Remember that the country of Iraq has only about 35-45 million people as it’s about the size of Texas. It is not huge like the US or other countries in Europe or Africa. In Iraq it often takes time to gain momentum on a country wide effort, especially when you are dealing with two major governments, Kurdistan and the Baghdad governments.
I will have my normal Wednesday call to Iraq. I try to get together a list of questions for my CBI contact. What I want to know this week is something to gauge the electronic payment effort on. In other words when is enough? For example in today’s list of articles the Association of Private Banks announced today, Saturday and I quote – “that financial inclusion in Iraq increased by 48.5% during the current year, while confirming Iraq’s efforts to reach a rate of 60% in financial inclusion operations next year”. You can go read the entire article titled “BY 48.5%.. BANKS ASSOCIATION: FINANCIAL INCLUSION IN IRAQ HAS INCREASED”
So, is 60% their goal? Is this a measure of enough to pull the trigger on the next rate change and conduct the project to delete the zeros inside Iraq to get the process underway again? Do they mean “by next year” or “during next year”? I would suggest by the end of this year, meaning by next year (early 2025) if they are to reinstate at that time. What do you think?
How far is Iraq into this banking reform and electronic payment process? An interesting article in today’s new may give us some hints that they are much farther than we think. Please read the article titled “GOVERNOR OF THE CENTRAL BANK OF IRAQ: WE HAVE MADE GREAT STRIDES IN THE PROCESS OF REFORMING THE BANKING SECTOR” So what happened this past period? The Central Bank of Iraq participated in the Electronic Payments Conference towards Financial Stability in Iraq, which was held under the patronage of the Prime Minister of Iraq, Mr. Mohammed Shia Al-Sudani, and organized by the Iraqi Private Banks Association, with the wide participation of parties concerned with electronic payment and the Iraqi banking sector. Who sponsoring them and why? On this same note you might want to also read the article titled “AL-ALAQ: THE NUMBER OF DIGITAL BANKS IN IRAQ WILL BE GREATER THAN NEIGHBORING COUNTRIES”. This article will give you a perspective on what took place in the conference and were they intend to bring Iraq in the banking sector.
The IQD should already be reinstated a decade ago and so why are we still waiting? What is this game being played? I am referencing Dr Shabibi’s 2012-2013 efforts again. Okay so the US Treasury is forcing Iraq down a path or revitalization of their economy first. This could make sense as we could see a higher rate when we go to exchange. But will we die first before this happens? How much is Iraq losing by not reinstating?
There is a good article in this regard you might want to read titled: “IT WILL TRANSFORM IRAQ INTO AN OPEN COUNTRY.” AL-SUDANI: THE PATH TO DEVELOPMENT NEEDS 5 YEARS TO COMPLETE”
It will play out as there is enormous pressure in all aspects as to how to handle and manage Iraq’s wealth.
They are going to do it and use all these additional revenues to fund it, such as taxes, customs, tariffs, minerals, and other major financial outlets sectors. You can go read the entire article titled “PARLIAMENTARY FINANCE COMMITTEE DISCUSSES PROPOSAL TO ESTABLISH SOVEREIGN FUND”. The Parliamentary Finance Committee announced, on Monday, discussing a proposal to establish this sovereign fund. They have to park all this money somewhere and let it grow.
Why would Iraq even need this sovereign fund? So, let me explain. At least this is how it was told to me by my CBI contact. Iraq will need to invest its money. But what money? Are we talking about the oil revenues? Yes, some of this money is from excess oil revenues beyond what they need to pay to run the government and salaries of Kurdistan. This excess comes when the budget is priced lower than the actual outgoing price of oil. We can call this “surplus revenues”. Right now they put this money in their reserves so they can use it for the proverbial “rainy day” if the oil prices drop below their budgeted price of oil.
