Thursday Morning Iraq Economic News Highlights 8-31-23

Thursday Morning Iraq Economic News Highlights 8-31-23

Economic Proposals To Reduce The Differences Between The Official And Parallel Dollar Price

Information / Baghdad...The researcher in economic affairs, Muhammad Al-Saadi, explained how to reduce the differences between the official dollar exchange rate and the one sold in the parallel market through government procedures and decisions.

Al-Saadi told Al-Maalouma, that "there is a commission that exchange companies receive when buying and selling dollars, and it is assumed that there will be a commitment to the specified commission according to the Central Bank's policies."

He added, "The competent authorities can reduce the demand for the dollar by reducing money transfers and pushing for imports through documentary credits, so that the process of obtaining the dollar at the official price takes place smoothly, away from any complications that push the merchant to resort to the black market."

And he indicated that "there are many options available to the government in order to reduce the withdrawal of the dollar from the markets, especially the parallel one, impose control and monitor any cases of manipulation or speculation, and support the dinar in the local markets, as well as providing more facilities for merchants to push them towards registering on the electronic platform in order to obtain dollars in order to import their goods. LINK

A Parliamentary Committee Reveals The Latest Developments In The Oil And Gas Law: 4 Dimensions In Front Of Its Legislation

Time: 08/31/2023 Read: 2,496 times  {Economic: Al Furat News} The Parliamentary Oil, Gas and Natural Resources Committee revealed that the draft oil and gas law, which has been stalled for years, is still "in the process of writing its draft."

Committee member Sabah Sobhi said, in a press statement, "The draft oil and gas law is still in the process of writing its draft, which is the first stage in enacting any law. This law needs a comprehensive political consensus, as it is a sensitive law that needs deep study and discussion by the parties." political".

He added, "The law includes many dimensions, the most important of which is the economic dimension, which is the most important, because the enactment of this law leads to the restructuring of the Iraqi economy, and the second dimension is the legal one, because until now there is a legal vacuum with the existence of a constitutional article related to oil that requires the enactment of a law of its own."

He continued, "As for the third dimension, it is political, given that the issue of the oil commodity is very important from a political point of view, as it is the main revenue on which the economy and the Iraqi state depend, because 90% of the country's budget depends on oil imports, so we need to legislate this law, and another after It is the technical dimension because oil is full of techniques from exploration until we reach sale, so we are in the process of enacting an important, complex, sensitive and fateful law for Iraq.

Many explain the reason for the delay in enacting the oil and gas law to the political dimension that is governed by consensus between the parties to the political process, while relying on the law being approved in the current parliamentary session if it is completed by the government.

It is noteworthy that Prime Minister Muhammad Shia' al-Sudani held a meeting on the second of August to discuss the draft oil and gas law, and witnessed the review of the latest drafts of the draft law, its details and clauses. In the meeting, al-Sudani affirmed that "the draft oil and gas law is one of the basic and important laws, and the law is part of the commitment to the ministerial curriculum. " to his government.  LINK

Parliamentary Oil: The Oil And Gas Law Is Still In The Process Of Writing Its Draft

Energy  Economy News _ Baghdad  Although years have passed since the talks about the oil and gas law and the arguments about it, it is still a draft of the government and has not been completed yet. It is being relied upon that the law will be approved in the current parliamentary session if it is completed by the government.

A member of the Oil, Gas and Natural Resources Committee in the House of Representatives, Sabah Sobhi, said, in an interview with “Al-Sabah” followed by “Al-Iqtisad News”, that “the oil and gas law is still in the process of writing its draft, and it is the first stage in the legislation of any law, as this law needs political consensus.” Comprehensive, because it is a sensitive law that needs deep study and discussion by the political parties.

He added, “The law includes many dimensions, the most important of which is the economic dimension, which is the most important, because the legislation of this law leads to the structuring of the Iraqi economy, and the second dimension is the legal one because until now there is a legal vacuum with the existence of a constitutional article related to oil that requires legislation of its own law.”

