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Economists: Any budget that depends on the rentier economy is doomed to failure

Shafaq News / Iraqi economists predicted, on Monday, that the fate of any budget that relies on the rentier economy will be failure and an increase in the deficit.

“It is difficult to define a single scenario for a budget for more than a year, in light of a rentier economy that depends on oil as the country’s only resource,” economist Dergham Muhammad Ali said, in an interview with Shafaq News agency.

And he indicated that “the safest scenario is to set a multi-scenario budget, a pessimistic scenario that depends on a low oil price, a moderate scenario that depends on an average barrel price that is close to the current one, and an optimistic scenario. Expenditure accounts are placed on these three scenarios and are determined in light of allocations, the value of the deficit, and the mechanisms to bridge this deficit.”

He added, “The budget in its current form is threatened with failure in the event of a deterioration in oil prices, which is an expected scenario, which will make it difficult to implement the budget paragraphs.”

For his part, the financial and economic expert Hilal Al-Taan considered, in his interview with Shafaq News agency, that “it is not possible to predict future oil prices because oil is a political and economic commodity that is subject to the laws of external and not internal supply and demand, and therefore the problem of the Iraqi economy is that it is a rentier that depends on oil by 93% by achieving budget revenues.

Al-Taan indicated that “this matter is considered a mistake in fiscal policy, despite our assurances in previous years, since 2003 until now, that it is necessary to reduce dependence on oil as a main resource for the budget and rely on other non-oil resources that include taxes, customs, state real estate revenues, and encouraging the productive and agricultural sector.” industry and reduce imports.

He stressed that “until now, there has been no development and oil is still the main source in the budget, and therefore the assumption of a price of 70 dollars per barrel in the budget is a large and dangerous number in light of the unstable conditions in the world, and this will cause embarrassment to the state.”

He pointed out that “the budget is currently talking about the existence of 63 trillion dinars as a deficit in light of setting the price of 70 dollars per barrel of oil in the budget, and in the event that oil prices drop from what has been determined in the budget, which is what is happening now, this will lead to a disaster as the deficit will exceed 100 trillion.” dinars, and therefore it is difficult to cover the budget, and the coverage will take place again, either by borrowing from abroad, which is difficult, or relying on internal debt from the central bank or commercial banks, and then we will suffer a real problem after that.

Al-Taan called on the government, “the need to reconsider the budget in terms of setting a new price for oil that protects it from global oil fluctuations, and to reduce and pressure unnecessary public expenditures in state departments. There are also incorrect concessions that must be reduced by a courageous and decisive decision.”

It is noteworthy that oil prices fell again today, Monday, after rising this morning, with Brent recording losses amounting to more than 2%, and approaching the price of 70 dollars.

Shafaq.com

Baghdad, Erbil reach comprehensive agreement

Baghdad (IraqiNews.com) – The Iraqi Prime Minister, Mohammed Shia Al-Sudani, announced on Monday that a comprehensive agreement had been reached on the standing issues between Baghdad and the Kurdistan region.

Al-Sudani, during a press conference, said that the understandings between Baghdad and Erbil were on clear points, noting that if any disagreements between Baghdad and Erbil took place, there is a committee that submits its recommendations to the Prime Minister.

“For the first time, the total revenues of the oil produced in Kurdistan are deposited in a bank account controlled by the federal administration,” Al-Sudani explained.

Al-Sudani added that the understandings between Baghdad and Erbil confirm that the two parties are moving forward to approve the oil and gas law.

The oil and gas law in Iraq, which has been stagnant in the Iraqi Parliament since 2005 due to disagreements with the Kurdish political forces, stipulates that the management of Iraq’s oil fields must be entrusted to a national oil company supervised by a specialized federal council.

This means that Baghdad is responsible for oil in Kurdistan, which Erbil rejects, and considers it a measure that violates the constitution.

The issues between Baghdad and Erbil are among the major problems the successive Iraqi governments face.

Some of the major issues between Baghdad and Erbil include the salaries of employees in Kurdistan Regional Government (KRG), security coordination in disputed areas, and a mechanism for exporting oil from fields in the Kurdistan region.

Iraqinews.com

Parliamentary Finance: We have not received the 2023 budget yet

Information / Baghdad… A member of the Parliamentary Finance Committee, Representative Mudar Al-Karawi, confirmed, on Monday, that the budget has not reached his committee yet.

