the export of crude oil called “Basra Medium” next January, to be added to Basra’s heavy and light crude.

According to Reuters, “the creation of the new crude, medium-sulfur, will be by dividing the current (Basra Light) crude production into two grades.”

It is noteworthy that “Basra Light” will score about 33 degrees after the split on the “API gravity” scale, an indicator to compare the density of crude oil with water, while the “Basra Light” crude will reach about 29 degrees, according to the agency.

The agency quoted its sources as saying, “The attractiveness of Basra crude will be similar to the Qatari Al Shaheen crude,” noting that “this step may stabilize the quality of Iraqi crude to buyers, but its costs may increase if SOMO decides to remove the price mechanism currently used to compensate buyers for it.” Gravitational fluctuations in the API.

The current Basra Heavy Crude, produced in 2015, has an API gravity of about 24 degrees. Degrees with a lower gravity figure are heavier and tend to produce less gasoline and diesel when refined, according to Reuters.

Basra crude, which is exported from the Basra oil port, represents the bulk of the country’s exports and revenues, while Iraq exports about 2.77 million barrels per day of Basra crude last month, and it is the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC).

Buyers must notify SOMO, by November 13, of the quantity that they plan to raise for each grade in 2021, and Basra Medium crude can be nominated either as part of the quantities actually required by buyers or as an additional quantity for 2021.  Number of observations 57, date of addendum 11/3/2020

What If Oil Prices Continued To Decline?

Economie| 12:46 – 11/03/2020  Follow-up – Mawazine News  A number of analysts expect the price of Brent crude to drop below $ 35 in the coming period due to the accumulation of stocks and the decline in global demand for oil.

In a report published by the Russian newspaper “Izvestia”, writer Valery Voronov confirms that a number of factors explain these pessimistic expectations regarding oil prices, including the continuing outbreak of the Corona virus, tightening quarantine measures globally, resumption of production in Libya, as well as the uncertainty before the presidential elections in United State.

It is not unlikely, according to the author, that the price of black gold will return to the level of $ 45 a barrel by the end of this year, in light of OPEC Plus countries’ adherence to the agreement signed earlier this year, which is the main factor in the price recovery so far.

Sudden drop

In today’s trading, the global benchmark Brent crude futures contract for January delivery fell by 3.71%, to reach $ 36.54 a barrel, the lowest level since early June.

US West Texas Intermediate crude futures, for December delivery, also fell 4.37%, to $ 34.25 a barrel, according to Anadolu Agency.

The principal analyst at “A.Markets” Artem Dave had expected that the price of Brent crude would reach $ 36 a barrel, and that the prices of West Texas Intermediate crude would range between 33 and 34 dollars per barrel, according to the Russian newspaper Izvestia.

Other experts agree with these expectations, and confirm that all conditions are ripe at the present time for lower oil prices.

According to independent analyst Dmitry Adamidov, futures contracts can reach very low prices, and may reach negative levels, and the price of oil may reach below $ 35, although this possibility is somewhat weak.

Natalia Milchakova, an expert in the Russian “Alpari” group, believes that oil prices may reach $ 34 a barrel, stressing that it is unlikely to drop below that.

American closures and elections

Artem Dave believes that the new lockdown measures due to the spread of the Coronavirus will significantly affect oil prices. For example, Germany and France imposed a one-month quarantine, while Spain imposed a 6-month quarantine.

Dave adds that the resumption of oil production in Libya will also be a factor. At the beginning of last month, production was at the level of 500 thousand barrels per day, before reaching about 700 thousand barrels per day by the end of the month, and it is expected that production will exceed one million barrels per day by mid-November.

Dave explains that Libya is not committed to the OPEC Plus agreement, which allows it to maintain the level of production at the maximum level, according to the Russian newspaper.

Economist Maria Belova believes that the possibility of widespread closure measures around the world, as happened in the first wave of the Covid-19 epidemic, may lead again to a major imbalance in the levels of oil supply and demand, as happened in March of this year. .

Belova explained that the spread of the Corona virus last spring led to the collapse of oil demand, and the surplus supply at the peak of the decline in consumption in April reached 19.5 million barrels per day. However, consumption levels gradually returned, reaching their peak last October, and demand has exceeded production levels by 3.2 million barrels per day.

Artem Dave confirms that the ongoing controversy with the approaching US presidential election and expectations that Joe Biden will win, are two other factors that may lead to a drop in prices to between 30 and 35 dollars a barrel.

If Biden wins the presidential race, it is expected that the sanctions imposed on Iran will be eased, which means increasing global production to record levels, and the possibility of a price collapse.

OPEC Plus Agreement

Experts believe that the OPEC Plus agreement signed last April is the only factor preventing the collapse of oil prices. The commitment of the producing countries to the terms of the agreement could also lead to an increase in prices by the end of this year.

The head of the economics department at the Russian Energy and Finance Institute, Marcel Salikov, expects that oil prices will rebound by the end of 2020 and early 2021, and that the price per barrel will exceed $ 45.

And Russian Energy Minister Alexander Novak said after the last ministerial meeting of OPEC Plus countries that an agreement had been reached to continue implementing the agreements in full. According to the agreement, member states will start increasing production at the beginning of 2021.

Last week, Russian President Vladimir Putin stressed that there is no need to change any clauses in the OPEC Plus agreements, but he did not rule out the possibility of taking new decisions to maintain the current restrictions, or reduce production if necessary, according to the Russian newspaper.

In the context, the Interfax news agency reported on Monday, citing sources, that senior managers of Russian oil companies discussed with the Russian Minister of Energy a possible extension of the current oil production cuts to include the first quarter of 2021.

Interfax said, quoting one of the sources, that oil companies favor an extension of the existing cuts during the first quarter. From 2021 instead of increasing the volume of cuts, according to what Reuters reported. Ended

The Minister of Transport announces the activation of land and air transit in Iraq

Local| 05:12 – 11/03/2020   Baghdad – Mawazine News, Minister of Transport, Nasser Hussain Bandar Al-Shibli, announced, on Tuesday, the activation of land and air transit in Iraq.

A statement by the ministry, which has been received by Mawazine News / a copy of it, stated that “The Minister of Transport held an expanded meeting with the aim of activating transit transport operations in the country. Joint operations, in the presence of the technical representative of the Ministry, Engineer Talib Baish, Director General of the Technical Department, General Director of the General Land Transport Company and Director of Air Cargo at Iraqi Airways.

Al-Shibli said that, “In line with the government direction that Prime Minister Mustafa Al-Kazemi has committed to maximizing state resources, and in the interest of investing the important geographical location of Iraq, which is an important link for many countries, the Ministry is determined to activate transit transport operations that pass through The Iraqi airspace, as well as the Iraqi mainland, which is open to many countries, because these operations represent an important source to provide money and increase revenues in a way that serves the interest of the Iraqi citizen.

The statement added, “The meeting resulted in the formation of joint working committees to lay the foundations and controls that will be the basis for the work of those committees that will present their final reviews next week.” Ended 29 / A43

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