Thread: Archive News - Iraqi Dinar Think Tank - 06/05/09 - 04/09/09

Iraq's central government demanding the p.alm of her hands on the foreign reserves

Central Bank of Iraq called on the government to cease its hands of the foreign currency reserves, is struggling with the State that rely on oil to meet the budget deficit in the wake of decline in crude prices.

And reduction of Iraq's budget in 2009 three times as a result of the sharp decline in oil prices from a record high near 150 dollars a barrel last summer. The Central Bank says that ministers and other officials want to use part of the proceeds of foreign exchange has approximately $ 40 million to bridge the gap.

The bank said in a statement on Sunday that the attempt to withdraw the foreign exchange reserves of the Central Bank to cover the direct expenses of different government would weaken the ability of fiscal policy to achieve stability.

The Bank, in particular, the importance of using foreign exchange reserves to maintain the value of the dinar against the dollar in the absence of stability of the country's economy.

The bank sets the exchange rate through the auctions. The law requires the bank to maintain its independence from the government.

In addition, lower oil prices have fallen Iraqi oil exports in the past year, some politicians have warned of "catastrophic" financial next year if Iraq did not reach the means to increase revenue.

The public sector is the main sector of operation in the Iraqi economy continues to basic services such as electricity stalled six years after the US-led invasion of Iraq.

It would further reductions in the budget to ex.ac.erbate tensions in a country just recovering from conflict.

The recent proposals to strengthen the revenue value of the sale of treasury bonds of three billion dollars and a tax rate of 35 percent on the profits of oil companies and the sale of a license to operate a network of other m.obile phone.

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Opinion Piece

the effects of the global financial crisis on the Central Bank of Iraq

Maithem Laibi Ismail
Civilized dialogue

Do you sacrifice the stability and the central bank raising the zeros?

Some believe that the financial crisis affected the Iraqi economy only through the reflection caused by the decline in oil prices in the successive reductions in the budget of 2009, and as Iraq's economy is dependent on the oil yield in the financing of expenditures, it is their view here that the repercussions of the crisis on the financial instruments of public only, and there are no implications for monetary instruments, and this team goes beyond that to argue that Iraq did not acquire the securities market with the advanced capitalist market economy has further adverse effects on total, which faced many of the economies.

Say that the financial crisis affected the world as a whole, the effects on the Iraqi economy are deeper than those effects, the question we ask here is: The financial crisis will affect and change the outlook for the monetary authority of the representative of the Central Bank of Iraq?

The answer to this research requires more than trying to changing the central control, to be one of the most important of these variables is the local currency and value, from here we will focus on two axes in this regard, the first relates to the system of the exchange rate applied, and the second is linked to the decision to be the three zeros done in the future.

Say; and fairness, that central to a large extent able to choose a proper drainage system, which was able to maintain the stability of the value of local currency against the dollar, through the use of daily currency auction, which the buyer down the Central Bank of the dinar in exchange for pumping dollars into the market, and improve Iraqi dinar gradually and continuously, thus a guarantor power of the Iraqi dinar and expelled him from the specter of fluctuations, which was facing the Iraqi dinar, which was prior to 2003 reflected the volatility of the economy as a whole, from here say that the CBE has been successful in the exchange rate policy, and for such period, the only remaining question challenge now is to what extent can the Bank to maintain and support the lifting of the value of the Iraqi currency against the dollar?

Here, jump to mind the nature of the relationship between the global financial crisis and the Central Bank of Iraq, there is a strong link between the Central Bank and the global crisis and the resulting decline in oil prices, the goods financed by the President, the Central Bank of dollars, those dollars through the Bank managed the composition of foreign reserves which amounts to more than 21 billion dollars, which obviously worked in the promotion and strengthening of the Bank's stance in maintaining the value of the Iraqi currency, and in the same dollars that the bank manages the daily currency auction, we say here that the central bank and to the continuation of the fiscal crisis and the resulting survival oil prices in the low levels, it would be two possibilities, one is prejudice and sacrifice Bahtiatath which accumulated in foreign currency, warn of the danger of this is a red line which we consider unacceptable the crossing, the local currency will be open and without cover, the other possibility is to sacrifice to preserve and improve the stability of the dinar through the sacrifice of the Iraqi currency auction, and this is unacceptable to the other of Rjuana might bring to the situation of chaos in the exchange market, the Iraqis before 2003, both of which affect; outcome, a negative impact on the role of the Central Bank of Lesotho guest grants stability and performance in the national economy.

The task of the central bank is not easy, in a range of parameters such as the global financial crisis and management of the economy of oil in the state, ramping up to a free market economy and emerging from the womb of the worst political crises and internal security.