Al-Karawi said, in an interview with Al-Maalouma, that “the 2023 budget is still with the Presidency in the House of Representatives, and it has not officially reached the Finance Committee.”

He added, “The budget may begin its dialogues in the Parliamentary Finance Committee, starting next week.”

He pointed out that “the budget has many complexities, which we hope will find solutions leading to its resolution before voting on it, but it takes weeks.”

And the Presidency of the House of Representatives had announced a few days ago that the 2023 budget had arrived, pending discussion by the Parliamentary Finance Committee.

Almaalomah.me

A parliamentarian determines the fate of the oil and gas law and the next legislative direction

Information/Baghdad… Today, the representative of the State of Law coalition, Muhammad Radhi, determined the fate of the draft oil and gas law and its next destination.

Radi said in an interview with the information agency, “The draft oil and gas law will go to Parliament, and there is a technical delegation that meets from time to time and has reached advanced stages between the Federal Ministry of Oil and the Ministry of Natural Resources in the region.”

He added, “Prime Minister Muhammad Shia’a al-Sudani pays great attention to important laws, including the oil and gas law, which guarantees a better use of financial and oil resources.”

Radi pointed out, “Passing the draft oil and gas law requires the approval of the Kurdistan Regional Government on the conditions set by the central government in the capital, Baghdad.”

The Oil and Gas Law stipulates that the management of oil fields in Iraq must be entrusted to a national oil company under direct supervision by the central government in the capital, Baghdad.

Almaalomah.me

Al-Sudani, prior to his visit to Turkey: We seek to transform Iraq into a center for world trade

Information / Baghdad… Prime Minister Muhammad Shia al-Sudani clarified, on Monday, the objectives of his upcoming visit to Turkey, while pledging to provide the needs of citizens and strive to transform Iraq into a center for world trade.

Al-Sudani said in an article prior to his visit to Turkey, followed by Al-Maalouma Agency, that “the visit to Turkey acquires special importance at this particular time, with the positive developments taking place in the Middle East region in terms of strengthening cooperation between countries, mobilizing efforts to achieve economic integration and push it forward, and solve The differences are based on the methodology of prudent dialogue that prevails over interest and elevates cooperation between neighbors in order to achieve the interests of peoples.

He added, “We will focus in our discussions with the Turkish side on strengthening Iraqi-Turkish relations in all fields, especially the economic field, especially as we look forward to implementing ambitious economic projects in the energy and transport sectors, and transforming Iraq into a center for global trade between Asia and Europe through the great port of Faw project and everything related to it.” economic zones, residential communities and tourist attractions.

He continued, “We look forward from this giant project, which will extend over an area of ​​more than 20 square miles, to open the way for an economic boom for Iraq,” noting that “it will contribute to strengthening economic and trade relations between Iraq and its neighbors, led by Turkey on the one hand, and the countries of Europe and Asia on the one hand.” other”.

He stated that “the project of the great port of Faw will include the dry canal corridor, which will be formed by a highway and a railway line, and will pass through Diwaniyah, Najaf, Karbala, Baghdad, and Mosul, and extend to the Turkish border, allowing access to the port of Mersin and Europe via Istanbul,” explaining, “We will discuss the details of these projects with officials.” The Turks, as part of our efforts to strengthen the economic and trade partnership with Turkey, with which Iraq’s trade balance has reached about $20 billion, represented in Turkish imports of chemical products, seeds, grains, legumes, furniture, medicines and medical supplies, and Iraqi exports to Turkey concentrated in oil.

On the security level, Al-Sudani said, “Border control will occupy an aspect of the talks, as well as joint cooperation between Iraq and Turkey, especially in the intelligence aspect and information exchange.”

On water quotas, the Prime Minister affirmed that “the water problem will occupy a space of discussion in Ankara,” appreciating “the efforts of the Turkish side to increase the water quotas that came from behind the dams to Iraq.”

He stated, “We will discuss with them how to cooperate and coordinate to ensure that Iraq obtains its water needs, which is a lifeline for development and agricultural expansion,” pointing out, “We will affirm our full solidarity with our Turkish neighbors in their painful affliction after the great earthquake, and we will continue to provide all the assistance they need in this regard.” Tough time.”

