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Iraqi News Thursday AM 12-24-20

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Parliamentary Finance Issues An Explanation Regarding The Determination Of The Dollar Exchange Rate

Political| 06:02 – 12/24/2020  Baghdad – Mawazine News The Parliamentary Finance Committee issued, on Thursday, a clarification regarding Saad’s determination of the exchange of the dollar against the Iraqi dinar.

The committee stated in a statement that Mawazine News received a copy of, that “determining the exchange rate of the dollar is a governmental matter and its exclusive authority, as it is the one who draws and implements the fiscal and monetary policy, and the inclusion of that price in the draft budget law 2021 is to calculate the value of oil revenues and international loans that are calculated on It is dollar based and converted into Iraqi dinars depending on the exchange rate. ”  She added, “This price was mentioned in the budget, it is not intended to acknowledge or not, but to approve it in the calculation of revenues and expenditures only, as mentioned above.”

Increased Again .. The Dollar Exchange Rate In The Iraqi Market

Pratha News Agency100 2020-12-24   The exchange rates of the dollar increased in the main stock markets and local markets, today, Thursday (December 24, 2020)

The Kifah Stock Exchange recorded 142,000 dinars against 100 US dollars, while the exchange rates on Wednesday in the Kifah Stock Exchange recorded 140,500 dinars per 100 dollars.  As for the exchange rate in the local market, it also rose, as the selling price was: 141,000 dinars per 100 dollars.  The purchase price is 140,000 dinars per $ 100.

Deputy: Parliament Will Refuse To Impose Taxes Or Raise The Price Of The Dollar

Pratha News Agency76 2020-12-24   MP Badr Al-Ziyadi confirmed, Thursday, that it is not possible to impose a tax on the total salary of employees and raise the exchange rate of the dollar together through the budget law, while the House of Representatives will reject one of the paragraphs.

Al-Ziyadi said in a press statement that “the House of Representatives will have a position on raising the price of the dollar and imposing a tax on employees’ salaries and may resort to canceling one of the paragraphs,” noting that “the government has a responsibility to develop an effective plan to overcome the crisis.”

He added that “passing the tax on the total salary of employees and raising the exchange rate of the dollar together during the budget law for the next year is something that will not be achieved,” indicating that “the budget will need 30 days to complete it within the House of Representatives.”

The deputy for the Al-Fateh Alliance, Mukhtar Al-Mousawi, confirmed, last Monday, that the House of Representatives will refuse to accept the draft federal budget bill for 2021.

Last Monday, Al-Fateh coalition deputy, Abdel-Amir Al-Taiban, called for the dismissal of Prime Minister Mustafa Al-Kazemi’s government as soon as possible.

Parliament Is About To Reduce The Value Of The 2021 Budget And Review The Dollar Exchange Rate

Pratha News Agency99 2020-12-24   Member of the Parliamentary Legal Committee, Hussein Al-Oqabi, confirmed, on Thursday (December 24, 2020), the parliament’s intention to reduce spending in the 2021 fiscal budget, indicating that parliament “will not be satisfied” at the dollar exchange rate set by the government.

Al-Aqabi said in a press interview that “the budget was supposed to reach Parliament on the fifteenth of October, which is the deadline according to the Financial Management Law,” adding that “the budget was delayed by about two and a half months and has not yet arrived.”

He explained, “The budget is the responsibility of the government in accordance with the constitutional texts and it is responsible for preparing the draft budget, and the House of Representatives gives legitimacy to government spending and has the right to reduce the budget and rotate its sums, and these are fixed rights of Parliament, and it has no right to increase spending.”

He added, “According to the budget leaks, the (budget) spending is 150 trillion, the House of Representatives can reduce it, and this is what the parliament will do because the amount is very, very inflated and it is illogical and unrealistic, and also the exchange rate we see, and we will not be satisfied with it at all.

He pointed out that “the issue of providing some contract dues will be entered into by the House of Representatives,” adding that “Parliament has the right to rotate the sums and has the right to conduct certain transfers within the budget.”

It is noteworthy that the spokesman for the Council of Ministers and Minister of Culture, Hassan Nazim, announced yesterday, Tuesday (December 24, 2020), that the 2021 budget will be sent to the House of Representatives.

On December 19, 2020, the Central Bank set the price of selling the dollar, as it will be 1450 dinars per dollar from the Ministry of Finance, 1460 dinars per dollar for banks, and 1470 dinars per dollar for the public.

The Decision To Reduce The Dinar: To Feed The Treatment Or To Stop The Collapse

Dr. Muhannad Talib Al-Hamdi   Articles   Muhannad Talib Al-Hamdi *   Riot police were sent to protect the headquarters of the Central Bank of Iraq in central Baghdad before the announcement of the devaluation of the local currency, fearing the outbreak of popular protests. The Iraqi government’s decision to reduce the value of the dinar against the US dollar by nearly 20% sparked an uproar in the Iraqi street.

