Iraq is the world’s first in the density of natural resources.. A new vision for investing resources
The economic advisor to the Prime Minister, Mazhar Muhammad Salih, revealed a new vision for investment in materials in Iraq.
Saleh told {Euphrates News} that: “What the economic policy in our country is looking forward to is thinking outside the box and providing sustainability in the current account surplus of the Iraqi balance of payments through investment expansion in natural resources, manufacturing them and making them ready for export in a way that provides returns that help establish a sovereign wealth fund.”
He added, “The most appropriate model is to generate a sovereign wealth fund {directing its investments towards internal opportunities} and according to a different vision; since our country is ninth in the world in terms of the diversity of its natural resources in the ground and first in the world in terms of the concentration of wealth per square kilometer.”
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More than a billion dollars.. Sales of the Central Bank of Iraq in 4 days
The total sales of hard currency in US dollars by the Central Bank of Iraq during the days in which the auction was opened last week amounted to more than one billion dollars.
Shafaq News Agency correspondent stated that the Central Bank sold during the past week and for the 4 days in which the auction was opened, one billion, 67 million, 584 thousand, and 729 dollars, at a daily rate of 291 million, 196 million, and 182 dollars, higher than the previous week, when the selling rate reached 289 million, 134 thousand, and 990 dollars.
The Central Bank auction opened its doors on Sunday, Monday, Tuesday and Thursday, after being closed during the official holidays last week, which included Friday, Saturday and Wednesday.
The highest dollar sales were on Monday, when sales reached 296 million, 151 thousand, and 962 dollars, while the lowest sales were on Sunday, when sales reached 284 million, 696 thousand, and 947 dollars.
Our correspondent indicated that foreign remittance sales during the past week amounted to 1 billion, 67 million, 537 thousand, and 979 dollars, an increase of 95% compared to cash sales, which amounted to 46 million, 750 thousand dollars.
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Iraq’s Economy in 2024… A Year of Achievements and Failures
The year 2024 witnessed many notable economic developments in Iraq, including the oil sector and the expansion of energy imports from neighboring countries, in addition to the fluctuations associated with the rise in the dollar price and the continuation of punitive measures against banks participating in the currency auction. The year also witnessed intensive efforts by the Ministries of Agriculture and Trade to secure basic foodstuffs and ensure market stability.
The year 2024 witnessed important economic developments in terms of relations with international institutions. The beginning was with the International Monetary Fund, which expected on May 16 that the Iraqi economy would grow by 1.4% in 2024 and 5.3% in 2025. The Fund also indicated that the Iraqi budget deficit would widen to 7.6% in 2024 compared to 1.3% in 2023.
For his part, the Prime Minister’s Advisor for Financial Affairs, Mazhar Salih, revealed on May 18 that the total loans provided by the International Monetary Fund to Iraq since 2003 amounted to less than $8 billion, stressing that Iraq had repaid them in full in 2024.
In the same context, data from the International Monetary Fund, issued on July 22, showed an increase in Iraq’s gold reserves by 2,644 tons, bringing the total to 148,305 tons.
On the credit ratings front, Fitch International announced on November 28 that it had affirmed Iraq’s rating at B- with a stable outlook, reflecting a balance between economic challenges and government efforts to improve financial stability.
It also expected Iraq’s budget deficit to rise to 8% of GDP in 2024, compared to a deficit of 2% in 2023. The agency attributed this expectation to the Iraqi economy’s heavy dependence on basic commodities, weak governance, and high levels of political risks.
Regarding the general budget, the Federal Council of Representatives approved, on June 4, 2024, the current year’s budget worth 211 trillion dinars, equivalent to more than $155 billion, making it the largest budget in the country’s history. Operating spending accounted for 74% of the total budget, which is 95% dependent on oil revenues, highlighting the continued dominance of oil in the structure of the Iraqi economy.
Oil: Notable Contracts and Rounds in 2024
In 2024, the Iraqi oil sector witnessed a series of strategic contracts and agreements aimed at developing oil and gas fields and enhancing national production, in addition to participating in international decisions within the OPEC+ group.
Gas field development contracts
On April 14, the Ministry of Oil signed a contract with Ukrainian company Ukrzym Resources to develop the Akkas gas field in Anbar, with the aim of producing 100 million standard cubic feet per day within the first two years, with plans to increase production to 400 million cubic feet within four years.
On October 31, the ministry signed a contract with a consortium of Chinese companies Jera and Petro Iraq to develop the Mansouriya gas field, to provide 300 cubic meters of gas per day.
Licensing rounds and new projects
On May 12, the Ministry of Oil launched 29 oil and gas projects in the fifth and sixth supplementary licensing rounds, with the aim of producing between 800-850 cubic meters of gas and 750,000 barrels per day of crude oil.
On August 14, development contracts for 13 exploration blocks and oil and gas fields were signed.
MOUs and field development
On May 25, the ministry announced the signing of a memorandum of understanding between Siemens and Schleminger to invest in flared associated gas, with plans to submit technical and financial bids to develop the fields.
On August 1, the ministry signed a memorandum of understanding with British company BP to rehabilitate and develop the four northern oil fields in Kirkuk.
Operational and infrastructure achievements
On September 9, Oil Minister Hayan Abdul Ghani inaugurated the new oil tanker “Sumer”, with a transport capacity of up to 200,000 barrels.
