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Tishwash: Legal clarifying the power of Parliament to change the exchange rate of the dollar in the budget

The legal expert, Ali Al-Tamimi, explained the extent of Parliament’s authority to change the dollar exchange rate in the budget, pointing out that Parliament is facing a historical position to prevent the increase in the difficulty of living for the people.

Al-Tamimi said to “the information”, that “Article 62 of the constitution permits parliament, upon the arrival of the draft budget, to transfer between chapters and chapters as well as reduce the total amounts, and he may, when necessary, return them to the Council of Ministers and suggest an increase in total expenditures, and Article 57 of the Constitution requires Legislating the budget law even if the legislative term ends, and this means that Parliament cannot reduce the exchange rate of the dollar that was set in the budget.

Rather, it can propose and return the budget to the Council of Ministers because of the extreme necessity for that, as it violates Article 30 of the Constitution that requires the government to provide Decent living for people ”.

He added, “Parliament is facing a historic position … that it represents the people in … standing by the people and preventing the increase in the difficulty of living.”

And that “Parliament and if the budget law is legislated, it is subject to appeal before the Federal Supreme Court according to Article 93, as this contravenes Article 30 of the Constitution and Articles 23 and 26 of the Charter of the International Covenant.”  link

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Tishwash:  Pandemic, dinar devaluation deal big blow to small business

ERBIL, Kurdistan Region — The coronavirus pandemic and devaluation of the dinar have created tough times for small businesses in the Kurdistan Region.

Lockdowns imposed by the government once the coronavirus outbreak reached the Kurdistan Region forced businesses of all sizes to shut down to limit the spread of the virus, slashing their revenue.

However, business owners who rented the space they operated from still had to pay rent, even though their premises were closed for weeks – forcing them to shut up shop.

There is no government data available for the number of businesses that have closed since March 2020, an official from the Kurdistan Regional Government (KRG) Ministry of Labour and Social Affairs told Rudaw English.

Bahman Othman, owner of City Gym in Sulaimani told Rudaw’s Rozhan Abubakir on Sunday that the main problem business owners faced was with their landlords.

“When we had to close down our gyms in the beginning of the virus, our main problem was with our landlords, who asked for rent despite our gyms being empty,” Othman said.

“Because of the landlords, many businesses announced their bankruptcy.”

Early on in the lockdown imposed in the spring of last year, Prime Minister of the Kurdistan Region Masrour Barzani asked commercial landlords to reduce rents to ease the burden on their tenants.

However, the request was never government-enforced – leaving the decision to landlords themselves.

“Some reduced the rent, some did not,” Othman said.

An official from the KRG told Abubakir that they have given struggling small business owners financial assistance.

“Here at the ministry, we have an aid box for small businesses from which 8,136 people have benefitted,” said Zakia Seyid Salih, deputy minister for Labor and Social affairs.

“Until March 1, 2021, our ministry is not taking repayments on loans we’ve given to start-ups, as a way to ease the burden on small businesses.”

Though pandemic-related restrictions have been lifted with the decline in coronavirus cases, small businesses now have to contend with another issue – the increase of the dollar exchange rate.

“Our rent is in dollars, and our registration fee is in dollars too, but people pay in dinars – which means fewer people will register, and it will be yet another burden on our shoulders,” Othman said.

Iraq’s Central Bank set the dollar at 1,470 dinars last month, in what the country’s finance minister said was a step towards reform and creating a “financial balance” that will revitalize a struggling economy.

News of the devaluation enraged public sector workers, who said their salaries would be “worthless” in a country that lacks a developed manufacturing sector and is heavily reliant on imported goods. link

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Tishwash:  Representative economy: a difference in the exchange rate of the dollar returned to the government by 12 trillion dinars

A member of the Parliamentary Economic and Investment Committee, Hamid Al-Mousawi, revealed that the difference in the exchange rate of the dollar returned to the government by 12 trillion dinars, pointing out that Parliament is determined to reduce the budget deficit and pressure unnecessary expenditures.

Al-Mousawi said to “the information”, that “the Financial Management Law prevents the deficit from exceeding the 3 percent, while the deficit in the current budget has reached 44 percent, so work is being done diligently to come out with a budget that preserves employee benefits and social care and stands in front of the deductions decided by it.” Government, as well as pressure over public expenditures. ”

He added that “many of the paragraphs in the budget are called black holes, where the government tried to add unnecessary expenditures, and there is serious work to prevent these expenditures and direct them towards eligible categories.”

And that “the government has achieved by raising the exchange rate of the dollar, the amount of 12 trillion dinars, and this difference will be invested to end the financing gap and the deficit in the budget.”  link

Tishwash:  4 currencies trying to break the dominance of the dollar on global markets

At a time when the European Union is trying to break the dominance of the US dollar in most of the markets, there are still 4 currencies that managed during the last period to withdraw part of the share of the US green card in the reserves held by central banks.

The euro, the Chinese renminbi, in addition to the special drawing rights system related to the International Monetary Fund, and finally the cryptocurrencies that have managed during the past years to draw the world’s attention to this market, which is growing with steady strength, is one of the strongest competitors for the US currency at the present time.

In a recent report, the “Financial Times” newspaper mentioned that the European Union plans to fight “the dominance of the dollar” in global markets, and indicated that “one of the documents reviewed by journalists confirms that the global financial markets depend heavily on the US dollar.”