The Prime Minister pointed out that “the current visit comes at a very important time for the region, which seeks to enhance cooperation and economic integration and mobilize efforts in the interest of economic development, and these efforts are in harmony with our internal priorities in Iraq, which we put at the head of fighting corruption and advancing economic development so that it feels Iraqi citizen with the desired effect and as soon as possible.

He stated that “the economic cooperation projects that we seek with Ankara will greatly contribute to creating job opportunities in many Iraqi governorates and will accelerate the pace of Iraq’s transformation into a commercial center linking the European and Asian continents, and will put Iraq firmly on the world trade map,” explaining, “We are making plans in parallel To cooperate with Turkey to enhance our joint economic capabilities and according to timetables for priority projects, with our keenness to diversify energy sources and invest in renewable energy projects to serve development ambitions.

And he indicated that “the near future will witness greater economic engagement with Turkey and with all our neighbors and our region, because this engagement and joint cooperation is the only way to overcome the consequences of global crises and the challenges they impose on us at this sensitive time,” noting that “we emphasized this both during the second Baghdad summit that It was held in the sisterly Hashemite Kingdom of Jordan, or through my recent visits to the United Arab Emirates and Cairo.

He stressed that “Iraq’s approach in the current and future period is clear and unmistakable, and it depends on strengthening cooperation with brothers and neighbors on the political, commercial and economic levels, with the aim of strengthening cooperation and pushing our efforts inside Iraq to achieve our declared priorities, which we will not deviate from in an honest attempt to change the reality of the Iraqi citizen and provide his needs.” Giving priority to Iraq’s interest and interest over every interest, amidst an atmosphere of cooperation and constructive dialogue with neighboring countries and brothers in our Arab surroundings.

Almaalomah.me

Loss of confidence in Western banks and banks is absent.. How can the Iraqi government implement economic reforms?

Since last January, Iraqi Prime Minister Muhammad Shia al-Sudani announced a number of financial and economic reforms in the country, including the activation of the electronic payment system, as a statement issued by his office announced work to activate the “electronic payment” system (Point of sales), Starting from the first of next June.

The government had confirmed the start of implementing the system while exempting its electronic equipment from taxes, in an attempt to encourage private companies to adopt this system, as Iraq is one of the countries lagging behind in implementing it.

Statistics

Specialists in economic affairs confirm that the application of the electronic payment system means the need to open bank accounts for all shopping centers, hospitals, factories, medical clinics, pharmacies, and others, in light of the country’s lack so far of the presence of branches of foreign international banks, as in the rest of the world, which may cause a great demand for banks. Civil and government that may not be able to keep up with the rising demand.

According to a study prepared by the Central Bank of Iraq in 2018, the percentage of Iraqis who have bank accounts does not exceed 3.2% of the country’s total population, and the number of government banks in Iraq is 7, in addition to 25 private commercial banks, 3 private Islamic banks, and 3 branches of Islamic banks. Foreign, according to the official website of the Central Bank.

As for the number of foreign commercial banks, it amounts to 16 banks belonging to Turkey, Lebanon, Iran and Jordan, taking into account that the Central Bank placed 7 of these banks under guardianship with the liquidation of their business in the country in 2020, according to the Central Bank’s website, with an office for a bank. The American “Citi” and another for the German “Commerz” bank, as they are based in the Babylon Hotel in Baghdad.

And the Central Bank of Iraq had excluded 4 local banks 3 months ago from the currency sale auction, due to accusations against these banks related to dollar smuggling and money laundering, as this coincided with the start of Iraq implementing the international money transfer system known as “SWIFT”.

With regard to the electronic sales system and the extent to which it can be implemented, Abdul Rahman al-Mashhadani, a professor of economics at the Iraqi University in Baghdad, explained that Iraq is still in the first stage of this experiment, and that the former Iraqi Prime Minister Haider al-Abadi had initiated this since 2017 without implementing it.

Speaking to Al-Jazeera Net, Al-Mashhadani revealed that the electronic sales system needs the presence of “Automated Exchange Units” (ATM) throughout Iraq, and that the total available of them does not exceed 1564 ATMs, most of them in Baghdad and Erbil, pointing out that the ATM is an integrated bank. Its business includes withdrawals, deposits and transfers, but the services it provides in Iraq are limited to cash withdrawals only.