From here on, the central careful search for a way out of this crisis, and the selection of a stable exchange rate system more flexible and more responsive to the requirements phase, we are here not to go too far in a campaign central to the policy which we consider prudent over the past years; also to do so multilaterally Now, we squeeze by the central in the search for novel ways wise and long-term goal of combining economic stability, which is the inherent purpose and goals of the approach flexible exchange rate regimes and managed.

Another question that jumps to mind is: Is there any effects of the global crisis to review the project three zeros from the lifting of the Iraqi dinar, which the parties had begun to promote a number, such as the Central Bank of Iraq and the Ministry of Finance?

It seems that the answer to this question will not be easy, I say this because the implications of the crisis on the Iraqi economy is difficult to monitor the state of the final results of which, besides the impact of the crisis on the decline in oil prices has led to serious implications was the review of the general budget in terms of restructuring expenses and the reduction of such expenditures to more than once in the 2009 budget, it is difficult to predict the effects of such crisis on the Iraqi reality.

Is well known that it was a proposal from the Ministry of Finance to the Central Bank to lift the three zeros from Iraqi dinar, which has been approved by the Central Bank, where he spoke on the last long-term strategy aimed at improving the situation of the Iraqi currency, through the deletion of three zeroes, and the strengthening of systems of payments Consistent with the economic development in the country.

The question now is, "Will this project still exists and could come into effect under conditions of global crisis?

That the answer is likely to be negative, the global situation is in a state of instability and financial crisis caused tremors among the key economic life of Iraq, while the decision to lift the zeros must be in a stable economic environment, and such a decision is not only already After experiencing the currency Thassanna and stable in value, both of which is not available in light of the crisis and its repercussions, the economic Valmngirat likely continue to be unstable for some time which may extend to the end of 2010, and as long as the lifting of zeros on the dinar, as the promoters Essentially, the idea, had nothing to do with inflation and it is just a psychological issue, we believe that any action by the Central Bank in this regard under the circumstances of global psychological shipped will not even achieve the desired objective.

So, it seems that the central and financial re-consider the matter, and before we ask, does the Iraqi economy has already arrived to the hyperinflation crisis enough to warrant the deletion of zeros?

Say that the answer to that would have been negative as well, and our guide on this is simple and comes from the nature of the decision to lift the three zeroes itself, and I (three) zeros, this means that the value of the Iraqi dinar did not amount to a serious deterioration, did not pass the Iraqi economy varying from hyper-inflation, has also seen some of the States embarked on this experiment, such as Turkey, which was deleted (six) zeros from the Turkish lira to one million Turkish lira lira equal to one, but on the contrary, we find that inflation in the Iraqi economy has started to take a very moderate rates especially after the years 2005 and 2006 which saw the biggest waves of inflation.

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We reduce the fear of the presence of the negative effects of borrowing from the International Monetary Fund

Reduced the economic decision of the Commission in the House of Representatives MP Yonadam Kanna we fear the importance of the existence of a negative impact on borrowing from the International Monetary Fund.

He said we were in a press statement on Tuesday that the amounts borrowed by the intention of Iraq relating to specific projects, not all investment projects, adding that Iraq would reject the conditions that affect the national sovereignty.

He explained that we were that Iraq sought to borrow from the International Monetary Fund is to complete the projects and described the strategy in the field of energy, noting that Iraq does not have the liquidity of the funds necessary for the implementation of those projects, in addition to the countries which had promised to the reconstruction of Iraq did not implement their promises, he said.

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Jihad confirms that the interrogation of al-Shahristani, to discuss the rates of production and not the issues of administrative corruption

The Oil Ministry spokesman Assem Jihad said the invitation of Parliament to question the minister Hussain al-Shahristani, to discuss oil production rates.

Denied in a newspaper interview that the call for the parliamentary questioning on charges linked to al-Shahristani, the administrative and financial corruption in the ministry, indicating that this is totally different from the call made to the Minister of Trade Yarrub future.

The Jihad and the al-Shahristani, initiated more than once to attend the meetings of the parliament to present the activities of the ministry as one of the most important ministries in Iraq, where resources are about 95 percent of national income.

He said, adding that the minister will explain to Parliament the reasons for the decline in oil production and respond to all questions posed.

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Zubeidi: He confirmed that 20 percent of the budget next year will depend, however, the resources of oil and 45 billion dollars in salaries, subsidies and the ration card

Minister of Finance revealed that the 45 billion dollars in the current year's budget allocated to the ration card and the salaries of staff and retirees and the network of social protection, stressed that his ministry has prepared a plan to reduce dependence on oil to 80 per cent of the budget next year

And Bayan Jabr said in an interview with the "morning" that the state provides an income of more than twenty million people, including more than one million and 250 thousand families covered the salaries of social protection network, and about two million, 500 thousand employees and two million pensioners, according to a study by the Economic Department in the Ministry.

