Tuesday Morning Iraq Economic News Highlights 5-9-23
An Economist Explains The Reasons For The Rise In The Dollar: It Is Not Economic
2023-05-09 Shafaq News/ The Iraqi economist, Dergham Muhammad Ali, said on Tuesday that the reasons for the rise in the exchange rates of the US dollar in the local market are “not economic”.
Ali told Shafaq News agency, “There are currently no economic reasons for the fluctuation of the dollar’s exchange rate,” noting that “the ones responsible for it are the intermediary banks, most of which are linked to political parties.”
He continued, “Therefore, the stability of the exchange rate depends on the agreement of the political blocs with the government, which makes the price stabilize whenever there is political stability,” explaining, “If they want the price to stabilize near the official price, the intermediate link must be removed by offering the dollar through the ATM.” (ATM) under the supervision of the Central Bank, and with a maximum daily or weekly withdrawal limit, to prevent the withdrawal of large amounts and market manipulation.
The automated teller machine (: Automated teller machine, abbreviated ATM) is an electronic device that provides customers of financial institutions with conducting financial transactions in public places as an alternative to the need for an employee, and among the financial operations that are allowed to be carried out through an automated teller machine is access to bank accounts, cash withdrawals and knowledge of balances accounts, and deposit cash too.
Dollar prices rose in the parallel market during these days to reach 145,000 dinars compared to 100 dollars, despite the Central Bank feeding foreign transfers fully in addition to meeting the cash demand.
A Slight Decline In Dollar Prices In Baghdad And An Increase In Erbil
2023-05-09 Shafaq News/ The exchange rates of the US dollar against the Iraqi dinar decreased slightly today, Tuesday, in the main stock exchange in the capital, Baghdad, while it increased in Erbil, the capital of Kurdistan Region.
Shafaq News agency reporter said that the central Al-Kifah and Al-Harithiya stock exchanges in Baghdad recorded 144,750 Iraqi dinars for 100 US dollars this morning.
On Monday morning, the prices were 144,800 dinars for 100 dollars.
Our correspondent indicated that the buying and selling prices were stable in the exchange shops in the local markets in Baghdad, where the selling price reached 145,750 Iraqi dinars per 100 US dollars, while the purchase prices amounted to 143,750 Iraqi dinars per 100 US dollars.
As for Erbil, the capital of the Kurdistan Region, the price of the dollar recorded an increase, as the selling price reached 145,300 dinars against the dollar, and the purchase price was 145,200 dinars against 100 dollars. LINK
Parliament Is Looking To Reduce The Budget Deficit And Increase Government Income
The first 2023/05/09 Haider Al-Jaber First Deputy Speaker of Parliament Mohsen Al-Mandalawi called for the need to expedite the completion of the discussion and maturation of the draft general budget law, indicating that the Iraqi people of all sects are waiting for its approval, and will not excuse anyone in the event of its delay.
This comes at a time when the Parliament’s Finance Committee continues to host ministers to discuss the budgets of their ministries. Parliamentary committees are looking for ways to reduce the budget deficit by reducing spending and increasing government income.
Al-Mandalawi chaired, at midnight yesterday, Sunday, a meeting of the Parliamentary Finance Committee, during which it hosted the Minister of Finance, Taif Sami, to discuss the draft federal budget law. He is waiting for the approval of the budget because it is directly related to his life, and he will not excuse anyone if it is delayed.
Al-Mandalawi called for “determining the appropriate measures to overcome the current obstacles and challenges to expedite the approval of the budget,” stressing “the need to guarantee the financial dues of those with special grades for appointment, and to increase the share of the governorates to complete the lagging and strategic projects.”
During the meeting, “the ministry’s allocations for previous years were discussed compared to the current year, and the reasons for the increase in spending chapters such as grants, subsidies, and other expenditures, and social care,” pointing to “the necessity of maximizing revenues such as taxes, real estate, collection service, and others.”
For her part, the Minister of Finance reviewed the “spending chapters of the ministry,” noting that “the volume of amounts within the chapters on indebtedness, interest, the Olympic Committee, and other chapters are not in favor of the Ministry of Finance,” revealing that “a committee has been formed within the ministry to calculate the financial costs.”
Interventions included, during the meeting, which lasted late Sunday night, on how to pay the foreign debt owed by Iraq and the ministry’s procedures for replenishing the state’s public treasury, in addition to estimating oil and non-oil revenues and the volume of revenues, accounts and the issue of free lecturers and contracts after
2/10/2019, the mechanism for including their allocations, appointing first graduates and holders of higher degrees, and UNHCR contracts, in addition to some contracts for which funds were not allocated.
The draft budget law suffers from a deficit of 30%, which constitutes the most important obstacle facing the adoption of the law, in addition to the fluctuation of oil prices, and the demand for a fair salary scale.
A member of the Economics Committee, Kazem Al-Fayyad, put forward several proposals to increase government income, criticizing the wrong collection policy that the Iraqi state is pursuing.
