Ministry of Finance: IMF refers to a gradual recovery of the Iraqi economy as a result of the government’s “reform” steps

The head of the International Monetary Fund mission, Tokher Mizorov, confirmed in a press interview that I followed (the Fourth), that the Iraqi economy is gradually recovering, but it is still weak.

He said policies must remain focused on reducing vulnerabilities, supporting economic recovery, and enhancing resilience through broad-based structural reforms. Increased inflation, fueled by rising global commodity prices, calls for strengthening targeted social safety nets to help the most vulnerable while avoiding measures that impair fiscal sustainability and weaken competitiveness.

Here is the text of the interview:

What is the International Monetary Fund’s assessment of the Iraqi economy during the coming period, and what are the policies recommended by the Fund to achieve economic growth?

The good news is that the Iraqi economy is witnessing a gradual recovery, and it is expected that the balances of public finances and the external current account will shift from a double deficit in 2020 to a double surplus in 2021, especially with expectations that the gradual recovery trend will continue.

At the same time, however, the economic recovery remains fragile, incomplete, and subject to challenges—real non-oil GDP has not yet reached pre-pandemic levels—and global inflation presents a new challenge.

Public finances are still mainly dependent on oil revenues, which threatens that any reversal in the oil market conditions will easily cause pressure on public finances to be financed again.

Accordingly, it will be important for economic policies to continue to focus on reducing vulnerabilities and on supporting economic recovery without exacerbating domestic inflation.

This will help enhance the resilience and sustainability of the Iraqi economy, enabling it to better face future challenges. In addition, diversifying the economy and promoting private sector development are the most important factors for achieving development in Iraq.

This requires carrying out wide-ranging reforms, the most important of which are those aimed at enhancing public resources and reducing their dependence on oil while creating the necessary space to increase much-needed spending on the investment and social protection sides. combating corruption and improving the governance and efficiency of the public sector; In addition to reforming the electricity sectors, the financial sectors.

How do you explain the increase in inflation in Iraq and do you attribute this to the devaluation of the dinar in 2020? As in many countries around the world, inflation in Iraq largely reflects rising prices globally. Due to a combination of different factors such as the rapid recovery in global demand, supply chain disruptions, and the deterioration of production capacity due to the global pandemic, global commodity prices have risen sharply over the past year.

International energy prices have more than doubled, while world prices for wheat, rice, aluminum, copper and nickel have risen by 20-50 percent. All of this increase, in turn, has led to an increase in the costs of production and transportation for a wide range of consumer products whose prices are increasing globally, including in Iraq.

In our assessment, it appears that the impact of the devaluation of the dinar on inflation was limited. In general, it is very unusual for a one-time adjustment of the exchange rate to continue to affect inflation in any significant way after fourteen months. Does the fund support maintaining the current exchange rate or returning to what it was in order to reduce inflation and help vulnerable groups?

Policies aimed at containing inflation and its impact should take into account the fragility of the recovery in Iraq and the long-term goals of diversifying the economy and strengthening the private sector.

Thus, the first policy priority is to avoid making the problem worse by adopting domestic policies that increase inflation, for example through expansionary policies. The second priority is the implementation of policies specifically targeted to protect the most vulnerable.

At the same time, it will be important to avoid any measures that could weaken Iraq’s economic capabilities without addressing the problem. For example, measures that undermine the competitiveness of domestic producers and encourage imports will not, if at all, bring significant benefits to vulnerable groups. This explains the scarcity of countries with a fixed exchange rate to revalue their currency in economic history.

For the same reasons, it would not be advisable for Iraq to do so. What should the government do to contain the social impact of inflation in Iraq? Higher prices erode the purchasing power of household income and savings. Since more than a fifth of Iraq’s population lives in poverty, protecting vulnerable groups from the effects of inflation is of paramount importance.

To achieve this, the 2022 budget should prioritize strengthening targeted cash transfers to help the poorest families during these difficult times. Continuing to work on improving the coverage of the social protection network will also contribute to ensuring that those who really need it most are helped. Moreover, linking the increase in pensions and salaries of low-paid civil servants to inflation will contribute to protecting the purchasing power of their incomes and prevent them from falling into poverty. International experience has shown that such measures are most effective in protecting the livelihoods of vulnerable groups.

What should the monetary policy of Iraq and the Central Bank of Iraq focus on? The main objective of the Central Bank is to maintain price stability, support growth, and maintain the stability of the financial sector. To achieve this objective, in the short term, the central bank should closely monitor domestic liquidity conditions to contain potential inflation expectations, while ensuring that sufficient credit is available to support a gradual recovery path.

