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Samson: An Intensive Deployment Of “Law Enforcement” Forces In Front Of The Central Bank

An intensive deployment of ‘law-keeping’ forces in front of the Central Bank, Al-Firdous Square, and in front of the Ministry of Electricity and the Iraqi Engineers Syndicate building, and the reasons are not known yet.   LINK

Moparman:  Could this be for the big day tomorrow? Could the budget delay also be until after the announcement? IMO Yes. The GOI knows that the auctions must be stopped due to corruption. The GOI and the CBI also know that to add more value to the dollar will cause more inflation and will also push away investors. If they add value to the dollar, they will still be stuck with the big question, how are they going to pay their people every month? IMO, all the disinformation is following Kuwait’s mold.

DeepWoodz:  Imo…Im sure this is way off base but I’m trying to be a good student so whatever.

Some of the articles seem to put out info that look bad at first glance, and it would seem Allawi is in on it. Two months ago or so the GOI, namely the MOF, pulled a fast one and restricted the amount of dollars in the market which has been driving the rate up.  They said they did it to bridge the deficit. I believe from the 2020.

So with the market rates going the wrong way and someone leaking some opinions in the articles, confusion abounds. I’m still not sure about the leaked budget.

On that note, bring in the Governor making it clear to everyone that the CBI controls the real effective exchange rate of their currency and the rate hasn’t changed…..YET, but fear not because after two separate meetings. One with the PFC and the other with the Parliamentary Economic and Investment Affairs Committee. He also took a field trip into the markets and talked with exchangers and shop owners……

the CBI is ready to “launch a package of measures that will achieve a balance in the exchange rate in 2021.”

That will also double…”the hard currency supply in the market.”

Another member of the PFC says this concerning the higher rate in the markets….

“financial reform must be adopted exactly the opposite by reducing expenditures and developing plans and mechanisms for austerity”

Note the term..OPPOSITE.

Which brings us to Saturday that was supposed to be allotted for a meeting on the 2021. Saturday is looking interesting for sure.

Finally…we are one day closer to a special day. I wonder if we’ll have  a “white”(paper) Christmas!! Wink

PS…here’s a thought. Maybe just maybe….The plan has been to sow confusion. A concerted effort between GOI and CBI to lessen the dependence on the dollar in the markets, while at the same time giving the appearance that they are going to lower the value of the dinar to reduce the amount of people who would gobble up dinars knowing what was coming. Too little too late I think.

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Samson:  Abu Mazen Submits His Resignation From Parliament

19th December 2020

Al- Mustaqilla obtained a document showing that Representative Ahmed al-Jubouri, known as “Abu Mazen”, had submitted his resignation from the House of Representatives.

It is noteworthy that an Iraqi court prevented Abu Mazen from running for the upcoming parliamentary elections due to corruption charges against him.

Al-Jubouri is leading a Sunni parliamentary movement to overthrow Parliament Speaker Muhammad al-Halbousi, in partnership with Osama al-Nujaifi, but the coalition disintegrated for unknown reasons.  LINK

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Samson:  The currency float in Erbil shocks traders: We do not know how to act

19th December 2020

Although the Erbil Stock Exchange suspended its dealings on Friday, Saturday, as it was an official holiday, dozens of speculators gathered in front of its entrance after the noticeable rise in the exchange rate of the dollar against the Iraqi dinar.

Hajj Muhammad, (owner of a currency exchange office), told Shafaq News that he came to the Erbil Stock Exchange to explore the situation, indicating that “there are those who want to benefit from the market and speculation, otherwise there is nothing official to raise the price of the dollar against the Iraqi dinar.” He added, “We contacted the currency-buying offices that deal with the Central Bank in Baghdad, and they do not know about raising the price because the day before that, the bank asked them to buy the dollar prices, but until now we are in contact with them and the prices are the same as the old prices.”

Sources in the Parliamentary Finance Committee said last Thursday that the Central Bank will raise the price of the dollar to 145,000 Iraqi dinars for every hundred dollars.

In turn, Yassin Hamad, the owner of a banking office in the Arbil Stock Exchange, told Shafaq News, “We do not know the reasons, but there are those who have large sums of dollars and want to sell them at a high price in the hope that they will buy it in the coming days at a lower price and in return there are those who own the Iraqi dinar and want to he buys the dollar for fear that its price will rise further.”

The impact of this rise in the price of the dollar on the prices of foodstuffs as well, amid citizens’ fears of a rise in prices. “The prices of all foodstuffs have increased significantly,” said Zamdar Hussain, who was about to buy some foodstuffs in Sheikh Barbil’s market. Unfortunately, only the citizen pays the price.

Alan Shaker Amin, the owner of a food store in Sheikh Irbil’s market, defended the high prices, saying, “We do not know how to act, the price of the dollar changes every day and we do not have large sums. Selling in Iraqi dinars and then converting it into dollars to buy food with it from Turkey.” “We cannot maintain the price if the market is not stable in terms of currency exchange,” he added.