A statement of the Central Bank of Iraq regarding this reduction indicated, “It must be emphasized here that this change (reduction) in the value of the Iraqi dinar will be one-time only and will not be repeated.” “The central bank will defend this rate and its stability by supporting its foreign exchange reserves, which are still at stable levels,” the statement added .

The bank blamed poor economic policies over the past decade. He said that he “had no choice but to intervene” because poor economic planning and financial policies on the part of Iraqi politicians led to the transformation of Iraq into an oil-exporting country only, with the bulk of state expenditures directed to pay money to the bloated public sector.

Unofficial estimates indicated that the successive Iraqi governments that followed the formation of the first Iraqi authority after the invasion in 2003 were responsible for the disappearance of about a quarter of a trillion dollars, which were dedicated to reforming the health, education, electricity and public services sectors.

The Iraqi government reached this decision after it was unable to pay the salaries of its employees for two consecutive months, and was forced to borrow from the Central Bank of Iraq and other internal parties . The government sells oil in US dollars, which it uses to buy Iraqi dinars from the central bank to finance salaries and public services. Reducing the value of the local currency against the dollar means that it will get more Iraqi dinars from the central bank.

Years ago, the Central Bank of Iraq fixed the exchange rate of the Iraqi dinar against the US dollar, which is 1119 Iraqi dinars per dollar. Despite the emergence of a parallel black market selling dollars at a higher price, the difference was within the permissible margin of economic maneuver.

However, recent months have witnessed many fluctuations in the exchange rate, due to the Corona virus pandemic and the accompanying global financial crisis, and the decline in Iraq’s oil revenues after reducing the volume of its oil exports

Although the CBI is independent, the government pushed for the cut, the largest in Iraq since 2003, to enable it to pay dinar-denominated salaries to more than four million government employees. The decision to devalue the currency angered public sector workers. Many fear that the weakening of the dinar, as well as the proposed budget plans to cut salaries and impose taxes, will amount to harsh wage cuts.

Popular reaction:

The decision of the Central Bank of Iraq to reduce the value of the dinar sparked a state of panic among Iraqis, many of whom rushed to exchange offices to buy dollars, and to supermarkets to buy and store supplies .

Several hundred demonstrators gathered in the famous Tahrir Square in Baghdad, to protest against the sudden decline in their purchasing power and to urge the government to reconsider its decision. A young protester held up a banner reading “Before the dinar, the government must collapse.” Particularly among the demonstrators were numbers of seniors and retirees who criticize the measure that greatly reduced the value of their pensions .

Hundreds of demonstrators also gathered on Monday in the city of Kut, where merchants said they would now have to reduce imports because they are paying in US dollars for the products they buy from abroad. Agri-food traders and wholesalers in the city of Nasiriyah raised their prices by 20%, according to an AFP correspondent.

In the city of Basra, the head of the local branch of the High Commissioner for Human Rights, Mr. Mahdi Al-Tamimi, confirmed that the price hike came as a shock to consumers.

The curse of oil or its blessing:

The second-largest producer of crude oil in OPEC depends entirely on oil exports, and Baghdad’s revenues have in fact been cut in half due to the collapse in oil prices. This left the government unable to cover its costs. The International Monetary Fund expects that Iraq’s fiscal deficit will widen to 20% of GDP this year .

The decline in oil revenues has put pressure on the CBI’s foreign exchange reserves, which the World Bank said had fallen to about $ 50 billion by last September, forcing the government to borrow heavily to pay salaries. The size of the public sector in Iraq has more than quadrupled since the invasion in 2003, and the government has simply become the largest employer in the country. But she was late in paying the salaries of employees and retirees in November, causing social unrest .

With the World Bank expecting the poverty rate to rise sharply as the oil-dependent economy shrinks, the financial situation of Iraq, exhausted by wars and corruption, is so dangerous that Iraq is in talks with the International Monetary Fund for support . Sajjad Jiyad, a fellow at Century Research Institute from its office in Baghdad, says that the devaluation “sends a signal to the International Monetary Fund and others about the extent of despair the situation has reached and that Iraq is ready to take some of these painful steps,” meaning the march towards more fiscal austerity. .

But with Iraq dependent on imports, a weakening of the dinar is likely to lead to inflation. Prices have remained low so far, in part because Iraq’s two largest trading partners, Iran and Turkey, have seen a significant depreciation of their currency. “For the general population, there is concern that food prices will rise, as the country still imports most of the foodstuffs,” says Mr. Sajjad.

The Minister of Finance, Mr. Ali Allawi, warned that Iraq must take serious measures to reform the expenditures, which were inflated with the use of politicians using public employment to buy votes and loyalties. This month, the International Monetary Fund advised the Iraqi government, in building its budget for 2021, to give priority “to reversing the unsustainable expansion of the cost of salaries and pensions, reducing ineffective energy subsidies, and increasing non-oil revenues .”

