KTFA (Samson & Don961)

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Samson: Saleh: Iraq faces an uphill task to address the recession

26th January 2021

The financial advisor to the Prime Minister, Dr. Mazhar Muhammad Salih, announced that Iraq faces an arduous task to address the recession in the economy

Saleh said, in a symposium on the 2021 budget, that “the general budget for 2021 was born in harsh conditions, and public opinion must know it, including a decrease in GDP by 11% with a deficit of 16% in a single-rent country that depends on oil sales to finance its budget at a time when the Corona pandemic, during the past year 2020, led to a decline in oil prices and a deterioration in the health and economic situation, which required compulsory austerity, halting investment projects, and increasing the area of poverty to 30% of the proportion of the population and adding to them about 10 million new poor, accompanied by a rise in unemployment to 27% of young

He stressed that “these risks negatively affected Iraq and put it in front of the arduous task of dealing with the economic recession, which is preparing a large budget to avoid contraction within the Iraqi economy and with a large deficit that allows for the creation of new job opportunities  LINK

Don961:  The 2021 budget … a move to add “ huge ” revenues and two conflicting opinions regarding the deficit between “ huge ” and “ not worrisome ” – urgent

Posted 6 hours ago  Baghdad today – Baghdad

Iraqi officials are talking about a huge financial deficit in the 2021 budget, ranging from 71 to 80 trillion dinars (65 billion dollars), which is the highest number in the country’s history, according to observers, at a time when Finance Minister Ali Allawi revealed yesterday negotiations with the International Monetary Fund with the aim of Obtaining a loan of 6 billion dollars, and saving the economy of Iraq mired in problems.

Historical impotence

A member of the Parliamentary Finance Committee, Jamal Cougar, said, “The Finance Committee continues to consider the project in order to prepare it with an amended version and present it to vote in the House of Representatives.”

And on the expected amendments, Cougar said that “the blocks seek to reduce budget expenditures from 164 trillion dinars to 120 or 135 trillion dinars, and if that happens, it will reduce the size of the financial deficit.”

He continued, in a press statement, that “the Finance Committee is also working to add 20 trillion dinars to revenues, by raising the price of oil exported to Iraqi refineries to support coverage of domestic consumption of one million barrels, one of which is currently sold at a symbolic price of $ 5.”

According to the draft budget, expenditures amount to 164 trillion dinars (112 billion dollars), with a fiscal deficit of 71 trillion (48 billion dollars), which observers have prepared for a historical deficit in the oil-exporting countries.

The First Deputy Speaker, Hassan Karim Al-Kaabi, had confirmed that “Parliament is working to provide financial allocations for employee salaries, contracts, wage earners and free lecturers,” indicating that “Parliament is working to reduce spending and reduce the deficit before voting“ soon ”on the draft Federal Budget Law 2021.

Al-Kaabi said in an interview with the semi-official newspaper, Al-Sabah: “The House of Representatives will take into account the basic principles in the budget of reducing the volume of expenditure of 164 trillion dinars, and reducing the 44% deficit by 71 trillion dinars from the total estimated budget of 93 trillion dinars, which Set on the basis of the oil price of $ 42 per barrel.

Economists believe that Iraq’s resorting to devaluation in order to bridge the public budget deficit due to the increase in expenditures does not achieve the goal at the required level, as the real sectors, industry, manufacturing industries, agriculture and services are at their lowest levels, and their contribution to the GDP is low.

Iraq’s non-oil exports are very few, and do not constitute any percentage in the trade balance, and the private sector is also inactive, and the advancement of these sectors will take many years with the presence of effective plans and policies, and the value of the local currency is usually devalued in countries that have high export capabilities. The customs policy is ineffective at the present time, and it represents the basis for protecting the local product to stimulate production.

Parliamentary promises to intervene

The Parliamentary Finance Committee confirmed that the size of the budget deficit will not remain 71 trillion dinars, indicating that it is serious about making changes to the budget in line with the current situation of the country.

The committee’s reporter, MP Ahmed Al-Saffar, said in a press statement that “public spending in the budget will witness a clear reduction,” noting that “the committee has identified clear pockets and points in the budget that will enable the government to maximize revenues.”

Al-Saffar added that “the size of the budget deficit will be reduced and 71 trillion dinars will not remain, and that the change will extend to even the price of oil according to which the budget was calculated,” indicating that “the committee is serious about making changes to the budget in line with the current situation of the country, and to achieve the best use or exploitation For public revenues ”.

