Monday Afternoon Iraq Economic News Highlights 8-28-23
Al-Fateh: Iraq’s Accession To BRICS Will Break Washington’s Hegemony Over The Dollar
Information / special.. Today, Monday, the leader of the Al-Fateh Alliance, Ali Al-Zubaidi, stressed the necessity of liberating himself from the restrictions of the US treasury and entering the “global BRICS” group, while stressing that the government will not control the rise in the exchange rate of the dollar without exiting the power of the US treasury.
Al-Zubaidi said, in an interview with Al-Maalouma Agency, that “Iraq’s economic situation requires the government to join the global Brexit group,” noting that “getting rid of the restrictions imposed by the United States of America on Iraq lies in making the decision to enter the BRICS group.”
And he continued, “Washington will remain in control of Iraq with the card of raising the exchange rate of the dollar to pass its own interests,” calling on the government to “the need to liberate itself from the US treasury and enter the BRICS group.”
The leader of the Al-Fatah coalition concluded his speech, saying: “The BRICS group, after the accession of more than twenty countries, most notably the eastern ones, will compete with the dollar and will become the first currency in the coming years, given the program and the numbers that the major countries are working on now,” adding that “the government will not control the high price of Exchange the dollar without leaving the power of the US treasury.
The BRICS group has become one of the most important global economic organizations, given the growth figures achieved by the countries of this group over the years, which made it a source of interest for many other countries, which no longer wanted to join the group after the number of countries reached 20 countries. LINK
Iraq: A Fragile Economy And More Than $100 Billion In Debt
Posted On 2023-08-27 By Sotaliraq The World Bank described the Iraqi economy as “fragile” in its latest report, and stated that the country’s debts had increased to about $152 billion, and the currency auction of the Central Bank of Iraq caused the redirection of hard currency to the parallel market, which led to a decrease in the value of the dinar against the dollar.
The issued report indicated that the Iraqi economy continues to recover, driven by the oil boom, after the severe recession caused by the Corona pandemic in 2020, while the non-oil sectors are still suffering from recession, in addition to the emergence of growth obstacles again.
Despite Iraq reaping unexpected record oil revenues and approving the long-awaited new fiscal budget, Iraq is still at risk of missing an opportunity to move forward with urgent and long-awaited reforms that are critical to boosting private sector growth and providing millions of jobs needed over the years. the next ten, according to the report.
Great Risks
between the World Bank, through data for the spring and summer seasons of the current year 2023, for the report of the Economic Monitor for Iraq, which came under the title “Pressures Reappear: Recovery in Iraq is at stake,” that the real GDP rose at an accelerated rate to 7% in 2022, driven by The boom in the oil sector, however, decreased to 2.6% on an annual basis in the first quarter of this year.
As for the rate of consumer price inflation, which was at medium levels in 2022, it also rose at the beginning of this year due to the depreciation of the Iraqi dinar in the parallel (black) market, as the favorable oil market dynamics in the first nine months of 2022 led to an increase in total reserves. , excluding gold, to a record $89 billion, however, this trend slowed in early 2023.
Also, according to the World Bank, Iraq’s budget for the years 2023-2025, which was approved last June, indicated an increase in public spending, which could lead to a rapid drain on unexpected oil revenues, and thus pressure on public finances, in addition to that the expansion of spending has It causes the long-needed delay of the structural reforms needed to develop a vibrant and sustainable economy in Iraq.
He stated that “the annual budget approved by the Iraqi authorities witnessed an excessive increase in the volume of public expenditures by 59% compared to the previous budget, which represented 74.3% of total spending, which would lead to a large fiscal deficit of 51.6 trillion Iraqi dinars ($39.7 billion), representing about 14.3 % of the volume of public imports, more than half of the recent record reserves accumulated in the aftermath of the boom in oil prices.
For his part, a professor of economics at Al-Maqel University in Basra says that there are many negatives that afflicted the country’s general budget for the years (2023-2025), noting that it is represented by the large size of the budget, which recorded the largest deficit ever, in addition to that its financing will be through internal and external borrowing. By 66%, which will cause an increase in the indebtedness of the current government and future governments, according to the decree.
