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Tishwash:  Parliament votes entire borrowing bill after marathon negotiations – urgent

The House of Representatives voted on the borrowing law, at dawn today, Thursday, after marathon negotiations that continued since .yesterday noon, and were interspersed with disagreements with the Kurdish forces and the rest of the blocs

The (Baghdad Today) correspondent said that the House of Representatives voted on all the provisions of the Financial Deficit .Financing Law, (borrowing) concerned with the distribution of salaries and financing expenditures for the remaining months of 2020   link

Cutebwoy:  Parliament passes the borrowing bill and gives a green light to pay salaries

The Iraqi Parliament   2020-11-11 20:52

Shafaq News / The Iraqi parliament voted, on Thursday, on the borrowing law that the government has been waiting for to secure the delayed salaries of employees for several weeks, as the country is going through one of the most difficult financial crises, due to the decline in oil prices.

The session was hindered after the Kurdish blocs boycotted the voting session after a disagreement over a proposal submitted by Shiite parliamentary blocs that included “determining the Kurdistan Region’s share of the total actual spending – current expenditures and investment project expenditures – after excluding the sovereign expenditures specified in the federal budget law on the condition that the Kurdistan Region should pay The establishment of oil exported from the region and in quantities exclusively determined by SOMO and federal non-oil revenues.

In the event of non-commitment of the region, its expenses may not be paid, and the violator of this provision bears the legal violation. The session was held with the participation of most of the deputies, including the Kurds, after agreeing to postpone the vote on that controversial point, but Parliament proceeded to vote on the article, which caused a verbal altercation between Kurdish representatives and others from Shiite blocs that caused their withdrawal from the session.

The vote was also made to allocate an amount of 400 billion dinars to the port of Al-Faw, and to adopt fingerprints in salaries in order to ensure that there are no “aliens” – ghost employees -.

This amount will cover the government’s fiscal deficit for the months of October, November and December.

This is the second time that the government asked Parliament to grant it the authorization to borrow in order to secure operating expenses, on top of which are the salaries of employees.

On June 24, parliament approved a bill that allowed the government to borrow 15 trillion dinars internally and $ 5 billion abroad to cover the fiscal deficit.

According to the official authorities, these funds have run out during the past months.

Employees are still awaiting payment of their salaries last October, the second delay of its kind for the second month in a row.

The legislation of the fiscal deficit law comes to secure a legitimate cover for the government, given that Iraq has not approved the fiscal budget for 2020 due to the crisis of protests that toppled the previous government and was followed by the Corona pandemic crisis, which reduced the state’s revenues by nearly half.

And Iraq is one of the countries with a rentier economy, as it relies on revenues from selling oil to finance up to 95 percent of state expenditures.

The country is experiencing a suffocating financial crisis due to the decline in oil prices due to the Corona pandemic crisis, which has paralyzed large sectors of the world’s economies. And before the Corona pandemic crisis, revenues from selling crude amounted to about $ 6 billion per month, but they have almost halved this year.

Parliament passes the borrowing bill and gives a green light to pay salaries


Harambe:  Bloomberg: Zimbabwe Under Investor Pressure to End Gold Sales Monopoly  (11/12/20)

Gold mining investors are pressuring Zimbabwe to change a law forcing producers to sell their output to the central bank, which part pays them in local currency that’s worthless outside the country.

That law is making it hard to raise capital for investment projects, according to B2Gold Corp. and Caledonia Mining Corp., which are considering acquiring assets in Zimbabwe. B2Gold Chief Executive Officer Clive Johnson said the Canadian company has held talks with the government about changing the rules to unlock investment.

While mining investment is key to rebooting Zimbabwe’s collapsing economy, the nation suffers from an acute shortage of dollars. As the rally in bullion generates more interest in the industry, the government is “weighing its options” on whether to grant investors gold-trading licenses, said Deputy Mines Minister Polite Kambamura.

“The ability to handle gold sales is critical to a company like ours,” said B2Gold’s Johnson. “It’s an issue that would have to be clarified first for one to buy some assets and build some gold mines.”

Zimbabwe currently forces gold miners to sell their bullion to Fidelity Printers and Refiners Ltd. It pays them 70% in dollars and the remainder in local currency.

Payment delays of up to two weeks by Fidelity Printers and Refiners have impacted on producers, according to Chamber of Mines of Zimbabwe CEO Isaac Kwesu. Gold output in the southern African nation fell 30% in the first 10 months of 2020 from a year earlier. Existing mines require almost $400 million in fresh capital, the industry lobby group said.

To justify building new mines, Jersey-based Caledonia would need to take charge of its gold sales, said CEO Steve Curtis, whose company is interested in buying one of Zimbabwe’s largest gold operations.

