Government Advisor: Iraq Seeks to Establish Sovereign Wealth Fund
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed that Iraq is seeking to establish a sovereign wealth fund.
Saleh told Al Furat News Agency: “Iraq seeks to establish a sovereign wealth fund, especially after the conflicts and wars that have been going on for less than half a century, and the previous regime’s major role in wasting the country’s resources and wealth, have transformed the surplus in the current account of the balance of payments into a net deficit due to the deterioration of the national economy’s export sectors, most notably the oil sector.”
Saleh pointed out that “the increase in foreign debts in the past decades was an alternative to establishing a sovereign fund for foreign wealth that relies on surplus oil revenues that can be invested in a diversified investment portfolio whose returns support the state’s general budget in general and the investment budget, according to the absorption capacity in particular, similar to countries such as Norway, China, the Gulf countries, and other countries of the world.”
Iraq has previous experience in establishing a sovereign wealth fund, through the establishment of the Iraqi Fund for External Development, which was established under Law No. 77 of 1974. However, after that, the work of this fund was limited to managing Iraq’s financial contributions to regional and international organizations and bodies. There was also an attempt to establish two sovereign funds for Iraq in 2018, but they remained without practical implementation.
Countries’ economies are divided into three categories based on their source of income: economies with diverse sources of income, economies with a single source of income (“single-basket economies”), and the third category is between them.
Iraq falls within the second group, as Iraq is considered a rentier state, due to its almost complete dependence on revenues from the sale of crude oil, as oil revenues constitute more than “90 percent” of the total revenues of the general budget, and contribute about “45-60 percent” of the formation of the gross domestic product.
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Expert diagnoses two reasons behind the rise of the dollar against the dinar in Iraq
The economic and financial expert, Abdul Rahman Al-Mashhadani, attributed, on Wednesday, the reasons for the rise of the dollar against the Iraqi dinar to the rumor of the holidays and New Year’s Day.
Al-Mashhadani said in an interview with Shafaq News Agency, “The promotion of stopping the platform is a major reason for the rise in the price of the dollar,” indicating that “this rumor that spread showed that foreign transfers will stop.”
He explained that “this rumor is false, as 97% of the transfers made through the window were transferred to banks that have correspondent banks in a way that enhances the balances. Also, the Christmas holiday is another reason for the demand for the dollar, as there is a lot of travel during these days.”
Al-Mashhadani expected that “the situation will stabilize and the dollar will return to its normal status after the holiday.”
The price of the dollar rose gradually in local markets, where it recorded 152,300 dinars for every 100 dollars in the Al-Kifah and Al-Harithiya stock exchanges, and 152,200 dinars for every 100 dollars in Erbil, the capital of the Kurdistan Region.
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Iraq is the fifth largest Arab economy in terms of GDP
Iraq ranked fifth in the Arab world and 46th globally out of 196 countries listed in the table among the largest economies in the world in terms of gross domestic product for the year 2024.
The American magazine cewworld reported in a report seen by Shafaq News Agency that since 2014, China has occupied its position as the largest economy in the world when evaluated by GDP at purchasing power parity, with $31.072 trillion, followed by the United States of America with a GDP of $29.160 trillion, while India came third with $16.019 trillion, Russia fourth with $6.909 trillion, and Japan fifth with $6.572 trillion, while Tuvalu came at the bottom of the list with $66 million, preceded by Nauru with $141 million.
In the Arab world, Egypt came first with the largest GDP, which is equivalent to purchasing power parity, at $2.232 trillion, followed by Saudi Arabia in second place with $2.112 trillion, followed by the United Arab Emirates in third place with $849 billion, Algeria with $826 billion, and Iraq in fifth place with $655 billion, according to the American magazine’s report.
She pointed out that Morocco came in sixth place with $396 billion, Qatar came in seventh place with $355 billion, Tunisia came in eighth place with $269 billion, Kuwait came in ninth place with $249 billion, and Oman came in tenth place with $222 billion.
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A government move to establish the first industrial city specialized in iron and steel
The Ministry of Industry and Minerals announced today, Wednesday, the preparation of the necessary requirements to establish the industrial city specialized in iron and steel in Basra Governorate, stressing that the contracting file has reached advanced stages.
The ministry’s spokeswoman, Dhuha Al-Jubouri, told the Iraqi News Agency (INA): that “The Ministry of Industry and Minerals, represented by its Minister Khaled Batal Al-Najm, has paid special attention to establishing and developing industrial cities in general, including specialized industrial cities, such as the city specialized in the iron and steel industry that will be established on the land belonging to the Iron and Steel Company in Basra Governorate.”
She added, “This city will be important in meeting the requirements of iron and steel products, and this experience is distinguished by being the first industrial city to be developed by a global company specialized in this field.”
She pointed out that “the Council of Ministers decided in its regular session No. 42 held on 10/15/2024 to approve the authorization of the General Company for Iron and Steel to enter into a partnership with a developer to establish an industrial city in Basra Governorate on the company’s plot of land, in accordance with the provisions of the Public Companies Law.”
Al-Jubouri confirmed that “the Industrial Cities Authority, in coordination with the General Company for Iron and Steel, is working to prepare all requirements and proceed with the contract, which is now in advanced stages.”
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Iraq Announces Great Strides In Digital Transformation
The Ministry of Finance announced, that it has made great strides in digital transformation and electronic payment, while indicating that progress has been made in the field of automating customs procedures to ensure financial sustainability and economic diversification.
The representative of the Minister of Finance/Undersecretary of the Ministry, Rebaz Mohammed Hamdan, said in her speech during the fourth annual international scientific conference, entitled (Digital Financial Services – Challenges of Reality and Foresight of the Future), that “our conference today comes within the government’s efforts to implement the government program, as digital financial services have witnessed rapid development in recent years, and modern technology has contributed to accelerating the financial process.”
He added that “the ministry has made great strides in digital transformation, including financial transfers, electronic payments, online loans and mobile banking services, which has increased the efficiency of accelerating financial transactions, reduced the need for cash transactions and provided services to people who cannot access traditional banking services,” noting that “innovation and development in this field have been enhanced and ways of cooperation between relevant parties in the field of financial technology have been discussed, and the most prominent solutions related to cybersecurity and future risks in this sector have been reviewed and how to take precautions against these risks.”
He added that “the ministry has made progress in the field of automating customs procedures to ensure financial sustainability and economic diversification in accordance with the principle of integrity, transparency, and combating corruption, and implementing programmes at the Financial and Accounting Training Centre to train employees on the use of new digital systems with the aim of enhancing digital skills in the ministry, improving financial performance, and enhancing confidence in the financial system.”
