Iraqi News Friday Afternoon 12-24-21
Iraqi News Friday Afternoon 12-24-21
TLM724 Administrator BondLady’s Corner
A Year On The Rise In The Value Of The Dollar
12/24/2021 | 11:16 am books / d. Bilal Al-Khalifa ||
A year has passed since the Iraqi government decided to raise the value of selling the US dollar against the Iraqi dinar, so the selling price of the US dollar was 1182 Iraqi dinars and it became 1460 Iraqi dinars, and it is noteworthy that the official responsible for the exchange value and monetary policy is the Central Bank of Iraq, because it is the one who sells dollars and hard currency to banks and companies Banking and brokers.
After that, Parliament approved the Federal General Budget Law for the fiscal year 2021, No. 23 of 2021, which included the exchange rate of the US dollar at the new value, in Article (I-B), and where the objection of some deputies to the exchange rate was rejected, considering that changing the price is not within the powers of the House of Representatives.
Rather, the Central Bank has complete independence in formulating and implementing its monetary policy, according to its new Law No. 56 of 2004, which allowed it financial, administrative and legal independence.
Where the law stipulates in Article (16-b) as follows:
Formulating policies that would achieve the main objectives of monetary policy, including the exchange rate policy, restrictions imposed on the operations carried out by the Central Bank of Iraq in the open market, the interest rate policies that are imposed on the procurement of funds for the banking sector, and all forms and levels of reserves that are required from diaper banks.
However, the board does not have the authority to join a fixed exchange rate regime such as a monetary union or a currency board)
The jurisdiction of the Federal Court over him
As for Article (63-4) a text that the Federal Court does not have jurisdiction over the Central Bank’s procedures regarding the exchange rate, and the text is:
(The court does not have jurisdiction to review decisions or procedures of the Central Bank of Iraq regarding the development and implementation of monetary policy, including foreign exchange rate policy).
The relationship of the House of Representatives with the Central Bank of Iraq
The Central Bank of Iraq Law No. (56) of 2004 stipulated in appointing the governor that he should have a “university degree at least and have a long professional experience and specialists in banking, economic, financial, commercial or law fields (M 12/1).
He has the rank of Minister and is appointed upon the proposal of the Prime Minister and the approval of the House of Representatives (Article 13 / A).
This means that the House of Representatives has a decisive role in deciding who will manage the Central Bank of Iraq.
As there is no explicit text about the subordination of the Central Bank to the House of Representatives, but the governor of the bank is in the position of a minister and is treated as a minister, and the House of Representatives can vote on him and hold him accountable as well.
Thus, the House of Representatives can hold accountable the deviation or bad decisions, if any, by the Central Bank of Iraq.
Among the points that are important to clarify here are:
The decision came at a request from the Ministry of Finance to the Central Bank of Iraq.
It came at a request from the Iraqi government, and this means that the government interfered in the work of the Central Bank of Iraq, and this contradicts Article (16-b) that we mentioned above.
The decision was made between the government and the active political forces
The Iraqi constitution talked about multiple bodies, some of which linked the executive authority.
As for the central bank, it is supposed to be subject to a certain authority, especially the parliament, that is, the legislative authority represented by the House of Representatives, because its association with the government is incorrect, as we have seen in past eras.
But a member of the Finance Committee, Rep.Magda Al-Tamimi said on Tuesday 16/3/2021 that changing the dollar exchange rate is not within the authority of the Finance Committee.
Everyone noted that the decision left clear damage to important segments of the Iraqi people, especially the middle and poor classes, and this led to an increase in the prices of consumer goods in the local markets and increased the suffering of the simple citizen due to the increase in the value of materials in the local market by 23%, and thus it harmed more than 60% from the Iraqis.
At the time, the Iraqi government had several justifications, namely:
1- Strengthening the financial budget by providing 23% of the salaries of employees who receive salaries from the government, such as retirees and daily wage earners.
2- The government could save between 20 to 23 trillion dinars as a result of the decrease in the real value of employees’ salaries, which rebounded to the benefit of the country’s operational and investment budget.
3- An increase in the size of the monetary reserve in the Central Bank or the maintenance of the current reserve.
4- Supporting industry and agriculture.
5- Reducing sales of hard currency in the banknote auction, and thus reducing the exit of hard currency outside Iraq.
What are the downsides to the decision?
1- The rise in overall prices in the country, for example, that real estate prices rose by about 50%, in addition to the fact that some foodstuffs increased their prices by more than 23%.
2- The high rate of unemployment and the level of inflation of large numbers that Iraq has not witnessed since 2003.
3- The annual inflation rate increased by 8% last November compared to the same month of last year 2020.
4- Iraqis lost confidence in the government, which was reflected in the rise in consumer prices at a rate much greater than the change in the exchange rate.
5- The value of the Iraqi people’s revenues in the public and private sectors decreased by 23%
6- The return of the rate of sales in the banknote market to its previous era, as the Central Bank announced that sales to the dollar on December 21, 2021 amounted to 197 million dollars.
Topic Discussion
1 - It should be noted that 90% of Iraq's consumer needs are imported, and that the government should have exempted raw materials (which are not available locally) entering the local industry from taxes and customs, thus reducing the burden on the Iraqi citizen.
2 - The increase in reserves by an estimated 15 billion dollars during the current year did not come as a result of the exchange rate change, but rather due to the recovery of oil prices globally, and therefore one of the justifications used by the Central Bank has vanished.
3- As for the point of support for industry and agriculture, it has two parts
A - Part of the industry is dependent on raw materials that are imported from abroad, and therefore the decision has harmed the local industry.
B - The exemption of goods from customs and tax, and I mean the agreement with Jordan, has harmed the local industry and made it unable to compete with the importer.