This may not be the only problem in the tripartite budget, as Al-Marsoumi adds that what he described as the recorded “fixed burdens” include salaries, gas imports, social welfare, and the costs of oil licensing rounds, which amount to about $99 billion, indicating that the dilemma is that these burdens cannot be reduced within the two years. For the arrivals, the budget relied on exporting oil by 90% in light of the restrictions imposed on the country in order not to increase production in accordance with the agreements concluded with the “OPEC Plus” group, and to stop the export of oil through the Kurdistan region to the Turkish port of Ceyhan, which is estimated at 400 thousand barrels per day.
Excessive Spending
The economist, Muhammad al-Hamdani, indicated that Iraq’s restriction to the size of huge spending is due to poor planning resulting from the large economic benefits that Iraqi politicians reap, explaining that the tripartite budget allocated to Parliament is $350 million annually, with more than $1 billion during the next three years 2023. -2025, in addition to increasing the number of public sector employees by about 600 thousand job degrees through new appointments and contracts, which increased the financial burden on the public budget.
In an exclusive interview with Al-Jazeera Net, Al-Hamdani indicated that this increase in the number of public employees comes at a time when international indicators indicate that the Iraqi employee’s work rate does not exceed 10 minutes a day, indicating that the other dilemma is represented by the huge number of private grades. And general managers, which exceeds 4,500 general managers, which causes huge losses to the Iraqi economy as a result of huge salaries and allocations for armored cars and protections, according to him.
The currency auction may not be far from these debilitating indicators of the Iraqi economy, according to Al-Hamdani, who explained that 20 years after the US invasion of the country, the government still relies on the currency auction, although this mechanism is not followed in all countries of the world, especially in oil producing countries.
Al-Hamdani also stated that despite the Central Bank’s measures and promises of economic reforms, the Iraqi government is still unable to provide reassurance to the Iraqis in order to use banks and not to hoard money in homes and companies, which forces the government to proceed with the currency auction in order to provide cash liquidity in Iraqi dinars, at the same time Which economic reports indicate that about 80% of the volume of the Iraqi monetary mass amounting to 83 trillion Iraqi dinars is still outside the banking system, he said.
In the context, economist Rashid al-Saadi explained that the World Bank’s announcement that Iraq’s debts have risen to $152 billion is due to the failure of successive governments to adhere to plans, advice and warnings regarding managing the economic file, which led to the accumulation of those debts and their great benefits.
Al-Saadi also confirmed in his interview with a media outlet that the World Bank, prior to approving the tripartite general budget, issued a report confirming that an estimated $20 billion was spent for only about 100,000 Iraqis, and that among them are those who receive multiple salaries of up to 9 salaries per month.
Exaggeration In Numbers
Returning to Nabil Al-Marsoumi, a professor of economics at Al-Maqel University, and despite his acknowledgment of the negatives included in the tripartite budget, he believes that there is an exaggeration in the size of the public debt on Iraq, which was revealed by the World Bank report.
Al-Marsoumi says – in a post on his Facebook page – that the World Bank figures are incorrect, as the World Bank report assumed that Iraq’s external debt is estimated at $50 billion, while the value of internal debt is about $102 billion, and the ratio of public debt to GDP estimated at 58.3%.
Al-Marsoumi’s rejection of the World Bank’s data stems from the fact that these figures assume that the 2023 budget will be fully implemented, which will result in adding about $31 billion to the total public debt, indicating that logic shows that this budget will not be fully implemented, especially after its implementation has been delayed. to the current month of August, which raises doubts about the credibility of the World Bank figures, as he put it.
For more details on Iraq’s debts, he explained that Iraq’s external debt, along with the frozen Gulf debt, amounts to $61 billion, not $50 billion – as reported by the World Bank – and if the 2023 budget is fully implemented, the debt will rise to about $70 billion.
As for the internal debt, he revealed that it amounts to 53 billion dollars, and if the budget is implemented, it will rise to about 77 billion dollars and not 102 billion dollars as in the data of the World Bank, indicating that the total public debt in the event of the full implementation of the budget will reach 138 billion dollars and not 152 One billion dollars, according to the World Bank, according to the decree.