The Minister of Finance added, “One of the main reasons for the devaluation of the dinar is to push the economic cycle forward and revitalize the private sector and domestic production to avoid severe budget deficits . ” He also said, “What has been done is a preemptive step. Without this step, huge inflation will occur. We will encounter problems that we will not accept .”

The minister says the country’s foreign reserves could be depleted within six to seven months if government spending remains on the current path without changing the exchange rate. Without this step, the budget deficit in 2021 could reach 100 trillion dinars ($ 84 billion) . The International Monetary Fund expects Iraq’s economy to contract by 12% this year, more than any other OPEC member state.

“The devaluation was inevitable in light of low oil prices and budgetary pressures facing Iraq,” said Ziad Daoud, an economist who specializes in emerging market studies at Bloomberg. “It is also important to monitor the popular response to the resulting increase in the cost of living and the government’s austerity program, ” he adds .

Since the collapse of oil prices earlier this year, Iraq has been suffering from an unprecedented liquidity crisis. The state has had to borrow from the bank’s dollar reserves to pay nearly $ 5 billion a month in public sector salaries and pensions. But oil revenues, which make up 90% of the budget, come in, on average, at $ 3.5 billion .

In a move toward austerity, the state’s proposed budget for 2021 also calls for record spending, projecting a deficit of nearly $ 40 billion. The Cabinet voted on the budget and sent it to Parliament, where it is expected to face strong opposition. But those familiar with the insights of Iraqi politics say that it will eventually pass according to the desire of the leaders of the blocs and the influential political parties.

Over the past two decades, corruption has created a double-edged problem for Iraq. Weak, totalitarian Iraqi governments built on the basis of sectarian quotas mean that every major political party runs one or more ministries. They run these bureaucracies not in the interest of the country but as huge patronage networks: corruption machines that suck oil revenues from the treasury and pass them on to their constituencies in the form of jobs, contracts, and other perks. The spread of graft has stifled what was previously owned by the small private sector in Iraq, which means that there are not many alternatives to public sector jobs .

Therefore, it is not surprising that there has been a more than fourfold increase in the number of public sector workers since 2004, and the government pays 400% more salaries than it was 15 years ago. Thus, the government and its oil revenues became the main engine of the Iraqi economy, which gives the Iraqi people the opportunity to live.

The Iraqi economic expert, Mr. Munir Al-Obaidi, said in an interview with Al-Hurra channel that the impact of the devaluation will be negative at the beginning of the stage, which “will continue for six months or a year”, and after that “it will contribute to improving the domestic product from various sectors such as the industrial, agricultural and service sectors, because it will increase the activity of these sectors.” “.

But Iraqi industrialists say that the talk about the decision to devalue the Iraqi currency will lead to the encouragement of local industry, “too simplistic .” The Iraqi industrialist, Mr. Moataz Kamouneh, said in an interview with the same channel, that “the industry needs infrastructure such as electricity, sewers, water lines, transmission lines, import and export facilities, and all of these are not available .”

And he adds that “the raw materials have increased in value after the devaluation of the dinar because it is imported, which means that costs have increased, and the years of Iraqi industrial inactivity have made Iraq lose the advantage of keeping pace with other countries with technology and destroying old infrastructure .”

Is there a hand that extends into Iraq :

The devaluation of the currency, without accompanying economic reforms that the political forces in Iraq refuse to consider, will paralyze imports, undermine savings and increase hardship. If the United States government is willing to provide some aid, it is likely that many other countries will also participate. International financial institutions such as the World Bank, the International Monetary Fund, the Gulf states, and even some European and East Asian countries are expected to provide some funds .

Iraq crisis is a liquidity crisis. Iraq will need money to prevent the collapse of its financial system, which may lead the country into a spiral of violence that its borders do not contain. If the United States pledged to provide a certain amount, perhaps one billion dollars, it would be possible to assemble a package of up to 5 billion dollars to help Iraq in cooperation with other countries.

The idea of providing one billion dollars to support the emergency budget for Iraq may seem very difficult at the moment. But this should not be seen as such. The United States should have learned over the past 20 years two important lessons about this part of the world. First of all, what happens in the Middle East does not stay there. Second, one ounce of prevention is better than a pound of cure, as Washington’s tragic policies toward Iraq, Syria and Libya have shown.

* Professor of Economics and Political Science, Kansas State University, USA.

Number of observations 404   Date of addendum 12/24/2020

Dollar And Peoples

Thursday 24 December 2020  98  Adnan Abu Zeid   The dollar has become the talk of Iraqis, after economic treatments conducted by the government and the central bank, while enlightened by history, is aware of the political and social role of this global currency, which has settled many times, the future of political regimes, and the fate of economies.