Al-Fayyad told Al-Sabah: “It is in the public interest to reduce the budget deficit by submitting proposals to reduce the deficit, and we have put forward many proposals in the House of Representatives and presented them to the Prime Minister.” He added that “the first aspect is the development and support of the agricultural sector, in addition to having Ministries collect money but demand budget allocations.
He continued, “Many government institutions have shops, garages, markets, and (Allawi) vegetables, in addition to providing administrative services such as vacations and taxes, and these imports do not enter the state treasury.” He stressed that “oil imports in the budget amounted to 117 trillion dinars, while it amounted to Non-oil, only 20 trillion dinars,” warning of “a defect in the final accounts of each ministry.” https://alsabaah.iq/76542-.html
A Government Advisor Who Reduces The Risks Of Budget Deficit
Economical 2023/05/09 Haider Fleeh Al-Rubaie The financial advisor to the Prime Minister, Dr. Mazhar Muhammad Salih, underestimated the potential risks of a “hypothetical fiscal deficit” in the public budget, despite it exceeding the barrier of 64 trillion dinars, attributing this to the continuation of oil sales rates above the calculated price per barrel in the budget, which amounts to 70 dollars, and approaching the middle of the year. Finance, stressing the need for high discipline in spending, and he considered that financial rationalization to be counted among the indicators of performance evaluation and financial governance.
Despite the assurances given by the government advisor about the effects of the budget deficit and the economy in general, economists believe the opposite, as a number of specialists expressed their fear that the deficit would reach nearly 20% of the gross domestic product, stressing that this percentage is a violation of the Financial Management Law. No. (6) for the year 2019 as amended.
Economic specialists rely on the steps they described as “important” in implementing the government’s approach, especially moving the wheels of industry and agriculture, stressing that this approach can reduce dependence on oil revenues to support budgets, and mitigate the risks of deficit in the event of a decline in global oil prices.
And Saleh based his reassurances on “the arrival of the fifth month of the fiscal year, and the average sales of Iraqi oil are still higher than the price specified in the draft federal budget law for the current year 2023 and subsequent years, which amounts to $70 per barrel of exported oil.”
Saleh indicated during his interview with “Al-Sabah” that “according to these data, the expected financial risks, if they occur, will have a less severe impact on the hypothetical deficit estimates for the average fiscal year 2023, and in the event of price fluctuations of about $70 per barrel of crude oil, or even Less than that price, during the second half of the current fiscal year, at which point the budget resorts to financing parts of that deficit by internal borrowing from the market banking”.
Saleh believes that among the measures by which it is possible to confront the fiscal deficit in public budgets is the continuation of strictness and high discipline in enhancing non-oil revenues, and considering collection from non-oil revenue vessels (without delay) a first priority in evaluating the work of the state’s financial joints, as well as The importance of scrutinizing the exchange from the approved allocations in the exchange chapters and imposing high discipline on spending, specifically the ministries and spending agencies or exchange units, which should be careful in spending, and this is considered an important financial rationalization that is counted within the indicators of performance evaluation and high-quality financial governance.
Contrary to the opinion of the government advisor, the researcher in economic affairs, Bassam Raad, pointed out during his interview with “Al-Sabah” that “the enormity of the planned deficit in the 2023 budget is a complex and complex phenomenon, and there is an interconnected network of factors that contributed to this planned deficit, and at the forefront of this Factors Classify the Iraqi economy as a service, distribution, poor production, in addition to the changes that occurred as a result of the growth of expenditures the public”.
The seriousness of this deficit, according to researcher Raad, lies in the financing sources for bridging the deficit gap, which were identified through internal and external borrowing, stressing that this step could burden the budgets of the coming years by paying the installments and interest due for these loans, indicating that the ways to reduce the effects of this The deficit calls for searching for other sources of revenue to meet the growing expenditures and reduce the deficit gap, in addition to rationalizing spending and increasing the productive efficiency of public spending.
The spokesman pointed out that “the proportion of the planned deficit in the draft budget for the year 2023 amounts to (20%) of the gross domestic product, which is contrary to the Financial Management Law No. (6) of 2019 as amended (Article 4, Paragraph / Fourth), which stipulates that” it is not permissible to The planned deficit in the planning budget exceeds
(3%) of the gross domestic product,” according to the economic researcher, who also indicated that “the deficit in the general budget is one of the factors that determine Iraq’s economic capabilities in the credit rating. for the country.” https://alsabaah.iq/76517-.html
What About The Modification? Parliamentary Finance Reveals The Stage Reached By The Budget
Posted On2023-05-08 By Sotaliraq Today, Monday, the Parliamentary Finance Committee revealed the stage it has reached with regard to the budget and the date for starting the amendments.
Committee member Jamal Cougar said, “The House of Representatives has not yet reached the stage of amending the budget law by making transfers in the exchange chapters and other amendments.”