Foreign banks

Regarding the reason for the European and American banks’ refusal to work in the country, Jamal Cougar, a member of the Parliamentary Finance Committee, spoke about the political situation. He went on to say that the coming period may witness the entry of foreign banks into the country. He explained that Iraq was classified in the past among the countries that were not friendly to the West, and was not subject to the international financial transfer system, and with the start of implementing this system and the electronic platform 4 months ago, it became ready to enter these foreign banks and financial companies.

In this direction goes Abd al-Rahman al-Mashhadani, who added that the main reason for the lack of international foreign bank branches is due to the security situation that the country has witnessed over the past two decades, warning at the same time that these banks are afraid of Iraq because of the indicators related to money laundering operations.

After observing the security stability in the past period and the steps and measures taken by the Central Bank to reduce money laundering through the electronic platform, Al-Mashhadani hopes that the Iraqi government will be able to attract Western banks.

For his part, financial analyst Mahmoud Dagher talked about another reason that may prevent government economic reforms from entering into force, represented by the instability of the Iraqi dinar in parallel markets, which makes merchants prefer to deal in Iraqi cash or dollars away from the electronic sales system, which may apply to The work of foreign banks in the country.

With regard to the possibility of local and foreign banks absorbing government economic reforms, Dagher explained – in his interview with Al-Jazeera Net – that in Iraq there are about 10,500 “electronic points of sale” (POS) spread in the commercial sectors, noting that despite the small number of these devices, they are It is still not used until now, given that there is a fear among merchants of tax prosecution, which requires a high banking culture.

Economic experts in Iraq unanimously agree that Iraqis are still facing the problem of trusting banks operating in the country, as well as a lack of banking awareness, which Mahmoud Dagher adopts by saying, “Iraqi banks and foreign bank branches have the ability to absorb hundreds of thousands of bank accounts in the country, however, The problem is the banking culture, which is still mediocre.

Al-Mashhadani partly agrees with this opinion, and adds that there is a deficiency in the banking culture due to the reluctance of Iraqis to deal with banks due to the lack of services they provide, suggesting that the government grant a “tax vacation” that extends for 5 years in order to encourage all commercial sectors to work with the electronic payment system.

On the other hand, economic journalist Nabil al-Najjar believes that Iraqi banks have been able, during the past five years, to develop the technical sector, making them ready for the electronic sales system, and that they still need to increase the number of ATMs in all cities.

And on the banking culture, he explained that the Iraqi government is still failing to educate on dealing with electronic cash, indicating – in his speech to Al-Jazeera Net – that the Iraqi government has what he described as a golden opportunity to adapt and encourage the Iraqi street to deal electronically, through many gradual measures by expanding the circle Imposing it on merchants and markets, and then the rest of the sectors, and otherwise, Iraq will remain dependent on paper money, with all the problems and defects it poses, as he put it.

Rawabetcenter.com

Adoption of the national currency

Based on the decision of the Council of Ministers and in light of the policy of the Central Bank of Iraq to encourage reliance on the national currency in financial transactions inside Iraq provided by the banking system and non-bank financial institutions, it was decided that the electronic financial services provided inside Iraq through (automated teller machines, points of sale devices , electronic payment gateway ) in the Iraqi dinar currency.

cbi.iq/news/view/2272

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Kuwaiti dinar first and US dollar tenth: the 10 most powerful currencies in the world

Shafaq News / The American “Forbes” magazine stated that the US dollar is not the strongest currency in the world, but rather the Kuwaiti dinar, and with a big difference between them.

The American magazine stated that the US dollar is generally seen as the most powerful currency in the world, adding that it is the most traded currency on the world stage, but it is surprising that the “dollar” is not the most powerful paper currency, among the world’s 180 legally recognized currencies. all over the world.

He reviewed the report, which was translated by Shafak News Agency. The 10 most powerful currencies in the world, based on their relative value against the US dollar, noting that most currencies are “floating”, which means that their value fluctuates according to supply and demand, while some currencies are “correlated”, which means that their value is relative to another currency (such as USD) fixed at an agreed rate.

