Tishwash: IMF Staff Completes 2020 Article IV Mission with Iraq
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.
December 12, 2020
The COVID-19 pandemic and the sharp decline in oil prices and output have aggravated Iraq’s economic vulnerabilities. Real GDP growth this year is expected to contract by 11 percent amid a sharp widening of fiscal and external imbalances.
A comprehensive package of near-term economic policies anchored in a credible fiscal strategy is needed to overcome the health crisis, ensure economic stability, and protect the vulnerable.
Achieving durable and inclusive growth amid formidable challenges will require wide-ranging structural reforms aimed at strengthening public finances, improving governance, reforming the electricity sector, promoting private sector development, and ensuring financial sector stability.
Washington, DC – December 12, 2020: An International Monetary Fund (IMF) team led by Tokhir Mirzoev held a virtual mission with the Iraqi authorities from November 11 to December 10, to conduct discussions for the 2020 Article IV consultation with Iraq.
At the end of the virtual mission, Mr. Mirzoev issued the following statement:
“The fallout of the COVID-19 pandemic and the sharp decline in oil prices and output have aggravated Iraq’s economic vulnerabilities. Real GDP growth is expected at -11 percent in 2020, reflecting a contraction of oil output and an interruption of non-oil economic activity. The sharp decline in oil revenue is expected to widen the fiscal and external current account deficits to 20 and 16 percent of GDP respectively.
“A decisive recalibration of near-term economic policies will be critical to ensure macroeconomic stability and protect the vulnerable. Overcoming the health crisis is the highest priority. The next phase of the pandemic will require additional fiscal resources, including to acquire and distribute widely a viable vaccine, supported by a strong governance framework.
A comprehensive policy package to reduce fiscal and external imbalances will be critical to relieve financing constraints and ensure debt sustainability, while safeguarding international reserves. In this context, fiscal efforts in the 2021 budget should target key areas of fiscal vulnerability, notably reversing the unsustainable expansion of wage and pension bills, reducing inefficient energy subsidies, and raising non-oil revenues. Protecting the vulnerable will be of paramount importance and requires boosting significantly the targeted cash transfers and expanding their coverage, as well as improving targeting of other parts of the social safety net.
“Achieving durable and inclusive medium-term growth amid formidable challenges and vulnerabilities will require sustained implementation of wide-ranging structural reforms. These reforms should aim at strengthening public finances to enable critical health and social expenditure needs, reforming the electricity sector, fighting corruption, and expanding institutional capacity. Uncertain medium-term oil market prospects and strong population growth further raise the urgency of advancing the reform agenda.
“Continued strengthening of public finances over the medium term would create much-needed fiscal space for development and social protection. A comprehensive civil service reform would strengthen the effectiveness of the public sector while reducing fiscal costs.
Recalibration of the pension system is needed to ensure its sustainability. Stemming the electricity sector’s mounting financial losses and reforming the sector will enhance service provision and ensure its financial viability. Overhauling the tax and customs policy and administration will help diversify fiscal revenues. These efforts should be combined with improvements in public financial management and reforms to minimize fiscal risks stemming from government guarantees and other contingent liabilities.
“Addressing governance weaknesses and reducing corruption will be vital for Iraq’s future economic development. Simplification, digitalization, and greater transparency of key public services and institutions would reduce corruption risks, especially in public procurement. Alongside, strengthening audits, improving legal and regulatory frameworks in line with international standards and conventions, expanding capacity for risk-based supervision and enforcing compliance with AML/CFT rules will help strengthen public trust and investor sentiment.
“A decisive strategy to reform the large state-owned banks and level the playing field in the financial sector will enable private sector development and secure financial stability. In addition to strengthening control over these banks’ governance and enhanced supervision, it will be important to perform an international audit of the large state-owned banks to inform options for their restructuring.
“The team exchanged views with senior officials of the Central Bank of Iraq (CBI) and the Ministry of Finance, members of the Parliamentary Finance Committee, as well other ministries, government agencies, and representatives from the civil society.
The IMF team would like to thank the authorities for candid and productive discussions during this mission.” link
Annie68: SO, The IMF final inspection has been the hold up??
Stoneman: annie68 tony has been saying that for a while. Tied to Treasury.
Annie68: Not going to argue, but they are not one and the same,
Stoneman: annie68 they r not the same but IMF controlled mainly by US.
Tishwash: Range: 100 investment companies will start work in Iraq after approving the 2021 budget
The Iraqi Al-Mada newspaper said that 100 investment companies will start work in Iraq after approving the budget next year, indicating that the fees for these companies will be paid in oil and not in dollars.
Al-Mada newspaper said in a report, published today, that “the meeting of the three presidencies with the heads of political blocs, which was held in the Government Palace recently, discussed the file of holding parliamentary elections on time, approving the federal budget law, and the content of the oil agreement between Baghdad and Erbil.”
