Tishwash: Parliament awaits two government bills on budget and borrowing
Parliament is still waiting for two government bills on the budget and borrowing, the parliamentary finance committee said On Saturday.
“The government has not sent any law to the House of Representatives, whether it be the 2020 general budget law or the new borrowing law,” committee rapporteur Ahmed al-Saffar told Shafq News.
“We in the parliamentary finance committee hope that the government will send a reform paper or a law that has all the operational and investment expenditures of the past months in order to know the size of government spending for 2020 and to rely on 1/12,” he said.
Last month, the government approved the budget bill and sent it to parliament, before withdrawing it again for amendments. link
Tishwash: Cougar: The 2021 budget will witness a financial settlement between Baghdad and Erbil
Member of the Parliamentary Finance Committee, Jamal Ahmed Cougar, stated that there are a number of moves and mechanisms that will be followed between Baghdad and Erbil in order to settle financial disputes and solve the outstanding problems between the two parties.
Cougar said in a press statement followed by the independent today, Thursday, that “the budget for next year will be included during which texts relating to the agreement between Baghdad and Erbil include reciprocal rights and duties in addition to the proposed solutions to the outstanding problems between the two governments.”
He added that “the 2021 budget will witness a financial settlement between the center and the region, and time limits should be set for its implementation in addition to the problems and resources of the border crossings.”
And that “the oil problems between Baghdad and Erbil need to legislate the oil and gas law in order to solve them, restore negotiations with the region’s oil companies and settle accounts between the two sides.” link
Tishwash: In existing scenario will divert the central bank’s vaults to save “paper” instead of money … this is what will happen
There are multiple and varied solutions that will force Iraq to follow them to remedy the imposed financial crisis, while these solutions collide with several obstacles and challenges. However, the current and proposed scenario will force the state and the Central Bank to follow some of these solutions.
The starting point of the financial scenario that will be imposed on the country begins with a challenge facing the central bank represented by the decrease in its dollar revenues due to the sale of oil, and its attempts to preserve the exchange rate of the dollar against the dinar and not to increase it.
An economist told “Yes Iraq”, saying: “An average of 2.5 to 3 billion dollars enters into the central bank per month, resulting from the sale of Iraqi oil exported outside the country without others. As for the local sale of oil derivatives, revenues from outlets, taxes, levies and communications, they are levied in the Iraqi currency, so it is not Its effect on increasing foreign currency reserves.
While about $ 3 billion enters the central bank’s treasury per month, about $ 4 billion comes out of the treasury, as the central bank sells it monthly to banks and hawala companies, as a result of the dollar’s capital request for the purpose of importing goods from outside Iraq, and these goods are for sale to citizens according to the capital’s claim. , And submitted by them with identity papers.
As a result of the difference between the dollar coming in and out of the central bank, the bank began to consume dollars from its reserves, for the purpose of covering up the dollar’s demand, fearing that its price would rise if sufficient quantities were not pumped out.
The Iraqi dinar is threatened with disappearing from the bank’s treasury as well!
The Central Bank also bought bonds from government banks worth 19 trillion dinars, as it provided the amount in Iraqi dinars and kept the bonds with it in its vaults, and the banks loaned the amounts to the government, and there is a new loan request submitted by the government to Parliament and awaiting approval.
In the event that the situation continues as mentioned, the dollar will disappear from the central bank or decline to its lowest level, and the dinar will decrease from its coffers and replace it with bonds.
What happens after the disappearance of the dollar from the bank’s treasury?
If the dollar disappears, its value will increase dramatically, and then all the commodities denominated in dollars will rise.
What will the government do?
The government will reduce expenditures for the purpose of reducing internal borrowing from banks and selling bonds to the central bank, as internal borrowing is from government banks, which in turn sell bonds to the central bank, so the central bank prints the currency and gives it to the banks to buy the bonds or use the currency stored in its vaults that was not put up for circulation, as if The process is to print a coin without a cap in gold and dollars.
Another solution is to get money by selling the dollar at a higher price
Another thing that the government can do is reduce the value of the dollar against the dinar, so that it can cover the salary expenses when selling the dollar to the central bank after selling oil, as it will try to pressure to reduce the quantities of the dollar sold by auction, and it will face two problems (the first) is its fear of its inability to cover the demand External, (second) the inability to be influential, especially with the difficulty of trying to obtain dollars without oil due to the fact that Iraq is an environment that expels dollars, visitors and investment.
The orientation towards import alternatives, which is a great opportunity for aspirants in the private sector, through the shift from trade to industry, and from import to export, by building substitute factories for every commodity on which there is a demand for clothing, equipment, foodstuffs, etc., and the value of demand in Iraq for goods is estimated Foreign Ministry by 40 to 50 billion dollars.
Get a dinar in another way
Maximizing the state’s revenues from the local dinar from some sectors, but this step collides with some economic indicators and others related to the great interests of the influential people, according to specialists.
As the reduction in expenditures will lead to a decrease in the prices of local goods and services, and not to decrease the dollar-denominated goods. link