Iraq is cursed with its wealth .. so what to do? The World Bank answers

Shafaq News / Two experts at the World Bank warned that Iraq is afflicted with a double curse through a mixture of government corruption and a sick private sector.

In a report by the American Brookings Institution, translated by Shafaq News, the two economists at the World Bank, Bledi Chiliku and Wael Mansour, said that the resource curse refers to countries rich in their resources in obtaining the benefits of their national wealth. “Countries damned by their resources” tend to fall into conflict, corruption and economic turmoil.

The experts pointed out that in countries such as these, competition diminishes when the real exchange rate increases, governments adopt repeated fiscal policies, dependence on commodities expands, and exposure to external shocks increases.

And they considered that there may be curses less destructive than the mixture of the corrupt government and the sick private sector, and unfortunately, Iraq is completely connected to this curse, as a recent report showed.

The “Brookings” report stated that the oil wealth of Iraq has allowed it to be in a position to achieve income at a high – medium level, but its institutions and the socio-economic results that it records indicate a low and fragile country.

He pointed to growth being driven by oil production and associated investment, not by productivity. The educational system, which was once at the top of the ranks at the Arab level, is now placed at the bottom of the list.

Iraq has one of the lowest rates of female participation in the workforce in the world, while the unemployment rate among young people is 36 percent, suffers from deteriorating infrastructure and working conditions, and ranks one of the poorest among the countries of the high-middle economies.

The recent conflicts have had a significant economic cost, as the level of GDP in 2018 was 20 percent lower, due to the ISIS war.

Nearly two decades after the 2003 war, Iraq is still caught in the trap of fragility and facing increasing political and social unrest. Amid multiple crises, including the oil shock and the Covid-19 epidemic, in addition to the results of poor economic policies, and the inability to address corruption, Iraq is now facing the worst performance in its annual growth in 2020 since the fall of Saddam Hussein.

The two experts at the World Bank considered that there is a consensus that sustainable growth, job creation and improvement of the standard of living for Iraqis all require peace and stability, reducing dependence on oil and directing the state towards a market in which it relies more on the private sector, strengthening regional integration, and improving the general management of oil revenues.

While these goals remain in place from a technical point of view, successive attempts to achieve them by the government and donors have remained elusive. The two economists said, “We believe, mainly, that this is because the reform programs in Iraq are outside a strong political framework.”

The two experts believed that in order to understand the fragility, violence and limited development, careful analysis of the political system in the country, the nature of the social contract and social divisions in society is required.

They suggested that the best way to do this is through an analytical framework that looks at three competing levels: between political elites, between state and society, and between social groups. Applying this framework to fragile states suffering from conflict and violence helps them understand why reforms have not gone wrong.

As for Iraq, these three levels have turned violent in recent history. Conflict erupted over competition for power and resources. And Iraqi elites have exploited ethno-sectarian divisions in their quest for power. Also, large foreign interventions reinforced these lines of division and turned Iraq into a field for greater geopolitical competition.

In addition, the heavy dependence on oil has strengthened conflicts at all levels, exacerbated competition among elites, and undermined the principle of holding the state accountable for its responsibilities to the people. Also, the oil wealth reduced the incentives to collect other types of revenues for the government, especially from taxes. This, in turn, weakened the need for the principle of compromise – accountability between the state and society, which forms the basis and essence of state building processes.

While 64 percent of Iraqis say the country is divided, the political balance will become more fragile in the coming years in light of the available demographic data. In Iraq, one of the largest proportions of youth in the world, and a regional gap in terms of poverty rates and service provision. Homogeneity and social trust are low in the areas liberated from ISIS, while poverty rates are greater in the south, despite the fact that it pumps the majority of oil wealth.

In conclusion, the two economists asked what could be done at the level of change in thinking, and indicated three aspects: a political refocusing that includes all social groups, a re-action of the social contract in a way that enhances confidence, and a review of the economic model to be more diversified.