4 - One of the goals of this decision is to reduce the deficit, and one of the ways of that process is to maximize revenues, especially non-oil revenues, and the repeated exemptions on goods and commodities from composting and tax have violated this goal.
5 - The decision was made by the government and with the approval of most of the political blocs and parliament's approval of the federal general budget, which included the new price, and therefore they are the ones who bear the responsibility for that.
6 - The affiliation of the central bank to the government is incorrect and does not exist, but whether it is subject to the control or supervision of the Iraqi parliament, the issue is not clear and this must be determined.
Conclusion
The decision had some benefits for the government, such as raising the hard currency reserve to 64 billion dollars, as well as negatives in the Iraqi economy, such as the rise in inflation to 8.4%, according to a statement by the Ministry of Planning on 12/22-2021, but at the same time it harmed many citizens.
They are from the poor and middle classes, and increased in unemployment and poverty
https://almaalomah.me/2021/12/24/572654/
A Government Advisor Reveals The Amount Of Internal And External Debts Remaining On Iraq
And the mechanism for paying it.
Economie| 10:33 - 24/12/2021 Baghdad - Mawazine News, Mazhar Muhammad Salih, the economic advisor to the head of the caretaker government, determined, on Friday, the size of Iraq's remaining internal and external debts and the mechanism for paying them.
Saleh said in a statement to the official agency, "With regard to foreign debts, there is a suspended amount that has not been settled under the Paris Club Agreement to settle Iraq's external debt, and it goes back to the so-called debts before 1990, estimated at 41 billion dollars, which requires that if the debt is correct, it be deducted by a percentage 80% or more according to the terms of the Paris Club Agreement, with no more than $8-9 billion.”
He added that "the aforementioned amount appears in the accounting books of four Gulf countries, at a rate of approximately 66%, distributed between Saudi Arabia, Kuwait, Qatar and the Emirates, and it dates back to the era of the Iran-Iraq war and is expected to be written off by 100% because it is a debt associated with wars and not for development purposes."
He pointed out that "the remaining 34% belongs to eight different countries, and in general it can be said that the sovereign debt on Iraq is divided between the group of Paris Club countries and countries outside the Paris Club, and commercial debts," explaining that "Iraq's foreign debts, especially debts before the year 1990 was settled under the Paris Club Agreement 2004, where it was agreed to write off 80% and more of those debts whose initial estimates at that time approached $ 129 billion, and most of them were written off and the rest of the debt was scheduled for 20 years.
And he indicated that "despite the fact that Iraq made some external borrowings due to financial distress after 2014 as a result of the war on ISIS terrorism and the drop in oil prices and its direct impact on the country's public budgets, the total external public debt subject to repayment obligations does not exceed 20 billion dollars today."
Saleh added, "As for the internal public debt, it is the largest today and amounts to about 50 billion dollars, but it is a debt between government financial institutions exclusively, and it is settled within internal economic policies, and it is a low-risk debt," noting that "the increase in oil revenues will provide high financial leverage.
To settle the residual indebtedness and with soft options,” he explained, “in light of the foregoing, the public debt components can be re-analyzed again, as follows: If the internal public debt touched nearly $50 billion, 67% of it goes back to the Central Bank of Iraq with an average annual interest rate of 3%, and as for the external debt, the remaining amount that must be paid is about $20 billion.
He stressed that "recalculating the actual external public debt is $29 billion, and the actual total internal and external debt is $79 billion, and assuming that the gross domestic product for the year 2021 is $178 billion, the ratio of the actual debt to the mentioned output is about 45%, and it is still It is within the safe range of EU standards for stability and growth." Ended 29/A 4
https://www.mawazin.net/Details.aspx?jimare=179467
Oil Prices Fell, And Brent Settled At $ 76.56 A Barrel
Economie| 08:18 - 24/12/2021 Follow-up - Mawazine News:
Oil prices fell, on Friday, in limited trading during the Christmas holidays, after rising for three days, as investors tried to estimate the impact of the mutated Omicron from the Corona virus on demand.
Brent crude futures fell 29 cents, or 0.4 percent, to settle at $76.56 a barrel.
Meanwhile, oil markets in the United States halted its activity on Friday, due to the Christmas holiday. Ended 29/A4 https://www.mawazin.net/Details.aspx?jimare=179458
Dollar Exchange Rates In Local Markets
Sweeteners 2021-12-24 | 02:36 Today, Friday, the dollar exchange rates continued to be stable in the local markets. And the dollar selling prices were 148,000 dinars per $100, while the dollar purchase prices were 147,500 dinars per $100.
and decided Central Bank of Iraq Earlier, the exchange rate of the dollar against the Iraqi dinar was adjusted, as the purchase price of the dollar reached Ministry of Finance 1450 dinars, and the selling price to banks was set at 1460 dinars per dollar, while the selling price to citizens is 1470 dinars per dollar. LINK
President Of The Republic: We Congratulate Our Christian People On The Glorious Christmas Of Jesus Christ
Friday 24 December 2021 16:28 | political Number of readings: 249
Baghdad / NINA / - The President of the Republic, Barham Salih, blessed the Christians with the glorious Christmas of Christ, affirming his support for them.
Saleh said in a tweet to him on Twitter: "We congratulate our Christian people on the glorious Christmas of Christ, and we affirm our support for Christians who have suffered from the effects of extremism and terrorism, and their brothers from the other components shared their suffering."
He added, "Today, we are in dire need of a serious stand that establishes a capable state and good governance that upholds the principle of citizenship and protects rights and peaceful coexistence."/End of 7 https://ninanews.com/Website/News/Details?key=946647
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