And he continued: “As for the third dimension, it is political, given that the issue of the oil commodity is very important from a political point of view, as it is the main revenue on which the economy and the Iraqi state depend, because 90% of the country’s budget depends on oil imports,

so we need to legislate this law, and another after It is the technical dimension because oil is full of techniques from exploration until we reach sale, so we are in the process of enacting an important, complex, sensitive and fateful law for Iraq and for the parties involved in the issue of oil production, since this commodity is linked to the producing region and provinces and it has rights and obligations at the same time Therefore, there must be a conscious and practical view that is compatible with the Iraqi federal constitution.”

And Sobhi indicated, “The law is still with the government until now, and there is no official draft by the government, and what is currently in circulation is the draft that was written by the Iraqi Federal Ministry of Oil, and it came from only one party, and this draft must include the ideas of the Kurdistan region and the oil-producing provinces as well.”

So that it is integrated and can be discussed in the Council of Ministers and voted on, and then sent to Parliament and work on it.

He stressed, “The law is sensitive, and if a political agreement is not reached on it, it will be the same as the previous sessions, but we believe that the current session will be decisive for the law.” He added, “It is true that the conditions are not appropriate for the issuance of the law; But the will of the Prime Minister and the Prime Minister of the region to issue the law exists in order to overcome the problems that Iraq suffers from regarding oil ». Views 77  08/31/2023 - https://economy-news.net/content.php?id=36088

{Oil And Gas}.. Postponed Until Further Notice

The first  2023/08/31   Baghdad: Shaima Rasheed  Many explain the reason for the delay in legislating the oil and gas law to the political dimension that is governed by consensus between the parties to the political process, while it is being relied upon that the law will be approved in the current parliamentary session if it is completed by the government.

A member of the Oil, Gas and Natural Resources Committee in the House of Representatives, Sabah Sobhi, told Al-Sabah: “The oil and gas law is still in the process of writing its draft, which is the first stage in enacting any law. This law needs a comprehensive political consensus, as it is a sensitive law.” It needs deep study and discussion by the political parties.

He added, "The law includes many dimensions, the most important of which is the economic dimension, which is the most important, because the enactment of this law leads to the restructuring of the Iraqi economy, and the second dimension is the legal one, because until now there is a legal vacuum with the existence of a constitutional article related to oil that requires the enactment of a law of its own."

And he continued, "As for the third dimension, it is political, given that the issue of the oil commodity is very important from a political point of view, as it is the main revenue on which the economy and the Iraqi state depend, because 90% of the country's budget depends on oil imports,

so we need to legislate this law, and another after It is the technical dimension because oil is full of techniques from exploration until we reach sale, so we are in the process of enacting an important, complex, sensitive and fateful law for Iraq.   https://alsabaah.iq/83492-.html

Oil and Gas Law.. Postponed until further notice

Iraq  2023/08/31   Baghdad: Shaima Rasheed  Although years have passed since the talks about the oil and gas law and the arguments about it, it is still a draft with the government and its writing has not been completed yet. Many explain the reason for the delay in enacting this important law to the political dimension that is governed by consensus between all parties. The political process, while it is being relied upon that the law will be approved in the current parliamentary session if it is completed by the government.

A member of the Oil, Gas and Natural Resources Committee in the House of Representatives, Sabah Sobhi, told Al-Sabah: “The oil and gas law is still in the process of writing its draft, and it is the first stage in enacting any law. This law needs a comprehensive political consensus, because it is a sensitive law that needs To a deep study and discussion by the political parties ».

He added, “The law includes many dimensions, the most important of which is the economic dimension, which is the most important, because the legislation of this law leads to the structuring of the Iraqi economy, and the second dimension is the legal one because until now there is a legal vacuum with the existence of a constitutional article related to oil that requires legislation of its own law.

And he continued: “As for the third dimension, it is political, given that the issue of the oil commodity is very important from a political point of view, as it is the main revenue on which the economy and the Iraqi state depend, because 90% of the country’s budget depends on oil imports, so we need to legislate this law, and another after It is the technical dimension because oil is full of techniques from exploration until we reach sale,

so we are in the process of enacting an important, complex, sensitive and fateful law for Iraq and for the parties involved in the issue of oil production, since this commodity is linked to the producing region and provinces and it has rights and obligations at the same time Therefore, there must be a conscious and practical view that is compatible with the Iraqi federal constitution.”