She added that “Prime Minister Mustafa Al-Kazemi reviewed during the meeting the terms of the oil agreement with the Kurdistan region,” noting that “the purpose of this meeting and the review of the oil agreement is to create conditions for the passage of the draft budget law easily in the House of Representatives after ensuring the approval of political blocs and parties.”
A short time ago, the federal government agreed with the Kurdistan region to reinstate the oil agreement signed in 2019, which obliges the region to deliver to SOMO an amount of 250,000 barrels of oil per day with half of its non-oil revenues (border outlets) to Baghdad, in exchange for the federal government’s commitment. Paying the region’s financial dues, which amount to about 12 trillion dinars.
She emphasized that “the investment will be distributed between the United States, Britain, Germany, France, Saudi Arabia, Egypt, Jordan, and Turkey, and that the government will deal with these companies by paying the oil directly, that is, these companies will get oil at lower prices instead of money.”
It is hoped that a hundred investment companies affiliated to advanced industrial and agricultural countries will enter Iraq in 2021, according to Rahim al-Aboudi, a leader in the wisdom movement, who says that “the work of these companies is dependent on the approval of the budget law link
Tishwash: The first session of next year … The stock market sets the date for its last session to 2020
The Board of Governors in the Iraq Stock Exchange decided, Sunday, that the last trading session for the year 2020 will be on Thursday 12/24/2020, and that the first trading session for 2021 will be on Sunday 3/1/2021.
As for today’s indicators, Taha Ahmad Abd al-Salam, Executive Director of the Iraq Stock Exchange, said in a statement that Mawazine News received a copy of it, that “the number of traded shares reached (1,031,499,522) shares, while the value of shares reached (707,559,242) dinars.”
He explained that “the price index in today’s session closed at (480.30) points, down by (0.29%) from its close in the previous session of (481.68) points.”
Abdul Salam added, “Shares of (26) companies out of (105) listed companies are traded in the market, while the number of companies suspended by a decision of the Securities Commission for not adhering to the instructions of financial disclosure is (31) companies.”
Pointing out that, “The number of shares purchased from non-Iraqi investors in the market reached (148) million shares, at a value of (141) million dinars, through the implementation of (70) deals on shares of (5) companies.”
He indicated that the number of shares sold by non-Iraqi investors in the market was (17) million shares, at a value of (30) million dinars, through the implementation of (18) deals on shares of (7) companies.
Tishwash: could these be CD’s 5% for a year 4.5% for 6 months?
Rafidain Bank raises deposit interest to 5%
Today, Sunday, Rafidain Bank announced financial benefits for fixed deposits of up to 5% for a year for citizens who deposited their money in the bank.
The media office of the bank said in a statement that “the financial benefits of fixed deposits for citizens who deposit their money in the bank for a period of six months amount to 4.5%.”
The statement called, “Citizens to visit bank branches, review instructions, deposit their money, benefit from this service and receive the financial benefits provided by the bank b link
Tishwash: A final opportunity that may save Iraqis from entering the new year with “empty pockets” .. a bet on a “short budget”
A final opportunity that may save Iraqis from entering the new year with “empty pockets” … a bet on a “short budget” that may prevent delaying it until the second month
The popular, political and parliamentary circles have been preoccupied for some time with the file of the delay in sending the budget by the Council of Ministers to Parliament, while there is only two weeks left until the end of the current year, while Parliament needs about two months to complete its discussion and vote on it.
And the government has placed Parliament before the status quo after it delayed sending the budget so far for various reasons, while it is hoped that the government will send the budget next Tuesday, the 15th of this December, after voting on it in the cabinet session.
When it is sent on this date, questions arise about the period that the budget will take in the House of Representatives until it is approved, as parliamentary sources talked about the need for the House of Representatives to two months, while others revealed the need for 45 days to approve the budget.
However, after the budget was delayed and became a fait accompli, delaying the vote on it in Parliament will cause a delay in the payment of salaries and the first month will be free of salaries, just as Al-Kazemi warned in previous statements, which puts Parliament in direct embarrassment in front of the people.
It appears that for this reason, Parliament will try to approve the budget as quickly as possible, as Parliament bets that the budget does not contain many paragraphs and sections.
A member of the Parliamentary Finance Committee, Jamal Cougar, said, in a press statement monitored by “Yis Iraq”, that “voting on the budget will not need more time if it does not include many sections and investment allocations in addition to the operational budget.”
He added that “the budget may be delayed approval within the parliament in the event that it faces objections from the representatives of the provinces in the event they feel unfair in terms of the sums allocated to their provinces.”
And that “the budget deficit should not exceed 3 percent of the total Iraqi national product, but the circumstance that Iraq is going through confirms that the state’s expenditures do not meet the need and there are expectations of improved resources during the last three months of next year.” link