To that, economic analyst Kovand Sherwani says, “Floating the dollar is a measure that the federal government will adopt to provide cash liquidity in dinars that will reduce the financial deficit, which is estimated at 58 trillion dinars in the year 2021.” But he cautioned that “raising the exchange rate from 1190 to 1450 dinars per dollar means that the market price will exceed 1500 dinars to the dollar, and this means a 25% drop in the value of the dinar. This leads to a decrease in the purchasing power of employees and people with limited income by more than 25% because more than 75% of goods and services in Iraq are imported, and their prices are set in dollars.”

Sherwani offers a solution to mitigate the harm to citizens, low-income citizens and public sector employees, saying, “It is possible to expand support for basic and food commodities, especially among them the ration card items, which have shrunk significantly in previous years.” He added, “As well as raising the interest rate on bank savings in dinars and supporting local commodities and products that are sold in dinars, as well as disbursing a financial incentive package for small enterprises, earners and private sector institutions.”   LINK

Samson:  Parliamentary Finance reveals the government’s intention to officially declare bankruptcy in early 2021

14:57 – 12/19/2020

The Parliamentary Finance Committee revealed, on Saturday, the government’s intention to declare bankruptcy early next year, indicating that it had resorted to the exchange rate of the dollar to avoid declaring bankruptcy.

“The current government has failed in all steps to save the country from the financial crisis as a result of the failed financial policy that it followed,” a member of the Parliamentary Finance Committee, Abdul Hadi Al-Saadawi, said.

He added, “The government was intending to officially declare bankruptcy at the beginning of 2021,” noting that “the government took steps to take for the affected citizen to avoid bankruptcy.”

Al-Saadawi said that “one of these steps is to raise the price of the dollar against the Iraqi dinar,” noting that “it is my solution, and the Iraqi dinar will be harmed by it.”   LINK

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Samson:  Central Bank: Change the value of the Iraqi dinar will be one-time only and will not be repeated

19th December 2020

Economy News publishes the text of the Central Bank of Iraq’s statement on the change of the dollar’s exchange rate, and it says

During the last months of this year, intense deliberations took place with the Prime Minister, the Minister of Finance and the Legislative Authority, regarding the general economic situation and the financial crisis that the public finances are going through due to low oil prices and production, and the economic and health challenges

The Board of Directors of the Central Bank held a number of meetings, some of which hosted the Minister of Finance for the same purpose

The Central Bank of Iraq would like to show the following

1- The structural distortions in the Iraqi economy impoverished public finances and restricted the ability of reform sought by the government and the Ministry of Finance. It is not a coincidence that the financial situation is this bad, nor is it the result of the current or the previous year, but unfortunately it took root more than a decade and a half ago due to the policy leadership of the economy and the preference for political thinking and the priorities of politicians over economic thought and development priorities and the rules of the relationship between economic policy on the one hand and fiscal and monetary policies.

On the other hand … the fiscal policy lagged behind, and the monetary policy was busy repairing the outputs of the confused fiscal policy

2– The subordination of the economic and financial policy to the aspirations and concerns of politicians resulted in the last acceptable models of financial management in Iraq, and the role of that administration was limited to the distribution of oil resources to life-sustaining requirements such as salaries and operational requirements, and the Ministry of Finance did not address its roles and leadership in economic affairs. In addition to the fact that it lacked many economic and financial information that could facilitate it and the decision-maker in the country to direct short and medium-term goals. This calls for an active approach to build economic and financial databases that facilitate decision-making and serve forecasts

3– Because of all these conditions, the Central Bank had no choice but to intervene on more than one occasion to support public finances and save critical public spending requirements .. However, this does not mean that these interventions remain open without restrictions or endings

4– On the other hand … the Central Bank understands the difficulties facing the reform intentions that the government is heading to undertake, but this does not prevent any steps that the monetary authority can take with effective steps to implement reforms that inevitably affect the institutions of the financial authority, especially the effective collection institutions. Customs, taxes, and other public collection institutions, and that spending be leaned and rationalized, all of which depends on the political will of the supreme state institutions that support the direction of the financial authority to achieve this

The government needs to support the vulnerable groups that will inevitably be directly affected, especially by any measure to change the exchange rate

5- The legislative authority will have an important role in supporting the direction of the Central Bank to adjust the foreign currency exchange rate, as failure to take such a decision may make us forced to take difficult decisions that may put Iraq in a situation similar to what happened to neighboring countries

It must also be emphasized here that this change (reduction) in the value of the Iraqi dinar will be one-time only and will not be repeated, and the Central Bank will defend this price and its stability with the support of its foreign reserves, which are still at solid levels that enable it to do so

6- The financial crisis that Iraq was exposed to due to the Corona pandemic and the resulting deterioration in oil prices and the decline in oil revenues, this led to a large deficit in the general budget and forcing the Ministry of Finance to borrow from banks and re-deduct them with the Central Bank in large sums, in order to pay salaries And meeting other spending needs related to services provided to citizens, and the continuation of the current exchange rate, which is not in any way commensurate with the rates of exchange rates in other countries, has become a major obstacle to conducting real development and enhancing competitiveness for local production, which prompted the Central Bank to think seriously about responding to financing requirements.