However, developing countries seemed to be most affected by the fluctuations of the dollar and its value, because they are unable to borrow in their poor local currencies, and they are forced to pay off their foreign debts with it, but the dollar turns into real tyranny in countries that are able to manage an economy that attracts foreign investment and boosts the pace of internal growth.

Iraq, one of the lagging countries in the administrative and economic system Rolling Eyes , where the observer touches the huge numbers of workers in redundant government jobs, as well as huge numbers of ineffective government companies whose employees receive salaries, while university graduation policies give birth to huge numbers of certificates At a time when the private sector is suffering from marginalization through stifling regulations and regional competition, university owners are demanding government jobs.

The crisis of the relationship between the dinar and the dollar, in Iraq, has its experiences in other countries. It suffered from the collapse of its national currency, so it resorted to financial tricks such as quantitative easing or printing more Of cash.

Currency devaluations against the dollar are still occurring in many countries, as Turkey and Vietnam have resorted to reducing employment and foreign imports.

Indonesia and Argentina granted tax breaks to return funds held abroad. Zimbabwe issued dollar bonds to support deficient foreign exchange holdings. OPEC members cut oil production to restore petrodollar revenues, and dollarize oil and other commodities.

And Iraq tried to exchange the dollar for the euro, in an attempt to insult the American currency during the era of Saddam Hussein’s regime. Iran is seeking to deal in currencies other than the dollar, to ease the impact of sanctions against it, but the problem is that most of its trading partners prefer the dollar. In its attempt to revive the economy and defeat corruption, India decided, in 2016, to begin to halt the circulation of currencies in denominations of 500 and 1,000 rupees, and the Prime Minister urged the people to stand firm.

And both Ecuador and Zimbabwe resorted to “dollarizing” their economies, through the official use of the dollar in all transactions. Hong Kong has steadily pegged its currency to the dollar, making it a spin in the orbit of US monetary policy.

During the Cold War era, in the mid-forties to the early 1990s, communist regimes responded to the policy of financial strangulation by Western countries, by floating more government loans on companies. Egypt and Argentina experimented with immediate direct devaluations early.

Indonesia also decided to activate domestic investment for the purpose of returning assets from abroad and attracting them with tax amnesty. What is still worrying is that citizens of developing countries, especially the wealthy among them, do not trust local currencies, which made the economies of these countries de facto hostages of the dollar. All of these mechanisms, even if they contribute to recovering money, are not a panacea, nor will they be a substitute for structural reforms that fail in many countries due to the inability to persuade the people of sacrifices.

America Is Considering Moving Its Embassy In Baghdad To One Of These Two Locations

Time: 12/24/2020 14:38:19 Read: 6,695 times  {International: Al-Furat News} The United States is considering closing its embassy in Baghdad quickly after a series of missile attacks on the Green Zone in Iraq, according to two sources familiar with the discussions of the American news site, Axios.

The site said that this step could be among several options under consideration, an introduction to respond to missile attacks.

He pointed out that, “In the event that the US embassy in Baghdad is closed, the US ambassador to Iraq (Matthew Toller) will be transferred to the city of Erbil in the Kurdistan region, or to the Al-Assad air base in Anbar province.

Earlier Wednesday, US President Donald Trump said , He will “hold Iran responsible” in the event of an attack targeting Americans in Iraq, with the approaching first anniversary of the assassination of Iranian General Qassem Soleimani in a US drone strike near Baghdad airport.

Trump attached a picture of missiles with a tweet on Twitter, in which he said that the embassy is in Baghdad was attacked last Sunday by several missiles.

A US official revealed to Reuters, on Wednesday, that “senior national security officials met at the White House and agreed on a set of proposed options to deter any attack on American military personnel or diplomats in Iraq.”

The commander of the US Central Command in the Middle East, General Frank MacKenzie, said that the barrage of missiles that was fired at the US embassy in Baghdad on Sunday was the largest attack on the capital’s Green Zone since 2010, with 21 missiles.   LINK

The Parliamentary Culture Committee Congratulates The Iraqi People And The Christian Brothers On Christmas And Affirms That The 25th Will Be An Official Holiday

12/24/2020  The Culture, Tourism and Antiquities Committee of the House of Representatives congratulated the Iraqi people and the Christian brothers on the occasion of Christmas and New Year’s Day.

The head of the committee and the members presented their warmest congratulations and blessings to the Christian brothers on the occasion of the birth of Jesus Christ, peace be upon him, and the New Year, confirming that the committee is moving towards making the twenty-fifth of December of every year an official holiday within the law of holidays and holidays, which will soon be enacted.

The committee blessed the weddings and celebrations on this occasion, calling upon Al-Bari, the Most High, to protect Iraq and the Iraqis from all evil.   House of Representatives  Media  Department 12/24/2020  LINK

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