“Those are the conversations the authorities have to get their heads around if you want an industry to be invested in,“ Curtis said in an interview. “That legislation, if they get rid of it, the level of investment would no question be up.”

Harambe:  Eurasia Review: Debunking Vietnam’s Currency Manipulation


The US Treasury is investigating whether Vietnam is manipulating (over-devaluing) its currency. This is driven by a growing bilateral trade surplus with the United States — a variable of special concern to the current White House but to very few economists.

It is the overall trade balance which would be relevant. That is close to balance — the (relatively) large 2019 trade surplus was only 4 per cent of imports. Most other years this decade the trade balances have been smaller or even negative. Another test would be if foreign exchange reserves were ‘excessive’ and at 3–4 months of imports, they are well within the range of normal holdings.

One can also look at the evolution of the exchange rate. In 2010, there was a trade deficit and the exchange rate averaged 18,613 dong to the dollar. In 2019, with the overall modest trade surplus, it was 23,050 and is little changed for most of 2020.

But the inflation differential more than explained the dong’s movement. Vietnam’s GDP deflator grew 62 per cent from 2010 to 2019 while the US deflator was up 17 per cent. If Vietnam’s currency had depreciated by the amount of Vietnam’s ‘extra’ inflation, it would have depreciated by 38 per cent and the dong should have depreciated to more than 25,000. Under purchasing power economic theory, exchange rates reflect inflation differentials.

If Vietnam is manipulating its currency, it is keeping it overvalued and making it harder to export, not easier. So, what is going on?

response to rising tensions with China and its rising labour costs, many companies adopted a ‘China+1’ strategy earlier in the last decade — often locating assembly factories for garments, shoes and electronics in Vietnam. With the more recent trade war sparked by US President Donald Trump, the policy changed to an ‘ABC’ (anywhere but China) strategy, and very quickly.

This has led to the migration of export production to Vietnam. Exports of goods rose from US$150 billion in 2014 to US$264 billion in 2019. They even grew in 2020, by 2 per cent through September. But imports of goods also grew quickly, from US$148 billion in 2014 to US$253 billion in 2019 — falling slightly (0.8 per cent) in 2020. The value added of the FDI exports is typically very low and a lot of the ‘Vietnamese’ surplus with the United States reflects imported inputs from the rest of Asia.

The IMF shows a current account surplus of 4.9 per cent of GDP in 2014 falling to 2.2 per cent of GDP in 2019. The balance on goods and services in 2020 through September was US$8 billion. Neither the trade surplus, current account balance or foreign exchange reserves show any sign of significant or increasing currency manipulation.

The values of other currencies — such as the euro and renminbi — are also important for Vietnam. The dollar was strong into 2019 due to Federal Reserve interest rate increases from near zero before 2016 to more than 2 per cent in late 2019 — at a time when EU and Japanese interest rates were much lower. The US trade deficit with all countries grew from US$490 billion in 2014 to US$617 billion in 2019. A large tax cut and full employment in the United States in 2017 increased demand and contributed to the growing trade deficit. The overall US trade deficit is largely caused by excess demand and a strong dollar.

The focus should be on the deluge of FDI — the World Bank data say there was a net inflow of US$9.2 billion in 2014 rising to US$16.1 billion in 2019. Much of this investment is aimed for export, but its production has low value added. An estimate for smart phone exports puts labour value added at 2 per cent of sales value and there are single digit estimates of total value added for chip assembly.

This is why the current account is nearly balanced — imports are coming in, little value added occurs and exports look big but mostly reflect production in other places. There is a remote possibility that Vietnam might seriously manipulate its currency in the future, but unlike China, it wants good relations with the OECD and the United States. It is much more willing to negotiate surveillance and management practices.

Some of the runup in exports is already hitting limits — the labour force wanting to work in factories is largely used up and there is a limited amount of agricultural labour willing and able to transfer to factories. Much of the declining agricultural labour force is aging. Young educated workers — increasing in number — do not aim for factory jobs.

This means the total factory labour supply may stagnate or even fall in the current decade. The main ‘crime’ of Vietnam is to be in the right place at the right time and to take advantage of global developments in which they have little influence.

It is likely that if Vietnam can spend more on infrastructure, it will. Its cities and rural areas need more transportation investments. Its electrical grid needs billions of dollars of upgrading. Water and sewerage systems need improvements. Such spending does not happen immediately, but it will follow. When it happens, imports will grow more than exports. Tariffs are low and falling.

The growth of smarter and cheaper robots and 3D printing is also likely to decrease demand for overseas labour. The United Nations estimates that robots could displace 75–85 per cent of labour in electronics assembly, garments and shoes — all major exports of Vietnam. If export production migrates to where it is consumed, Vietnam’s real economy and currency would both be in trouble.