Progress in Iraq will be elusive unless the political elite stimulates change through an alliance between elites and people, and this country has a common political vision that recognizes the need for a system that provides development for all Iraqis. For the sake of the social contract, there is a need to build trust between citizens and the government, strengthen institutions, strengthen citizens’ involvement in infrastructure and services, and find the way for an investment climate that creates jobs for young people. There is a need to invest in people first, develop infrastructure and strengthen institutions in providing social services to citizens, and organize the macro-economy and the work of the private business sector

Shafaq.com

The strategic policies of the state are guaranteed to improve the country’s currency

We are now suffering from weakness in all our institutions, most of which are unstable, and when the military strategy turns from internal war to eliminate internal terrorism, the Ministry of Defense turns from defense at home to a regional deterrent force and has the power to attack, exposing the country to an invasion or bypassing by the neighborhood or from any ambitions. External and we have systems to block and intercept any bypass by air, land or sea port. International economic dealings change with us

When the country becomes industrial, not consumer, and we have exports and our oil exports are a supportive factor for the economy, then we talk about currency and the auction.

When the Ministry of Industry is unleashed to rehabilitate the infrastructure of the strategic factories in the country, such as petrochemicals, iron and steel, factories in Alexandria and others, and we start exporting our industrial products here, the dealing with currency changes.

When the government launches the Ministry of Agriculture and supports it with sufficient funds in order for the ministry to support and encourage the farmer here, we will dispense with importing from neighboring countries, and at the same time the ministry supports livestock and we have self-sufficiency of meat, birds and other things here, we will dispense with imports. Countries by repeating it abroad and repeating inside Iraq. Here we will have a word where all the import that I mentioned is done in the dollar currency. Here the bank is obliged to put the dollar in the auction, but if we had self-sufficiency, all our economic policies would have changed.

A year ago, I asked your forum that the import be from Turkey, Saudi Arabia, Iran, or Oman, that our importation from these countries, especially food and consumer products, through the two currencies of the dollar and the Iraqi dinar, and here we have put our currency in these countries and the Iraqi dinar will be dead inside the country because of failed economic policies Unfortunately.

It is among the circulating currencies in these countries, the first being the neighboring countries

And closer to your side the idea… We only import tens of billions from Turkey annually, all of them in dollars.

If we agreed that we would import half the amount in dollars and the other half in Iraqi dinars, here a significant number of dollar currency would have been preserved.

As for distant countries such as Europe and eastern countries, importing from them in the same way is half in the dollar currency and the second half in exchange for oil and its derivatives.

Here the same, we will maintain the balance of hard currency in the country.

Important note

With this economic strategy, the Iraqi dinar will be included in the currency notes in the markets, and it will have value and respect

My respect

Burathanews.com

Restore Iraq back to its International status

Al-Kazemi to his French counterpart: The government seeks to restore Iraq to its international status

Al-Kazemi to his French counterpart – The government seeks to restore Iraq to its international status(Baghdad: Al Furat News) Prime Minister Mustafa Al-Kazemi began his first talks on Monday morning in the French capital, Paris, with his meeting with French Prime Minister Jean Castex, in the presence of a number of ministers from the two countries.

“During the meeting, ways to develop bilateral relations between the two countries and strengthen them in the economic, investment, security and health fields were discussed, and the situation in the region was discussed, and views were exchanged on a number of issues,” a statement by his media office said.

Al-Kazemi pointed to “the importance of strengthening cooperation between the two countries in many sectors, as the government seeks solid relations with the countries of the world based on common interests and to restore Iraq to its international status.”
The French Prime Minister affirmed “France’s keenness to support Iraq in various levels.”

Alforatnews.com

The Central Bank talks about its vision to reform the reality of the Iraqi banking sector

Baghdad – The Central Bank of Iraq discussed the means to include a vision for reforming the reality of the banking sector in the country.

The Governor of the Bank, Mustafa Ghaleb Makhaif, said in an interview with the official newspaper followed by “Nass”, (October 15, 2020) that “the future vision for the work of the Central Bank of Iraq is centered in light of the economic crisis through the goals it seeks to achieve and specified under its Law No. (56) Of the revised year 2004, the most important of which is (ensuring the stability of domestic prices and strengthening a stable financial system based on competition), to continue achieving the strategic objectives set out in the plan (2016-2020).