And Sobhi indicated, “The law is still with the government until now, and there is no official draft by the government, and what is currently in circulation is the draft that was written by the Iraqi Federal Ministry of Oil, and it came from only one party, and this draft must include the ideas of the Kurdistan region and the oil-producing provinces as well.” So that it is integrated and can be discussed in the Council of Ministers and voted on, and then sent to Parliament and work on it.

He stressed, “The law is sensitive, and if a political agreement is not reached on it, it will be the same as the previous sessions, but we believe that the current session will be decisive for the law.” He added, “It is true that the conditions are not appropriate for the issuance of the law; But the will of the Prime Minister and the Prime Minister of the region to issue the law exists in order to overcome the problems that Iraq suffers from regarding oil ». Edited by: Muhammad Al-Ansari   https://alsabaah.iq/83475-.html

Kurdistan Oil Companies Are Challenging The Center: We Will Not Export Even If Baghdad And Ankara Agree

Money  and business     Economy News-Baghdad  Today, Thursday (August 31, 2023), the Kurdistan Petroleum Industries Union announced its refusal to resume production and pumping of oil from the region, even if the government reached an agreement with the Turkish authorities.

The union, which includes a group of foreign and local companies working in the field of oil production, said, according to statements to the American newspaper, "The Cradle," that "oil-producing companies refuse to return to work again within the region,"

stressing that "the production and export of oil will be stopped completely, even if they reach The Iraqi government has reached an agreement with the Turkish side to re-pump through the port of Ceyhan until the conditions are fully implemented."

The Federation of Companies, according to what the newspaper showed, called on the Kurdistan Regional Government of Iraq to "provide guarantees that fully protect the rights of companies, including financial rights,"

stressing that they were "significantly affected" by the Kurdistan Regional Government of Iraq's breach of the official agreements governing the export of oil and the resulting suspensions. For export, it caused damages worth “billions” to companies, according to its description.

It is noteworthy that the threats of the companies coincide with continuous announcements from the Iraqi and Turkish government hinting that they are close to signing an agreement that guarantees the export of oil from the Kurdistan region of Iraq through the port of Ceyhan without problems, as the American newspaper confirmed that the companies’ implementation of their threat will mean the continuation of the current crisis even if Baghdad and Ankara reach an agreement agreement.

It is noteworthy that a responsible source in the Kurdistan region revealed, on (August 18, 2023), an arrangement for a meeting between the Prime Minister, Muhammad Shia al-Sudani, and the Kurdish oil companies, and with the mediation of the American ambassador in Baghdad, Elena Romanowsky, for the purpose of ensuring her fate and financial dues after the entry of the oil sector in Kurdistan into an unknown tunnel.

The source told "Baghdad Today" that "the reason for the meeting is for Al-Sudani to preserve the financial dues of these companies and their wages in the new agreement between Baghdad and Erbil on oil."

The source confirms that "the Kurdish oil companies in the region have not received their financial dues as well as their monthly wages since September of last year."

He pointed out that "the work of these companies is distributed in the regions of Kurdistan by filtering, extracting, investing and selling oil, and they used to receive their wages from the regional government, but the wages stopped with the cessation of oil export business and the reduction of extraction,

while they are now trying to guarantee the payment of their dues and wages in the event that the oil and gas law was enacted and also in If the oil export through Turkey resumes, or if the suspension continues for a longer period.

The official of the Foreign Relations Office of the Kurdistan Regional Government, Sven Dizyi, said on Tuesday, August 29, that Turkey supports the export of Kurdistan's oil, noting that the suspension of the region's oil exports "caused financial losses of more than $5 billion to the government."