Budget at the exchange rate that allows providing adequate resources to cover these needs and ensure the smooth payment of salaries and the critical requirements of government spending, and in order for the bank to avoid depleting its foreign reserves, which represent the main financial leverage for monetary stability in Iraq, And his keenness to support the public finances, as he is the advisor to the government and responsible for keeping its accounts

Based on the above, the Central Bank of Iraq decided to amend the foreign currency exchange rate as follows

1450 dinars per dollar is the purchase price of foreign currency from the Ministry of Finance

1460 dinars per dollar the selling price of foreign currency to banks

1470 dinars per dollar is the selling price of foreign currency to the public

We ask the Almighty to take the hand of our country and our people because of the goodness, payment, and honor that it contains

The Central Bank of Iraq – December 19, 2020   LINK

OlLar:  I love this , exactly what we expect, of coarse there is no mention of who said this, do you know what this means? Watch the CBI early Sunday morning, this is their HEADFAKE! We are going to have a very Green Christmas! Stay close to Jesus so this blessing does not become a curse . IMO

Don961:  The Central Bank is discussing with two parliamentary committees to balance the exchange rate
Saturday 19 December 2020 Baghdad: Mustafa Al-Hashemi

The rise in the price of the dollar against the dinar, and its causes, is still the talk of specialists in financial and economic affairs, at a time when the exchange rate exceeded 133 thousand and 500 dinars per hundred dollars in all governorates, despite the discussion of the financial, economics and investment affairs committees with the Central Bank, in two separate meetings, the reasons for that . The Parliamentary Economic and Investment Affairs Committee held a joint meeting with the Governor of the Central Bank, Mustafa Ghaleb Makhaif, and the bank’s management official, to discuss the crisis of the high exchange rate of the dollar in the local market and the daily currency auction.

The Parliamentary Finance Committee also held a new joint meeting with the governor of the Central Bank to discuss the implications of the high exchange rate of hard currency in the local market, after a previous meeting of the governor with members of the Parliamentary Economic and Investment Affairs Committee.

Khayef revealed the readiness to launch a package of measures that will achieve a balance in the exchange rate in 2021, such as launching a 3 trillion initiative to support low-income people, doubling the hard currency supply in the market, and increasing interest rates on the local currency deposited in banks.

The committee discussed ways to confront the negative repercussions of increasing the exchange rate on citizens, especially the poor classes, as well as the measures that the Central Bank will follow towards banking companies to deter the weak from exploiting this situation.

Earlier, the governor of the Central Bank conducted a field visit that included a number of companies mediating the sale and purchase of foreign currencies on the Karkh and Rusafa sides in Baghdad, accompanied by a committee specialized in auditing companies from the Banking Control Department at the Central Bank.

According to a statement by the central bank, “the governor was briefed on the functioning of these companies and their dealings with the beneficiaries of the citizens. He also listened to the notes and proposals of the owners of the companies and promised to study them by the bank and activate their outputs, which will positively affect the work of the Iraqi financial and economic sector.”

The statement indicated that this visit comes from his keenness to see first-hand the actual reality of the work of these companies in order to develop the services provided by them.

The specialist in economic affairs, Adnan Al-Fattal, believes that there is a case of speculation on the dollar by a group of people who have hoarded Iraqi money, who buy large quantities of dollars in exchange for the central bank preserving the amount of pumping the dollar into the market without increasing it.

Al-Fattal added in an interview with Al-Sabah that It is known that the Central Bank has set an official price for selling the dollar at 1190 dinars per dollar, while the owners of banking shops and speculators make huge profits from the difference in the price sold in the market of 133 thousand and 500 dinars per hundred dollars. , Which has been on the rise for days.

In turn, economic researcher Lubna Al-Shammari called on the Central Bank to coordinate with Economic Security to monitor the offender in the event of selling the dollar at the current price that confused the markets and commercial dealings in them.

Al-Shammari added to “Al-Sabah” that “the banks participating in the window of selling the currency bear part of the responsibility because the Central Bank sells dollars at a fixed exchange rate, and that buyers of hard currency from it and speculators bear the bulk of the cause of this crazy rise.”

She emphasized that “this increase is temporary and the exchange rate will return to its normal rates or close to it after the end of the Christmas and New Year period, because this rise is not new to Iraq as it is affected by rumors, false news and the current conditions in the country.”  LINK