In order to do this, the governor explained, “The bank recently presented the terms of the reform paper for the banking sector, which has been initiated now, because of its importance in developing banking services and products in the next stage, and through it the banking sector will be supported to advance its current reality, and a group of The specific criteria adopted by the bank and on the basis of which the operating banks have been classified, “indicating that” this classification will be reviewed by the end of this year, and this will continue for the seasons of the following year. ”

“This step comes within the framework of strengthening confidence in the banking sector and improving the quality of services provided to the public, as well as enhancing competitiveness in the Iraqi banking sector,” Mkhaif stressed, reiterating the previous central bank’s confirmation in the request to banks that are lagging more than once to work to correct their situation and pay dues. Her customers. ”

The governor of the Central Bank stressed that “this classification will be an opportunity for those banks to prove their seriousness in achieving the requirements of reform and to pay the dues of depositors and shareholders owed by those banks

Nasnews.com

An economist reveals the terms of the reform paper that the Ministry of Finance is working on

Today, professor of economics at Basra University, Nabil Al-Marsoumi, revealed some items of the economic reform paper called (the White Paper) that the Ministry of Finance is working on to reform the Iraqi economy.

Al-Marsoumi said, in a post on Facebook, which Al-Rasheed followed him, “As I expected in previous publications that the government reform paper will not deviate from the IMF policies and austerity measures with high social costs.”

He added, “This can be seen by looking at some of what was mentioned in the reform paper that the government called white, as follows:

1- Reducing the wage and salary bill from 25% of GDP to 12.5% ​​within three years.

2- Reforming the retirement fund so that it is not linked to the budget, and retirement salaries are paid directly from the fund.

3- Reducing financial support for state-owned companies by 30% every year for a period of three years.

4- Reducing total government support from 13% of GDP to 5% within three years.

5- Restructuring the public salary scale by stopping new employment and replacement operations in the public sector.

6- Setting a higher ceiling for employees ’salaries to achieve justice and reduce differences.
7- Applying income tax to employee allowances, incentives, bonuses, and others.

8- Reviewing fuel subsidies for state-owned oil companies. The proceeds from the sale of black oil should be returned to the state treasury.

9- Issuing national bonds and instruments and offering them for public circulation on the Iraq Stock Exchange.

10- Studying the current exchange rate of the dollar against the dinar and taking into consideration the requirements of financial and monetary stability and achieving the competitiveness of the Iraqi economy.

11- Restructuring the state-owned public companies and converting them into private companies.

12- Correcting the defect in the ration card system to ensure the protection of people with limited income and withholding it from families whose income exceeds a certain ceiling.

13- Ensure that all workers in the public, private, mixed and cooperative sectors are included in retirement benefits.

14- Completing the Social Insurance Law in order to be a substitute for the unified retirement, retirement and social security laws for workers

Alrasheedmedia.com

The Central Bank begins implementing steps to reform the banking sector

Today the Central Bank of Iraq began implementing its first reform steps for the banking sector, as it finished classifying private commercial and Islamic banks operating in Iraq according to a set of international standards as well as a number of standards approved by this bank.

This step comes within the framework of enhancing confidence in the banking sector, improving the quality of services provided to the public, as well as enhancing competitiveness in the Iraqi banking sector.

This bank confirms that it has previously asked the lagging banks more than once to work on correcting their situation and paying their customers’ dues, and therefore this classification will be an opportunity for those banks to prove their seriousness in achieving the requirements of reform and pay the dues of depositors and shareholders.

Finally, we announce that the next stage will include the process of “reforming government banks as well,” noting that the reform measures that have been adopted depend mainly on the Central Bank Law No. (56) of 2004 and the Iraqi Banking Law No. 94 of 2004 and the instructions and controls issued according to them.

https://cbi.iq/news/view/1571

Justifications For Changing The “Iraqi Dinar” Exchange Rate

Iraq is going through very sensitive conditions, as the Iraqi economy faces a real challenge after the excruciating failure to find alternatives to selling crude oil, prosthetic solutions, and weak control over public expenditures, and with the absence of sovereign investment funds that secure additional imports and a portfolio to protect the future of generations, especially in times of crisis.