Legal Crises and Exports
On November 5, Iraq participated in the OPEC+ group in extending the voluntary production cut of 2.2 million barrels per day until the end of the year.
On December 23, the Karkh Court of Appeal rejected the Iraqi Ministry of Oil’s lawsuit and overturned previous decisions nullifying the Kurdistan Regional Government’s contracts with foreign companies. Following the decision, nine foreign companies are seeking $24 billion in compensation for the halt in oil exports.
Central Bank: Decisions and Memoranda
During 2024, the Central Bank of Iraq witnessed the adoption of a set of decisions and the conclusion of memoranda aimed at enhancing financial stability and combating corruption, in addition to developing the banking system in the country:
On April 2, the Central Bank issued a decision to ban 8 local commercial banks from dealing in dollars, as part of its efforts to reduce fraud and money laundering.
On August 31, the bank announced that it had signed a contract with Oliver Wyman to conduct a comprehensive review of the status of Iraqi banks, with a focus on banks banned from dealing in US dollars. This measure aims to enhance transparency and improve the performance of the banking sector.
On December 3, the Bank signed a Memorandum of Cooperation with Frankfurt School, in coordination with the German Agency for International Cooperation (GIZ), within the framework of the project Strengthening Public Finance and Financial Markets in Iraq (FFM), funded by the European Union and the German Government. The Memorandum aims to improve the financial infrastructure and enhance the efficiency of financial markets in Iraq.
Electricity.. International connection and gas purchase
During this year, the Ministry of Electricity continued its efforts to provide energy through various contracts, especially with regard to providing gas to production stations. On March 28, the Ministry signed a contract to supply gas from Iran for a period of 5 years.
According to the Minister of Electricity, Ziad Ali Fadhil, the contract concluded with the National Iranian Gas Company is supposed to supply Iraq with 50 million cubic meters of gas per day.
On March 30, Minister of Electricity Ziad Ali Fadhil inaugurated the electricity interconnection line between Iraq and Jordan, which extends over three stages. Its capacity is scheduled to reach 500 megawatts in its third stage with a voltage of (400 kV) after activating the tripartite connection between Iraq – Jordan – Egypt, and thus the energy needs of large parts of Anbar Governorate will be secured.
The Minister also announced, on July 2, that electricity production had reached 27,320 megawatts, for the first time in Iraq, an increase of (3,000) megawatts over last year.
On July 19, the US State Department announced the renewal of the waiver granted to Iraq to purchase energy from Iran.
On November 9, the GCC countries signed a contract to implement the Gulf Electricity Market Interconnection Project with Iraq, which will enhance energy security and allow the GCC countries to supply Iraq with about 3.94 terawatt-hours annually, at competitive prices below the cost of local production, leading to a reduction in public expenditures.
On November 19, the ministry also announced that it had signed an agreement with Turkmenistan to supply 20 million cubic meters of gas to Iraq daily, to operate power generation stations in Iraq.
On November 23, the Ministry of Electricity announced the signing of contracts to implement the Smart Energy Transformation Project, which is supposed to provide electricity 24 hours a day, and will serve more than 130,000 subscribers in the governorates of Wasit, Kirkuk, Diyala and Anbar as a first phase.
Trade: Wheat and wheat safely
During this year, the Ministry of Trade confirmed, in a statement on August 12, that wheat production in Iraq recorded a 21% increase, reaching 6.3 million tons, which is the second year in a row in which self-sufficiency in this vital crop has been achieved.
On December 26, Minister of Trade Athir Al-Ghariri reassured that the current wheat stockpile is sufficient to meet the country’s needs for more than a year, in addition to securing basic food supplies for more than 8 months.
Ministry of Agriculture
At the level of the Ministry of Agriculture, it announced on July 26 that it had exported more than 400,000 tons of agricultural crops within 6 months.
On September 29, Finance Minister Taif Sami signed a loan financing agreement with the Austrian Ambassador to Baghdad from the Austrian Erste Group Bank to support the pivot irrigation systems project for the Ministry of Agriculture, worth 262 million, 155 thousand, and 298 euros, and implemented by the Austrian company Bauer.
Comprehensive vision
Regarding these economic events, the economic expert, Ahmed Abdul Rabbo, explained to Shafak News Agency, “The government of Mohammed Shia al-Sudani focused during 2024 on investing in and developing gas, and the oil sector witnessed the signing of contracts with important companies.”
Abdul Rabbo added, “The year 2024 also witnessed a trend towards electronic payment, while the Ministry of Commerce was able to secure food supplies, in addition to the fact that the markets witnessed stability compared to previous years.”
He continued, “However, the dollar exchange rate continued to rise throughout 2024, and this is a defect in the situation and shape of the Iraqi economy, and the government was unable to correct this distortion. Although the current year’s budget was the largest budget that Iraq has witnessed in its history, the government was unable to reduce spending, and there is still weakness in foreign investment, and what is happening from projects is contracting and not investment.”
He continued, “The sanctions on banks were a strong blow to the banking sector, and the Central Bank of Iraq has not been able to solve this problem until now.”
The expert confirms that “corruption indicators are still high, while external debt has decreased while internal debt has increased,” stressing the importance of “next year being the beginning of solving the electricity dilemma and the housing crisis.”