Continuing to build foreign exchange reserves will also contribute to strengthening and enhancing Iraq’s ability to sustainably meet its external obligations. Advancing banking sector reforms and enhancing financial inclusion will also be of paramount importance to support job creation in the private sector and achieve sustainable growth, during the next phase.

Alrabiaa.tv

Barham Salih calls for a political and social contract in Iraq

Shafaq News / The President of the Republic, Barham Salih urged, on Sunday, to conduct a political and social contract in Iraq, which he described as an inevitable necessity.

This came when the President of the Republic received presidents, deans and professors in Iraqi universities from various governorates, where they discussed the progress of higher education work in addition to the general political situation in the country, according to a statement by the President’s office.

The President of the Republic stressed the need to begin meeting the national and constitutional entitlements and not to disrupt them, noting that the tasks of the new parliament and the government that will emerge from it will be grave and hopeful, as it came after early elections in response to a movement and a broad popular public opinion that acknowledges the impossibility of continuing the current situation, and the importance of correcting tracks, and focus on serious reform and the fight against corruption.

He added that the urgent need for good governance through a new political and social contract is not a luxury but an imperative necessity imposed by the internal political and economic conditions and the rapid regional and international developments, noting that the formulation of this contract is with the participation of the national public opinion with its political, academic and social activities.

The President pointed out that Iraq’s absence from its pivotal role in the region during the past four decades due to its internal crises was reflected in its internal instability and withdrew to the whole region, noting that the efforts made have achieved great development in restoring Iraq to its natural pioneering role in the region through a national path based on rejection The country, Iraq, is an arena of conflicts, but rather a forum for the convergence of the interests of the peoples and countries of the region.

Shafaq.com

For the first time in the history of the currency auction, the central bank sells less than a million dollars in cash

Shafaq News / The Central Bank of Iraq’s cash sales fell on Sunday, to less than one million dollars, compared to foreign remittances, which rose to more than 112 million dollars.

The Central Bank of Iraq usually sells at least $12 million in the currency auction on a daily basis.

Shafak News Agency correspondent stated that today, during its auction for buying and selling US dollars, the Central Bank witnessed a decrease in its dollar sales to reach 112 million and 670 thousand and 566 US dollars covered by the bank at a base exchange rate of 1460 dinars per dollar compared to last Thursday, when sales amounted 137 million and 900 thousand dollars.

Our correspondent added; The bank’s sales to banks and mediation companies in cash decreased significantly to reach 960 thousand dollars compared to sales that went in the form of external remittances, amounting to 112 million and 710 thousand and 566 dollars.

Our correspondent indicated that 17 banks have met requests to enhance balances abroad, and two banks have responded to cash requests, in addition to one mediation company.

Shafaq.com

The Triple Alliance holds a meeting in Baghdad

Shafaq News / The Triple Alliance (the Sadrist Bloc, the Sovereignty Alliance and the Kurdistan Democratic Party) held a new meeting in the Iraqi capital, Baghdad.

The tripartite alliance held a meeting last February 27 in the Iraqi capital, Baghdad, in which it renewed its adherence to forming a “majority” government despite its rejection by internal and external parties.

The tripartite alliance includes the Sadrist movement, the Kurdistan Democratic Party, and the “Sovereignty” alliance, which includes most of the winning Sunni forces in the legislative elections that took place in October of 2021.

An informed source told Shafaq News Agency, “The meeting of the tripartite alliance in Baghdad is still going on until the moment, during which it was emphasized to expedite the formation of the majority government, despite the rejection of it by internal and external parties.”

The leader of the Sadrist movement, Muqtada al-Sadr, seeks, through the tripartite alliance, to form a national majority government, while stressing the exclusion of the “State of Law” coalition led by al-Maliki, but the rest of the Shiite forces within the “coordinating framework” reject this and demand a consensual government in which all political forces in Parliament participate. Similar to previous courses.

Shafaq.com

Deputy: The New Government Will Be Formed After Eid Al-Fitr

Information/Baghdad… A member of Parliament, Yasser Watut, suggested the formation of the new government after the blessed Eid al-Fitr, which falls next May.

Watout said in an interview seen by / the information /, that “the information confirms that the government will be formed after the blessed Eid al-Fitr,” noting that “the knot that currently stands before the formation of the government is the choice of the president of the republic.”