He continued, “There are some points of contention and some points that need to be repeated hosting because the committee needs to know some spending units and needs more information so that the committee can accurately determine the amounts that these units need,” noting that “the committee does not need more than ten days.” Or two weeks to reach a final study of the budget.

Questions are still being raised about the financial and economic indicators of Iraq in the coming year, especially with the continuing indicators of low oil prices and the high indebtedness of the country, and the decline in reserves in the central bank, which may significantly affect the prices of the local currency, and these problems prompted the Iraqi government to resort to borrowing in more From time, to pay employee salaries and other operating expenses.

White paper

The projected estimates of the size of the deficit in the draft budget raise a great economic controversy. Specialists believe that it is necessary to reduce spending and adopt austerity formulas in managing financial resources, given the pessimistic financial indicators for the next year as well.

And economics professor Abdul Rahman Al-Mashhadani notes that the speech of parliamentarians about a large deficit in the 2021 budget gives the impression of “the government’s reliance on the estimates of the White Paper in preparing the draft budget, which was estimated at 153 trillion dinars (about $ 130 billion),” indicating That “if this figure is adopted, the amount of the deficit will exceed the limits of 72 trillion dinars (about 60 billion dollars), and this is a huge number.”

Al-Mashhadani asserts, in a press statement, that “reasonable numbers” to be included in the draft budget should “not exceed the limits of 63 billion dollars,” adding, “According to the available economic data, the oil revenues of Iraq for the next year will reach about 42 billion dollars, and non-oil. About $ 8.5 billion, which leads to a deficit of no more than $ 12.5 billion, and this is logical and not worrisome.

He pointed out that “the solutions available to the government are related to” rationalizing spending and setting the budget within reasonable limits, “pointing out that” Iraq at best did not achieve expenditures higher than 85 trillion dinars (about $ 71 billion), except for the year 2013, when the volume of spending reached About 100 trillion dinars (84 billion dollars) were suspicious of corruption.

He said, “All indications indicate that the current year will be difficult financially, after Iraq drained its capabilities last year, as the central bank’s reserves decreased to 54 trillion dinars (about $ 45 billion), from 67 trillion dinars (56 billion dollars).” The accumulation of domestic debt, and oil price indices will remain between 40 and 50 dollars a barrel.

Save the economy

Yesterday, Finance Minister Ali Allawi confirmed that Iraq is negotiating with the International Monetary Fund with the aim of obtaining a $ 6 billion loan, to save its economy mired in problems, while giving positive indications regarding the 2021 budget deficit and linking it to high oil prices.

“Once the Iraqi parliament approves the spending plan for 2021, the government will be able to request rapid financing of two billion dollars from the emergency financing mechanism created by the International Monetary Fund for the benefit of countries affected by the repercussions of the Corona virus,” Bloomberg quoted Ali Allawi.

Allawi said that “Iraq can then request a second, low-cost loan of $ 4 million K dollars from the International Monetary Fund’s government reform program.”

The US agency stated that financing the International Monetary Fund would cover a small part of the expected deficit in the budget, but it would “reduce the severity of the depletion of Iraq’s foreign exchange reserves.”

Last year, the Iraqi government had to borrow more than $ 25 billion from the central bank in order to pay the salaries of public sector employees and meet other financial requirements.

“Bloomberg” pointed out that the Iraqi government is also planning to rely on other financing tools to help cover the deficit, as Allawi said that once the budget is approved, the government will also move to issue domestic bonds worth $ 5 billion.

As for international bonds, the Iraqi Finance Minister said that “international loans are somewhat expensive,” adding: “I do not know if there is a desire to buy Iraqi bonds. Returning to these markets now remains difficult. ”

And “Bloomberg” said that the average yield of Iraq’s dollar bonds is 8.3%, adding that it is among the highest levels of any government in the world, according to Bloomberg Barclays indicators.

Iraq’s economy has suffered since the collapse of global oil prices due to the Coronavirus pandemic. Although oil prices have recovered during the recent period, Iraq is still struggling to cover its costs and avoid the exacerbation of the fiscal deficit.

And last year, Iraq exceeded the production limits agreed upon with other oil exporters in the “OPEC +” group, in order to collect the liquidity its economy needs.

But Iraq is committed to compensating for the excess production during the past months, according to the Iraqi Finance Minister, who assured Bloomberg that “Iraq will respect the quota set for oil production within the OPEC + alliance because it helps reduce the risk of price collapse.”

Allawi praised Saudi Arabia’s sudden production cut by one million barrels this month, which helped oil prices rise.