And Cougar indicated that “the House of Representatives is still discussing and studying the budget law with government agencies, and for this it needs more time to conduct a comprehensive study after the meetings with ministers and governors are over, then there will be amendments according to what has been studied and discussed,” noting that “passing the budget Perhaps it will be the end of this month, and we need more time.” LINK
Parliamentary Finance Denies Returning The Budget To The Government: We Will Present It To A Vote This Month
Posted On2023-05-09 By Sotaliraq Baghdad / Firas Adnan The Parliamentary Finance Committee denied its intention to return the budget to the government, confirming the vote on it during the current month, pointing out that the drop in oil prices raises fears of an increase in the deficit rates and its transformation from planned to real, stressing that the provinces have spent only 10% of the allocations for the development of regions contained in Emergency Support for Food Security and Development Law No. (2) of 2022, which was approved by Parliament last year.
The day before yesterday, the committee hosted the Minister of Finance, Taif Sami, for the second time to discuss the ministry’s budget, and the possibility of making transfers of amounts to ensure reducing spending and increasing revenues that supply the state treasury, as well as developing an appropriate strategy on the ministry’s mechanism with regard to spending units.
Some social media circulated the return of political differences over the budget law, which was the reason for delaying its submission to a vote.
However, member of the Finance Committee, Representative Jamal Cougar, said, “The talk that some people are circulating about the existence of obstacles to presenting the budget law to a vote is an incorrect claim.”
And Cougar continued, “The second reading of the government project includes a number of stages, the first of which is listening to the opinions of deputies, and this was done in three consecutive sessions that were open.”
And he pointed out, “The second stage is by holding hosting sessions with ministers, governors, and officials of public spending units, and we are continuing to do so according to an intensive schedule that starts daily from ten in the morning until seven in the evening, and then starts at nine in the evening until twelve after midnight.”
And Cougar stated, “The third stage begins with the formulation of the budget, and we have divided the committee into two teams, the first conducting hosting and studying schedules to conduct transfers, and the second to reformulate the materials sent by the government within the draft budget.”
He denied, “There are obstacles or disagreements, but there are continuous and extensive discussions, and we hope to complete them as soon as possible,” stressing that “Parliament has no intention of returning the law to the government in order to draft it in accordance with the proposed amendments.”
Cougar explained, “The budget will be approved definitively during this month, but it is not possible to set a fixed date for presenting the project to a vote or ending discussions on its texts within the Finance Committee.”
And he indicated, “The session of the three presidencies with the political leaders of the State Administration coalition, held last week, had ended with setting the tenth of this month (the day after tomorrow) to complete the discussions on the budget.
Cougar added, “This date is very close and cannot be adhered to, because the current budget differs from its predecessors in three aspects.”
And he continues, “The first aspect is that this budget is the highest that reached the House of Representatives after 2003, with an amount of up to 200 trillion dinars.”
And Cougar goes on, that the second aspect is the large deficit in the law estimated at more than 64 trillion dinars, and fears that this deficit will turn from planned to real under the weight of the drop in oil prices, as the barrel reached 72 dollars.
And he added, “The draft budget came at a price of $70 per barrel, and we need a difference between 7 and 10 dollars.”
And Cougar stated, “The Ministry of Oil informed us that it suggested that the price of a barrel be $65,” and he believed that “this large deficit, with the decrease in the price of a barrel of oil, will burden the budget and put it in front of a great responsibility.”
And he continues, “The last budget approved by the House of Representatives was for the fiscal year 2021, with amounts of 164 trillion dinars, and the discussion on it continued for 45 days, while we are facing a budget higher than that, and therefore it needs more time to complete the discussions and final formulation.”
And Cougar went on, that “the third new aspect of the budget is its status for three years, and this means that it will be exposed to any error or unfairness that will continue throughout the period allotted to it.”
For his part, another committee member, Khalil Al-Dosky, stated that “the Finance Committee has held meetings with most ministries, and it is continuing this activity in order to prepare final formulations that include holding discussions to achieve fairness in the distribution of allocations.”
Al-Dosky added, “Public spending units, whether federal or in the regions and governorates, cannot be convinced of their financial share in the budget and demand an increase in it.”
And he pointed out, “The meetings showed that everyone is calling for an increase in his allocations, but the Finance Committee looks at the supreme interest of the country, and evaluates the volume of revenues and the effectiveness of expenditures for each ministry and governorate so that we distribute the sums according to the standards of justice and actual need.”
And Al-Dosky stated, “The representatives fear the delay in implementing the projects, and according to the data of the Ministry of Planning, the sums for the development of the regions mentioned in the Emergency Support for Food Security and Development Law were spent only 10% of them.”
However, he stated that “the Finance Committee will not stop supporting projects for the provinces and the development of the regions, on the contrary, most or all of the members with deduct sums from the current budgets towards the development of the regions.”
And Al-Dosky concluded, that “determining the criteria for distributing the amounts, whether retroactively or from the date of approving the budget, will be subject to discussions within the Finance Committee before voting on the law, taking into account new issues, most notably the oil price variables.”
It is noteworthy that the House of Representatives had ended discussions on the budget and referred the project to the Finance Committee in order to put the final wordings in coordination with the government before submitting it to a vote. LINK