Aid request to pay salaries:

Iraq today has reached a request for aid in order to pay the salaries of employees and retirees because what enters the treasury is not equal to less than half of what Iraq needs to cover salaries only, although the government has solutions if there is the will to improve the financial position and fill the budget deficit, by reducing public spending and controlling Wasted resources and support for the local industrial and agricultural product and other economic solutions, the most important of which is the central bank’s approach and monetary policy that restores the balance of the dinar’s price against the dollar in the daily auctions to sell the dollar by the Central Bank of Iraq, by raising the subsidy slightly from the exchange rate in a way that achieves the price change at a specific and studied rate To avoid the issue of inflation.

Taking into account international economic variables:

Our constant demand for a change in the exchange rate was based on a realistic vision that included all aspects of international economic variables due to the decline in oil prices and the Corona pandemic, as well as the chaos of imports, the loss of control and control over the border outlets, the volume of counterfeiting, corruption and smuggling through unofficial outlets, all causing the Iraqi market to be violated. And dumping it with inferior and cheap commodities and preventing the upgrading of the local product, which requires a review of the monetary policy to curb this chaos and achieve tax and customs revenues equivalent to the volume of imports, which we and with us many experts and specialists in financial affairs believe that the exchange rate must change, provided that it is accompanied by a set of supportive measures and decisions, to control Expected inflation.

The failure of the previous administration of the Central Bank of Iraq:

However, the previous administration of the Central Bank insisted on continuing with the policy of fixing the dinar’s price against foreign currencies, under the pretext that changing the exchange rate would reflect on high prices and inflation and harm vulnerable social strata and other justifications that do not get fat or rich from hunger. The continued sale of the currency at a fixed exchange rate by the Central Bank will lead to the bankruptcy of the state and the collapse of the economic system in conjunction with the decline in oil prices and the abandonment of a million barrels of its share for the benefit of others in these difficult circumstances the country is going through, The assumption that the survival of this equation, which is in support of imports, industries and exports of neighboring countries, will lead to the accumulation of goods in exchange for a cheap dollar that the exporting countries benefit from at the expense of the Iraqi economy stopping. The basis on which we started by demanding a change in the exchange rate is the fact that the state is not fully in control of the imports of the border outlets, including those in the Kurdistan region.

Exchange rate change proposal:

Therefore, we included the proposal to change the exchange by collecting tax and customs duties in advance from importers in the window of currency sale, and to clarify the matter, if we calculate the price of oil specified in the draft budget law at (56) dollars per barrel, meaning the rate of decrease is (15%), so the exchange rate is assumed ( 1300) dinars per dollar, and if (5%) was levied for the tax and (15%) for the customs fee and added to the exchange rate to become (1500) dinars per dollar, so we would have withdrawn the rug from the corrupt in the northern, western, eastern and southern outlets and we got On revenues from the state treasury, the monetary result to the state treasury every day is the sale of a dollar at a rate of (200) million dollars, and in the case of adopting the new exchange rate, it will be (60) billion additional dinars for each auction day, which is approximately (18) trillion dinars annually.

Conclusions:

First – Achieving revenues for the federal government’s treasury that exceeds (18) trillion dinars annually from the amount of tax and customs, with a price difference at least.

Second – Elimination of currency smuggling, as imports will be real and in the amount of transferable sums.

Third – ending the phenomenon of tax and customs evasion at the border crossings.

Fourth – the submission of all ports to the authority of the federal government and thus solve the problem of imports of goods and goods from the ports of the Kurdistan region because of the preference in terms of taxes and customs fees.

Fifth – ending all tax and customs exemptions for institutions and government departments and others.

Sixth – ending the phenomenon of the mediator in selling dollars and commissions of private banks, because dealing must be with the real importer and not with speculators, which will be reflected in the development of the export sector for local products and the creation of job opportunities.

Seventh – Streamlined flow of goods and goods from the border crossings. We expect the new administration of the Central Bank of Iraq, which has taken positive steps to correct the previous paths and approaches, which are in line with the reform plan, more decisions to create a real banking sector, and we hope from them to study the ideas and proposals presented by our council that serve the public interest.

Mustaqila.com

The free dinar .. An economist talks about a move that establishes a global demand for the Iraqi currency

The economist Ahmed Al-Salami wrote an explanation about some countries deleting zeros from their currency and the possibility of applying them in Iraq, while referring to the possibility of making the Iraqi currency strong and has global demand, in what he described as the free dinar.