He added that “the political blocs are determined to build the country despite the difficulty of the next stage and the accumulations that occurred in it as a result of the negatives of the past stages,” stressing that “the progress of the construction path is forward and without return.”

The member of the Patriotic Union of Kurdistan, former MP Rizan Sheikh Delir, had confirmed in a previous statement to Al-Maalouma, that the Presidency of the Republic will not pass without the occurrence of understandings and consensus between the two major poles of the political process, pointing out that the Union opened its doors for an understanding on the aforementioned position.

Almaalomah.me

Iraq exports more than 7 million barrels of oil to America in a month

Economy News – Today, the US Energy Information Administration announced that Iraq’s oil exports to America amounted to more than 7 million barrels in the month of February.

And the administration said in a table seen by “Economy News”, that “Iraq exported 7.224 million barrels of crude oil to America during the month of February, at a rate of 258 thousand barrels per day,” down from January, in which Iraqi oil exports to America amounted to 10,044. Millions of barrels, at a rate of 324,000 barrels per day.

He added, “Iraq exported crude oil to America during the first week of February at a rate of 226 thousand barrels per day, while an average of 225 thousand barrels per day was issued in the second week, and an average of 285,000 barrels per day was issued in the third week,” noting that “the fourth week’s exports amounted to 295,000 barrels per day.

The US Energy Information Administration stated that “Iraq ranked fifth in its exports to America during the past month after Canada, Mexico, Saudi Arabia and Colombia, and the second Arab country after Saudi Arabia, whose exports to America reached 10 million, and 584,000 barrels per day,” noting that “Canada ranked in the rank The first as the most oil-exporting country to America, followed by Mexico.”

On Friday, the Iraqi Oil Marketing Company “SOMO” announced that the rate of oil exports and revenues last February was the highest in two years.

The company said in a statement, that Iraq achieved the highest export rate during the month of February last two years, at a rate of 3.314 million barrels per day, and an increase of 112,000 barrels per day over last month.

The company added that Iraq also achieved “the highest financial revenues since 2014 at an amount of 8.54 billion dollars through the Oil Marketing Company (SOMO) exporting all available quantity for export of Basra and Kirkuk crude oil.

Economy-news.net

The world’s gold reserves are declining, and Iraq maintains its position

Economy News – Today, the World Gold Council announced a decline in the world’s reserves of gold after the central banks of countries sold quantities of it within one month, while Iraq maintained its global position.

The council said in its latest schedule for the month of March of 2022, which was reviewed by “Economy News”, that “the global reserves of gold decreased by 12 tons as a result of the central banks selling quantities of it,” noting that “the bulk of the decline resulted from large sales operations from Kazakhstan ( 17 tons), while Russia (3 tons), Poland sold two tons, Uzbekistan one ton, and Mongolia one ton.

He added, “The total purchases amounted to less than 13 tons, as Turkey bought (10 tons), India also bought one ton, Qatar (0.7 tons) and Ireland (0.5 tons).”

The Council noted that “Iraq maintained its global position as 39 out of the 100 countries listed in the table with the largest gold reserves, reaching 96.4 tons of gold, which represents 8.8% of the rest of its other reserves.”

He explained that “the five Arab countries in the table did not purchase any amount of gold during this month, so that Iraq maintains its fifth rank in the Arab world after Saudi Arabia, Lebanon, Algeria and Libya,” noting that “the total possession of gold in the five Arab countries amounts to 996.5 tons.”

He pointed out that “the United States still ranks first among the countries of the world in possession of gold with 8,133 thousand tons, followed by Germany, 3,359 thousand tons, then Italy 2,451 thousand tons, while Suriname ranked 100, with 1.5 tons, preceded by Yemen, with 1.6 tons.” .

It is noteworthy that the World Gold Council, which is headquartered in the United Kingdom, has extensive experience and deep knowledge of the factors that cause market change, and its members consist of the largest and most advanced gold mining companies in the world.

Economy-news.net

International Monetary warns Iraq and announces its position on the dollar exchange rate

{Economic: Al Furat News} The International Monetary Fund warned Iraq of the “fragility” of its economic recovery.

The head of the IMF mission in Iraq, Tohir Mizorov, said in a press statement: “Policies aimed at containing inflation and its impact should take into account the fragility of recovery in Iraq and the long-term goals of diversifying the economy and strengthening the private sector. It is to avoid making the problem worse by adopting domestic policies that would increase inflation, for example through expansionary policies.”