The question of dependence on the dollar is to be raised shortly before the inauguration of US President-elect Joe Biden. The newspaper stressed that “the document is related to overcoming difficulties similar to those faced by the European Union, after Trump reinstated sanctions against Iran, as well as the need to protect countries from the consequences of the illegal use outside regional borders of such measures.” The newspaper touched on “the European Union’s need to find ways to enhance the role of the euro on the global stage, through the lessons learned from the Corona pandemic.”

The euro controls 20 percent of bank reserves

The European euro tops the list of competing currencies for the US dollar, especially as it controls about 20 percent of global reserves in the euro, registering with this percentage the second largest share of reserves in the world. But according to a study prepared by the UAE-based Future Research and Studies Center, the ability of the euro to dominate it is undermined by several problems, which are that the euro is a universal currency that is traded across the economies of 19 countries that do not participate in a common asset market. For a global reserve currency to develop, investors need to be able to place their money in deep and liquid markets, and there are very few of these markets in the Eurozone.

At the same time, the Euro is also facing weak growth, and given the weak prospects in the coming years, investors may retreat from placing their money in markets that may face a downturn. The final problem with the eurozone is its politics. As a monetary union without a fiscal union, the eurozone has struggled to compensate for the devastating credit booms and crashes. This has led to a wide divergence in the economic outcomes, fueling political discontent between states.

While the European response to the Covid-19 pandemic has led to the formation of what can be called financial unions between European countries, to save the economies of surrounding countries in times of crisis, as the European Union agreed in July to issue 750 billion euros (907.5 billion dollars) of joint debt. , To finance remittances to countries struggling to recover from the pandemic.

While these unions could compete with the financial position of the United States, the more likely outcome is that enthusiastic defenses of national sovereignty will thwart efforts to forge a permanent fiscal union between European states. Also, Britain’s exit from the European Union may be followed by the exit of other countries, such as Italy. In this case, investors will not find safety in light of the uncertain economies.

The Chinese Renminbi and its “hide and seek

Whereas, the Chinese renminbi represents a key element in China’s strategy to exit from the policy of “hiding and direct”, which aims to conceal its rise, noting that internationalization will reduce China’s dependence on the United States, help it develop its markets, and establish Shanghai as an alternative financial center.

In this context, the Chinese government has pushed private companies to issue invoices and settle deals in renminbi, asked state companies to follow suit, and encouraged other central banks to adopt the renminbi. The “Belt and Road” initiative, through which it seeks to use its institutions to finance and build infrastructure in up to 68 countries, will also help the internationalization of the renminbi by establishing a trading system around Chinese companies.

In terms of challenges, China faces some big hurdles in the short term .  Since 2015, actions by the People’s Bank of China have made it clear that political leaders will continue to control the currency’s value. Instead of continuing to liberalize its capital account, China tightened capital controls.

Hence, to compete directly with the dollar, China must end capital controls, liberalize interest rates, and allow the yuan (the main unit of the renminbi) to float. However, the implementation of the above requires a major shift in the Chinese development model, and the reduction of the Chinese People’s Party’s control. Hence, the increasing importance of China in global markets makes the Chinese yuan a long-term competitor to the dollar. In the near term, however, Beijing will be limited to focusing on domestic markets as a means of pursuing its broader social and geopolitical goals.

Special Drawing Rights System

The “Special Drawing Rights” system of the International Monetary Fund is among the traditional competitors for the status of the dollar. It is an international reserve asset developed by the International Monetary Fund. China achieved major success in internationalizing its currency when the International Monetary Fund included the yuan in this basket in 2015.

The SDR’s primary goal was to act as an additional form of liquidity in the dollar-based Bretton Woods system. The International Monetary Fund has disbursed from that reserve since its inception on four occasions since 1970, despite repeated calls from China to expand the use of SDRs in the 1980s and 1990s.

Cryptocurrencies

In light of the popularity of the digital economy, virtual cryptocurrencies have gained more attention from investors through digital transactions. Facebook has launched its new cryptocurrency, Libra, which hopes to become the basis for a new financial system that is not controlled by power brokers, whether in the Wall. Street or central banks. The value of “Libra” depends on the value of a basket of currencies (such as Special Drawing Rights), and is intended for individual use, particularly for sending money across borders. This last functionality will also replace expensive systems like Western Union and others.

The introduction of cryptocurrencies by companies has encouraged some countries to consider issuing cryptocurrencies as an alternative to the traditional banking system. Last year, Bank of England Governor Mark Carney suggested that central banks jointly create a virtual currency as the global reserve currency as an alternative to the dollar.

While this option has clear benefits for countries that feel the indirect effects of the fiscal and monetary policy of the United States of America through economic and exchange rate linkages, it may face decisive rejection by the United States of America  link

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Mot: ~~~ We did not have flat screens, surround sound, I-Pads

He is 49 of Generation X.

Anyone who was BORN between 1965 & 1979, we are the last generation that played outside until dark.

We are the FIRST to play video games & the LAST to record songs off the radio onto a cassette tape, we loved roller skating on Friday and Saturday nights. We survived the 80’s with big hair and the era of extravagant everything.

We took walks with friends without worry of being taken, we watched cartoons on Saturday mornings while eating a bowl of cereal… we programmed the VCR before anyone else…

we remember learning how to use a computer for the first time, we played Atari & Nintendo. We are the generation of Soul Train, Gilligan’s Island, Dukes of Hazard, Scooby-Doo, Charlie’s Angels, Wonder Woman, Little House on the Prairie, Sandford& Son ,Happy Days, & Good Times…

We traveled in cars w/o seat belts or airbags, rode in the backs of pick ups & lived without cell phones.

We did not have flat screens, surround sound, I-Pads, Facebook and Twitter…

But we had a GREAT time All the time with each other!