What Iraq is now attempting to do, and they will be successful, is to try to harvest all avenues of additional revenues beyond the oil revenues. We can clearly see that the oil industry is not the energy of the future. It is not that oil is running out anytime soon but that there will be cleaner, more efficient energy sources coming our way. Keep in mind what the prophets also told us about three (3) news sources of energy and that these sources would be very affordable and practical. So, then why still use dirty oil.
To overcome this future situation Iraq must now make the changes and make them way in advance. The plan therefore is to capitalize on ALL and EVERY additional source of revenues besides oil. We were told that a combination of these revenues could rival the oil revenues. Really? Years ago, when I first heard this, I found this hard to believe, but as time passed I can see that there is enormous potential to get off the oil rentier economy and move more to self-sufficiency. Iraq must take advantage of all these sources of revenues. In addition, they are now kick-starting manufacturing. Yes, I am told the factories are being rebuilt and newer ones coming to life. This too will create more tax revenues, exports and of course jobs.
To pull it off they will need sort of an insurance policy. This insurance policy is the additional revenues. Think about it…. What if oil does decline, and it will, then what happens to Iraq if they solely pegged the IQD to the price of oil. Both would tank and goodbye Iraq. However, if they can sustain themselves with an additional source of revenues from these sovereign funds. They must rival the oil revenues and get them to this point.
So, what happens in the mean time when the price of oil is way beyond their budgeted amount? They will then keep growing their sovereign funds. This is the huge part of it all too. Most already tell us Iraq is filthy rich and they are, but they are not yet done as I described to you their near future plans. Right now the Kuwaiti dinar is one of the highest valued currencies in the world. Why? If you proportionately look at Iraq and compare its ability to generate wealth it can far out produce Kuwait. Why then is the KWD at $3+ and the IQD at about $.006?
I need everyone to relax and stop speculating and hoping for the RV tomorrow or next weekend. Just let the RV come to us. It is a byproduct of the effort not the main effort in itself.
I am talking in DETAILS, the nitty gritty details of what they are doing and the thresholds they are looking for. For instance, what percentage of the population do they need to have bank accounts regularly using electronic payments for everyday life. Then how about the merchants? Are the stores and shops all transitioned over? What about the banks, the most important pillar (as they just told us again). Are the banks in full inclusion? What is the “inclusion” of these banks and financial institutions in the electronic digital payment effort? Did they fix the issues with the Iraqi Stock Market (ISX) that we read about in the news not too long ago? Then at last is the additional revenues at the desired levels to rival the oil revenues? Can they now institute the petro-dinar and change over officially from a rentier economy? When it is estimated this will happen?
I have to also add that the CBI is not the entity holding up the RV. It is combination of entities as the CBI could conduct the project to delete the zeros beginning today and it would be successful too, however the US Treasury is not going to conduct its part along with the IMF until they are satisfied with the needed reforms. They need to see the economic changes they require. I know this seems very unfair, but this is hardball politics being played out. I keep asking what gives them the right to do this to a sovereign nation? Iraq is a sovereign nation, isn’t it? Is this just a notion or reality? It is all a matter of who controls what, get it? Who controls the management part of FOREX…..
Here is the process of the reinstatement again:
- Institute the reforms the “Pillars of Financial Reform” – Banking, Insurance, Stock Market;
- Get rid of the parallel market and demand for the dollar through the black market;
- Realize the Central Bank “official” rate of the dinar and overcome the dollar crisis.
- Be able to raise the “official” rate of the dinar against to dollar to a sustainable, realistic rate that reflects the true economy of Iraq (just over a dollar in-country),
- Conduct the Project to Delete the Zeros: decrease the monetary mass by collecting these large three zero notes, stashes/hoards of dinars and dollars. Swap out the currency.
- Watch/monitor for inflationary pressures on the process;
- Reinstate the IQD back to the global currency exchanges ie. FOREX. Not just a placeholder on FOREX pointing to ISX but the ability of tradable buy and sell options.
NOTE: This process above is an overall process and does not detail out the ongoing extent of efforts effecting this process and how they will achieve each step.