He added, “The second priority is to implement policies that are carefully targeted to protect the most vulnerable groups. At the same time, it will be important to avoid any measures that could weaken Iraq’s economic capabilities without addressing the problem.

For example, measures that undermine the competitiveness of local producers and encourage imports will not contribute to Realizing the benefits of remembering the weak groups, if they exist at all, and this explains the scarcity of countries with a fixed exchange rate to raise the value of their currency in economic history, and for the same reasons, it would not be advisable for Iraq to do so.

Mezroev pointed out that “the rise in prices leads to an erosion of the purchasing power of families’ income and savings, and since more than one-fifth of the Iraqi population lives in poverty, protecting vulnerable groups from the effects of inflation is of paramount importance. To achieve this, the 2022 budget should give priority to strengthening cash transfers directed to helping families.” the poorest during these difficult times.”

“Also, continuing to work on improving the coverage of the social protection network will contribute to ensuring assistance to those who are really in dire need of assistance,” he added.

Moreover, linking the increase in pensions, salaries of civil servants and low wages to inflation will contribute to protecting the purchasing power of their incomes and prevent them from falling into poverty. International experience has shown that such measures are the most effective in protecting the livelihoods of vulnerable groups. “.

The House of Representatives discussed in its session last Monday, in the presence of Finance Minister Ali Allawi. The Council discussed, during its hosting by the Minister of Finance, the rise in the exchange rate of the dollar and its repercussions on the market through the rise in prices and the damage to the poor segment, and the discussion of public debt and the financial policy of the Ministry of Finance and the proposed treatments.

Allawi warned during the session that reconsidering the exchange rate of the currency “in an ill-considered manner would lead to financial chaos similar to some countries, so the trend was to set the exchange rate of the Iraqi dinar comfortably to protect it from any external changes with a proactive and correct step in coordination with the Central Bank and study it with the President The government, heads of political blocs and other parties, in addition to the support of the International Monetary Fund, to change the price at a reasonable rate.

Allawi indicated that the benefits of devaluing the Iraqi dinar increased government revenues by 23 percent, pointing out that “the rise in prices in the Iraqi markets was not due to the decrease in the exchange rate of the dollar only, but rather as a result of the increase in global food prices since 2020.”

The Minister of Finance explained that “the rise in global oil prices is beneficial to Iraq and at the same time affects its needs of foodstuffs and oil derivatives, and the import of gas that is used to generate electricity by 30 percent, noting that the Iraqi external debt will be reduced by 4 billion dollars in 2021.”

Allawi suggested “supporting vulnerable segments of society by allocating a direct grant to be distributed through the ration card or social welfare and supporting small and medium-sized enterprises, especially in rural areas, as a result of the financial abundance resulting from the increase in oil prices.”

Alforatnews.iq

Iraqi parliament discuss dinar-dollar exchange with finance minister

ERBIL, Kurdistan Region – Iraq’s parliament convened on Monday to discuss the increased exchange rate of the Iraqi dinar with the country’s finance minister.

The Iraqi parliament held a session to discuss the high exchange rate of the Iraqi dinar, which is set at 1,450 dinars per US dollar.

“The parliament has begun discussing the exchange rate and its repercussions on the market through high prices which are harming the poor,” reported state media.

The Sadrist movement on Monday said the Iraqi finance minister Ali Alllawi has been summoned to attend the parliamentary session “to discuss the financial and economic crises that Iraq is going through.”

On February 17, Shiite cleric Muqtada al-Sadr and head of the largest parliamentary bloc, tweeted a list of six suggestions regarding the dinar-dollar exchange, with the fourth point reading “summon the finance minister to the parliament immediately.”

In December of 2020, Iraq’s central bank announced devaluing the country’s currency in an effort to combat a national liquidity crisis and bring in much-needed cash to the government’s coffers.

The devaluation of the dinar struck the public hard as government employees get paid in dinar, and they would be able to afford less with their salaries given that many imported goods are paid for in dollars.

The devaluation of the Iraqi dinar is a step taken towards reform and creating a “financial balance” and will revive the economy, Allawi said at the time.

In mid-August of last year, a member of the parliament’s finance committee said the dinar-dollar exchange rate will be fixed for the next five years.

Rudaw.net

Iraqi court’s ruling on KRG gas puts Turkey on the spot

A top Iraqi court has ruled that the 2007 oil and gas law affecting the Kurdistan Regional Government is unconstitutional in a heavy blow to the KRG and its energy deals with Turkey…

Read more: Al-monitor.com