 Source / Baghdad Today Agency   https://economy-news.net/content.php?id=36094

Sovereign Fund And The Problem Of The Iraqi Economy

2023.08.30 - Thamer Al-Ani  Baghdad - Nas    Savings and investment funds currently account for the largest percentage of sovereign wealth funds, according to the classifications of funds registered at the International Institute of Sovereign Funds, followed by development funds in second place. Sovereign wealth funds contribute to diversifying the economies of the countries that own them by converting the financial or cash surpluses of those countries into assets with economic return and using them in investment fields (stocks, bonds, real estate...etc). 

Iraq has previous experience in establishing a sovereign wealth fund, through the establishment of the Iraqi Fund for Foreign Development, which was established under Law No. 77 of 1974, but after that the work of this fund was limited to managing Iraq’s financial contributions to regional and international organizations and bodies, and there was also an attempt To establish two sovereign funds for Iraq in 2018, but they remained without practical implementation. 

In terms of the source of revenue, the economies of countries are divided into 3 sections; Economics with diversified revenue sources, and economies with a single revenue source “one-basket economies” and what is between them Section III.

Iraq falls within the second group, as Iraq is considered one of the rentier countries, due to its almost total dependence on revenues from the sale of crude oil, as oil revenues constitute about more than “90 percent” of the total revenues of the general budget, and they also contribute about “45-60 percent.” percent of the gross domestic product. 

This led to a major structural imbalance in the sources of financing the general budget, and as a result of unwise policies, and the difficult circumstances that Iraq witnessed, this imbalance deepened. To extend to all economic indicators, until crude oil revenues became a function of the level of general revenues of the state, and more generally a function of the level of activity of the national economy. 

 Depleted natural resources are a double-edged sword. Because it depends on the nature of the management and use of these resources, these resources may appear in a country with a sound economic thought and are used as a basis for the advancement and development of its national economy and its financial sustainability, which requires allocating the surplus or a certain percentage of the revenues of these resources in the development and development of other economic sectors through the Wealth Fund Sovereign,

and these same resources may be available to a country that is unable to adopt and apply an economic thought that helps it exploit these resources in a way that enables it to develop its economic sectors and sustain its finances and revenues, which leads to waste of these resources.

With the huge revenues that crude oil generated in Iraq after 2003, these revenues were not properly exploited, and successive governments were unable to develop and diversify their sources of public revenues, and they remained dependent on depleted rent revenue. 

Therefore, some oil countries, such as Saudi Arabia, the UAE, Kuwait, and Qatar, realized the great danger they might face if they were unable to diversify their sources of public revenues, and given that oil is a depleted commodity, and in order to achieve the principle of optimal exploitation of resources, most countries tended to devise a method for managing oil revenues, through Establishing sovereign funds to achieve national goals; And financed either by foreign exchange reserves, exports of natural resources, or surplus public revenues of the state. 

It should be noted that the Saudi Public Investment Fund rose to the sixth position in the world among sovereign wealth funds, according to the latest statistics from 2023 “SWF Institute”, and the fund’s assets increased from $ 690 billion to $ 776.7 billion.

It is noteworthy that the Norwegian Wealth Fund sits on the top of sovereign funds with total assets of $1.47 trillion, followed by the Chinese Cooperative Investment Fund, with total assets of $1.35 trillion, and in third place in the world came the Chinese Sovereign Wealth Fund “SAFE” with net assets of $1.019 trillion.

While the Abu Dhabi Investment Authority Fund was the fourth in the world and the first in the Arab world, with assets amounting to $853 billion, followed by the Kuwaiti Wealth Fund with net assets of $803 billion, then the Qatari Investment Authority Fund with $475 billion. 

The importance of these funds lies in their consideration as a tool of financial policy to achieve financial stability and reduce the possibility of resorting to borrowing. They are also an important tool in investing the state’s financial surpluses, in addition to considering them as a precautionary tool against the effects resulting from the fluctuations of the global oil market, and preserving the future of future generations.  Accordingly, and based on the need to use the country's resources in the best way, so the time has come to establish the Iraq Sovereign Fund, or to activate alternatives that may play the same role, to take advantage of the financial surplus in oil prices, which is expected to provide a large financial surplus.   https://www.nasnews.com/view.php?cat=113559