“Iran will soon delete four zeros from its currency and convert it from the riyal to the new toman officially and have completed the legal series for that, and at that time it will be 100 dollars equal to 300 toman only instead of 3 million tomans or 30 million riyals,” Al-Salami said.

He added: “A digital deception previously carried out by the United States, Italy and Turkey, the United States deleted its dollar currencies with zeros in front of the previous European currencies, the French franc, the German mark and the English pound, and canceled the $ 10,000 currency and the $ 1,000 currency and withdrew it from banking and personal circulation forever.”

He continued: “Italy also re-zeroed the Italian lira, adjusted its value and deleted six zeros from it, and the million lira turned into one lira and a hundred million lira into 100 lira before it was merged with the euro currency in 2002, as well as that of Turkey, which converted one million Turkish liras into one lira and converted one hundred million pounds One hundred Turkish liras only ”.

He explained: “Suddenly, the Turkish currency was circulated and used abroad for circulation, and it entered Iraq and was used for dealing and the exchange rate as a store of value, and whoever used to work in the Shorja knows this after the Turkish currency was forgotten throughout the nineties and eighties and was an attempt to integrate Turkey with European economic values.”

And that “the current Iraqi dinar differs slightly because the Iraqi economy is consumerist, but that does not prevent it. It is possible to apply that and use the deleted Iraqi currency zeros by buying and importing industrial production lines for the manufacture of basic and luxury goods as much as possible, and this will revive the exchange rate of the dinar and the demand for it externally and shrinking.” Depletion of foreign currency to buy the most insignificant commodities and deplete the cash balance, instead of facilitating official and accounting transactions, packages, storage, transportation, use of versatile metal change and revolutionary digital currency through cards and gain confidence internally and externally, needs a revival, stimulation and progress in this aspect, easy projects that are waiting for their hero, below. Conceptual models for the deleted Iraqi currency, the “free dinar” zeros.

Yesiraq.com

The first statement of the new Iraqi central governor: We drew up a plan to strengthen the national currency

Shafaq News / In his first press statement since assuming the position, the new Governor of the Central Bank of Iraq, Mustafa Ghaleb Al-Kitab, announced, on Thursday, a plan to strengthen the national currency.

The book said in a statement issued after his meeting with the President of the Supreme Judicial Council, Judge Faiq Zaidan, and reported to Shafaq News Agency, that ” a deliberate banking plan has been developed that will develop the work of the central bank, strengthen the national currency and address negatives in cooperation with the courts specialized in joint work with the Central Bank .”

For his part, the President of the Supreme Judicial Council affirmed that “the selection of independent personalities from among the employees of state institutions to run these institutions gives an indication of the government’s seriousness in pursuing the professional institutional approach in building the state as well as stressing the importance of preserving the independence of the Central Bank in accordance with the constitution and the Central Bank of Iraq law .”

He stressed the need to “abide by banking laws, the law against money laundering and terrorist financing, and the instructions issued pursuant to them, to build a sober banking sector capable of facing financial and economic challenges and providing real opportunities for development .”

On September 14, Prime Minister Mustafa Al-Kazemi made major changes in a number of positions, including the Central Bank, the Iraqi Trade Bank, the Baghdad Municipality and the National Investment Commission.

Shafaq.com

Iraqi PM appoints Mustafa Ghaleb as central bank governor – INA

By Reuters Staff

BAGHDAD (Reuters) – Iraqi Prime Minister Mustafa al-Kadhimi appointed Mustafa Ghaleb as central bank governor, state news agency INA said on Monday.

Kadhimi also appointed Suha Dawood Elias as head of the National Investment Commission and Salem Jawad Abdul Hadi Al-Jalabi as chairman of state-owned Trade Bank of Iraq (TBI), among other appointments, INA said.

INA did not provide further details.

Iraq’s economy and oil sector were battered by years of wars, sanctions and a stubborn Islamist insurgency triggered by the U.S. invasion.

Iraq relies on oil to fund 97% of its state budget. Iraqi Finance Minister Ali Allawi told parliament last week that reforming Iraq’s economy would take five years of work and that state debt amounted to 80-90% of national product, while foreign debt was at $133 billion.

Reuters.com