Whether the World Bank data is accurate or not, the facts indicate that Iraq is saddled with heavy debts of no less than $138 billion, noting that internal debts are the biggest obstacle for the country because of the high interest rates, according to what Iraqi economists revealed. LINK
The Exchange Rates Of The Dollar Against The Iraqi Dinar
Economy 2023-08-28 | 5,002 views Alsumaria News – Economy Alsumaria News publishes the exchange rates of the dollar against the Iraqi dinar in the Iraqi local markets, for Monday, August 28, 2023.
The selling prices in exchange shops in the local markets in the capital, Baghdad, witnessed an increase, as the selling price reached 154,250 dinars, while the purchase price reached 152,250 dinars for every 100 dollars.
And the Central Bank of Iraq decided, earlier, to adjust the exchange rate of the dollar against the Iraqi dinar, as the price of purchasing a dollar from the Ministry of Finance reached 1,300 dinars per dollar and sold it at (1310) dinars per dollar to banks through the electronic platform, and sold at (1320) dinars per dollar. Dollars from banks and non-bank financial institutions to the final beneficiary. LINK
Opportunistic And Rebellious”… A Parliamentarian Accuses The Kurdistan Government Of Supporting Türkiye To Prevent Oil Exports
Information / special. Today, Sunday, a member of Parliament, Ali Turki, accused the Kurdistan government of dominating and imposing wills in the file of resuming oil exports through Turkey, while stressing that the region supports Ankara by setting impossible conditions to prevent the resumption of oil exports through the port of Ceyhan.
Turki said in an interview with Al-Maalouma agency, “Kurdistan found by stopping oil exports a golden opportunity to show a lack of interest in the interests of the Iraqi people, especially the Kurds, as a result of the continued suspension of oil exports through Turkey,” noting that “the Kurdish people suffer greatly due to the lack of financial liquidity and the deduction of employees’ salaries.” without right or legal justification.
He continued, “The region supports Ankara by setting impossible conditions in order to resume oil exports through the port of Ceyhan,” pointing out that “what the region is going through is a reaction towards the Federal Court, which recognized the illegality of exporting oil in isolation from the central government.”
The member of Parliament concluded his speech by saying: “The Kurdistan government continues to work according to the principle of opportunism, rebellion, and authoritarianism towards the central government,” accusing “the Kurdistan government of authoritarianism and imposing wills in the file of resuming oil exports through Turkey.”
The suspension of oil exports to Turkey caused Iraq to lose 400,000 barrels of export funds, as a result of; Non-commitment of the Kurdistan Regional Government to stop smuggling to Türkiye for several years.
Ankara began using all possible papers to harm the Iraqi economy and export its oil through the Turkish port of Ceyhan, in addition to its failure to pay the fine imposed on it by international courts, after Iraq won an international lawsuit for the illegality of its receipt of the oil of the Kurdistan region. LINK
An Expert Proposes To Involve Experts In The Draft Oil And Gas Law
Baghdad today – Baghdad Today, Sunday (August 27, 2023), an expert in oil affairs, Hamza Al-Jawahiri, said that there is a need to involve experts in the oil field in preparing the draft oil and gas law, in addition to the participation of the authorities in the governments of Baghdad and Erbil.
Al-Jawahiri told “Baghdad Today” that “the legislation of laws in Iraq is subject to political agreements, which lead to the enactment of any law or not, but the preparation of draft laws must be from the competent authorities and personalities, so that there are no loopholes in the matter.” any part of the law.
He explained, “The involvement of experts and specialists in the field of oil in preparing a draft oil and gas law is applicable in many countries and is a health condition, and therefore the competent government agencies in the federal government and the Kurdistan Regional Government can also participate in preparing the draft.”
The oil sector in the Kurdistan region entered a “dark tunnel”, since oil exports through the Turkish port of Ceyhan were stopped by an international judicial decision from the Paris Court, in addition to the continuing dispute between Iraq and Turkey regarding the mechanism for restoring oil exports through the Turkish port of Ceyhan, in addition to the Baghdad agreement. The new Erbil, which made the Kurdish oil sector not isolated from the control of the federal government in Baghdad.
While the political forces stress the need to legislate the oil and gas law, reliance is being placed on resolving all the problems between Baghdad and Erbil and drawing the form of the relationship and the clear mechanisms for controlling the oil of the Kurdistan region and the specific powers of the regional government and the Baghdad government. It obstructs the enactment of the law and reaching an agreed formula. LINK