The report pointed out that exchange rates affect the cost of goods and services in a foreign currency, but exchange rate fluctuations also create an opportunity for investors looking to make profits through foreign currency trading.

Here are the 10 most powerful currencies:

1. The Kuwaiti dinar

The Kuwaiti dinar is the strongest currency in the world, as a Kuwaiti dinar buys 3.26 US dollars (or in other words, 1 US dollar is equivalent to 0.31 Kuwaiti dinars, meaning that every Kuwaiti dinar is equivalent to about 3 dollars).

The report indicated that Kuwait earns much of its wealth from being a leading global exporter of oil, and the Kuwaiti dinar was introduced in the sixties of the last century and was initially pegged to the pound sterling before it was re-linked to a basket of currencies.

2. The Bahraini dinar

The Bahraini dinar is the second strongest currency in the world with one Bahraini dinar buying 2.65 US dollars (or one dollar equals 0.38 Bahraini dinars).

Bahrain earns much of its wealth from oil and gas exports. The Bahraini dinar was put into circulation in 1965 and is pegged to the US dollar.

3. The Omani Rial

The Omani Rial is the third strongest currency in the world with one Rial Omani buying US$2.60 (or one dollar equals 0.38 Omani Rial). As with its other wealthy neighbors, Oman is a major exporter of oil and gas, and the Omani rial was introduced in the 1970s and is pegged to the US dollar.

4. The Jordanian dinar

The Jordanian dinar is the fourth strongest currency in the world, with a Jordanian dinar buying 1.41 US dollars (or one dollar equals 0.71 Jordanian dinars).

Jordan is less dependent on oil and gas exports than its neighbours, and is suffering from sluggish economic growth and mounting debt. The Jordanian dinar was put into circulation in the year 1950 and is linked to the US dollar.

5. Sterling

The British pound is the fifth strongest currency in the world with a British pound buying 1.20 US dollars (or 1 US dollar equals 0.83 British pounds).

Britain is the sixth largest country in terms of gross domestic product, according to the World Bank, and the pound was introduced for the first time in the 14th century before its decimal value was broken in 1971. It is a free currency and is not linked to other currencies.

6. The Cayman Islands dollar

The Cayman Islands dollar is the sixth strongest common currency in the world, with 1 Cayman Islands dollar buying 1.20 US dollars (or 1 US dollar equals 0.83 Cayman Islands dollars).

The Cayman Islands is a British territory in the Caribbean and is an offshore financial centre. The Cayman Islands dollar was first introduced in the 1970s and is pegged to the US dollar.

7. Gibraltar pound

The Gibraltar pound is the sixth strongest common currency in the world, with 1 Gibraltar pound buying 1.20 US dollars (or 1 US dollar equals 0.83 Gibraltar pounds).

Gibraltar is located in the southern part of Spain and is officially a British territory. The Gibraltar pound was first introduced in the 1920s and is pegged to the British pound (and the Gibraltar pound is equal to one British pound).

8. Swiss francs

The Swiss franc is the eighth strongest currency in the world, with one Swiss franc buying 1.07 US dollars (or 1 US dollar equals 0.93 Swiss francs).

The Swiss franc is the official legal currency of Switzerland and Liechtenstein and is viewed as a safe haven due to the political stability in Switzerland. The Swiss franc was introduced in the year 1850 and was briefly pegged to the euro before moving into a free float.

9. EUR

The euro is the ninth strongest currency in the world, with 1 euro buying 1.07 US dollars (or 1 US dollar equals 0.94 euros).

The euro is the official currency of the eurozone, which consists of 19 countries out of the 27 countries that are part of the European Union. The physical currency entered circulation in the year 2002 and is floating and free.

10. US dollars

The US dollar is the 10th most powerful currency in the world, at exactly 1 to itself. All other currency units around the world are worth less than the US dollar.

The conclusion of the report; The US dollar was introduced in the 18th century, and is legal tender in the United States, other American territories, and sovereign nations including Puerto Rico, Ecuador, and Zimbabwe.

The United States is the largest economy in the world in terms of gross domestic product. The US dollar is the most traded currency in the world. The US dollar is the largest reserve currency in the world (the currency most often held by central banks) and is the currency used to price many commodities, including Oil, gold and copper.

Shafaq.com