Allawi said, “Iraq’s budget deficit may shrink by 25% this year if oil prices remain around their current levels of $ 55 a barrel.”

The International Monetary Fund expects the Iraqi economy to contract by 12% in 2020 – the highest rate among OPEC countries, and have experienced a budget deficit of 22% of GDP.

Iraq devalued its currency last year by the largest amount ever, to reduce pressure on public finances at a time when it is trying to secure billions of dollars in foreign aid.  link

Samson: Speaker of Parliament meets Kuwaiti Crown Prince

26th January, 2021

Parliament Speaker Muhammad al-Halbousi met today, Monday, with his accompanying delegation, His Highness the Kuwaiti Crown Prince Sheikh Meshaal Al-Ahmad Al-Jaber Al-Sabah.

The meeting discussed bilateral relations between the two countries, enhancing means of cooperation in all fields in a way that serves the interest of the two brotherly peoples, and the importance of activating trade and revitalizing the private sector between the two countries, calling on his sovereignty for more coordination and cooperation to support Iraq in the field of reconstruction and investment.

The meeting also discussed the situation the region is going through, and emphasized the need to coordinate positions to face these challenges.

For his part, the Crown Prince expressed Kuwait’s position that Iraq is a safe country for its people to enjoy stability and prosperity. He also extended his deep condolences to the Iraqi people for the victims of the last two bombings in Baghdad, calling on the international community to stand with Iraq in fighting terrorism and extremist ideology.  LINK


Samson:  The Speaker of Parliament meets the Kuwaiti Prime Minister

25th January 2021

The Speaker of Parliament, Muhammad Al-Halbousi, and his accompanying delegation met with the Kuwaiti Prime Minister His Highness Sheikh Sabah Khaled Al-Hamad Al-Sabah.

At the outset of the meeting, His Excellency and the accompanying delegation congratulated His Highness Sheikh Al-Sabah on the occasion of his reappointment as Prime Minister and assigning him to nominate members of the new cabinet, wishing him success and success.

The meeting discussed enhancing the prospects for cooperation between Iraq and Kuwait in accordance with mutual interests in all fields, and the importance of activating the joint Iraqi-Kuwaiti ministerial committee and enhancing its work, as well as forming a joint parliamentary committee to activate cooperation and follow up and accelerate government procedures in the field of investment, trade and free zones.

His Excellency also discussed with the Kuwaiti Prime Minister the file of the remaining payments of debts owed by the Iraqi government to Kuwait, and the possibility of delaying their payment because of the financial crisis and the economic situation that Iraq is going through.

The meeting stressed the need to open the borders between the two countries to trade movement after it stopped due to the pandemic, with tightening commitment to preventive measures, appreciating Kuwait’s stances in support of Iraq during crises, the latest of which is the Corona pandemic crisis, which was represented by sending liquid oxygen trucks to the health institution.

For his part, the Kuwaiti Prime Minister offered his condolences to Iraq for the victims of the last two bombings in Baghdad, stressing his country’s support for the government and people of Iraq, and the continued expansion of the horizons of cooperation between the two brotherly countries at all levels.


Samson:  Details of the arrest of Iraqi oil officials on charges of corruption

26th January, 2021

The Integrity Commission revealed, on Tuesday, the details of the arrest of five officials in the Oil Products Distribution Company, the Kirkuk branch, indicating that they had caused damage to public funds estimated at two billion and 500 million dinars.

In a statement received by Shafaq News, the authority stated that a work team from the authority’s investigation office in Kirkuk managed to arrest the electronic control official in the Oil Products Distribution Company, the Kirkuk branch, and the managers of two government fuel stations and control officials in them, against the background of legal breaches that were proven in the work The electronic monitoring program by which the wheels are equipped with kerosene.

It indicated that the violations were represented by the lack of complete and correct data on the wheels that supply the product, as well as the penetration of the aforementioned program by other parties, according to which the processed quantities are being tampered with. The authority indicated that the fundamental investigations and audits conducted by the team proved that some governmental and private stations sold large quantities of gas oil in excess of 60 million liters, in contravention of the law, indicating that the value of the damage exceeds two billion and 500 million dinars.

It confirmed that a fundamentalist seizure report had been organized in the process, and it was presented with the accused and the investigative papers to the competent investigating judge. Who decided to arrest them in accordance with the provisions of Article (340) penalties.

Last September, the commission announced the issuance of an arrest and investigation order against a number of suspects in the North Refineries Company, the Kirkuk branch. Causing them to waste large quantities of white oil.  LINK