And that more than 45 billion dollars in the current year's budget allocated to the ration card and the salaries of staff and retirees and the network of social protection, subsidies and grants to institutions of the martyrs and separated politicians, institutions and other non-related to the Ministry.

And stop on the number of appointments and the demobilization of the working system of contracts, Zubeidi explained that the significant decline in oil prices was reflected in the size of the current year budget, the payment of the Council of Ministers and the House of Representatives to stop the appointments and transfers the call to ministries strength to fill the vacant degrees.

He said the powers of the Director of the appointment of a competent alternative to the table within the department to fill vacancies in accordance with degrees of controls, and requiring the appointment of two new contracts with the necessities, which was adopted by the Council of Ministers in this regard.

Zubaidi said that the ministers are all acknowledged the existence of disguised unemployment in the state's institutions of all, suggesting a strong orientation towards investment and activate its own law. According to the minister's remarks in this regard, several emphasized that the entry of investment to the country, especially in the residential sector will spend on the phenomenon of unemployment and reduce the dependence of citizens on the job and government subsidies.

He added that tourism in Iraq is no less important for oil is expected that the numbers of tourists between twenty and 25 million tourists a year after the establishment of a security, pointing out that the speed of ministries and provincial councils to exploit T_khasisatha investment will create many job opportunities in all sectors during the current phase.

Zubeidi, disclosed that the Ministry of Finance is currently preparing a budget for the next three years and plans a mission to maximize the state resources and reduce the proportion of dependence on oil imports to 80 percent

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Rafidain agreed to the opening of the Arab Academy for the banks in Baghdad

Met the general manager of Rafidain Secretary General of the Union of Arab Banks Abdul Hussein al-Yasiri implement the directives of the Minister of Finance to advance the work of the Iraqi banking and the creation of links with the Arab and foreign banks.

A source in the ministry of the reporter that during the meeting reviewed the achievements of the Iraqi banks during the period and the developments in the banking business, especially in the Rafidain Bank, who work with smart card and the destruction, pointing to the importance of cooperation between the Iraqi and Arab banks work to reach the ranks of the banking world banks developed.

At the conclusion of the meeting, the two sides agreed to convene a conference of Iraqi and Arab banks in Baghdad, the end of the month of October next, as well as to open Arab Banking Academy in Baghdad to contribute to the advancement of the Iraqi banks Through training and research And a series of cooperation with international banks.

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American electricity adviser killed

The U.S. State Department’s Deputy Director of the Iraq Transition Assistance Office and the top adviser to Iraq’s Electricity Minister, Terrence “Terry” Barnich, was one of three Americans killed in a roadside bomb near Fallujah.

State Department spokesman Ian Kelly said this Tuesday:

“On the afternoon of May 25th, a vehicle carrying Embassy Baghdad employees near Fallujah drove over an improvised explosive device. Two U.S. civilians and one military employee died as a result of the explosion. There was a State Department employee killed in the attack who was serving in our office in Baghdad. A Department of Defense civilian detailed to Embassy Baghdad was also killed. A third Department of Defense military employee was killed as well in the explosion.

“We offer our condolences and utmost sympathy to the families of those killed in the attack. The employees were returning from an inspection of a U.S. Government-funded water treatment plant under construction in Fallujah.”

The 56-year-old spent nearly two years in Iraq as a civilian. His main task was to help repair and expand Iraq’s electricity generation. He served three years as chairman of the Illinois Commerce Commission, effectively the utility regulators, and was active in state Republican Party politics.

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Iraq Investment committee proposes amendments on laws

Investment Committee aims at allowing foreign Companies to own land in Iraq. This project would help to entice the needed real estate development companies needed in order to construct houses, reform and expand the existing infrastructure. The Head of the National Investment committee Sami Al Aaraji said that the suggestion is one of many amendments on Investment law that aims at attracting foreign Capitals. The same source also added that the routine work and bureaucracy limited the effectiveness of the laws.

Aaraji said that the investor will have the right to own Iraqi land and added that the lands in which investment is allowed will be controlled by the investment committee without having to pass by the Ministries. He also added that he hopes these two amendments will be approved by September.

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Gulf states to 'review' currency union deal

Gulf countries will review their deal on regional monetary union and will seek to resolve disputes prior to its implementation, Saudi Arabia’s King Abdullah was yesterday reported as saying. The comments come less than a week after the United Arab Emirates broke ranks with four other Gulf states by withdrawing from the single currency plan in protest at a 5 May decision to base the joint central bank in Riyadh. King Abdullah did not specify what terms of a monetary union deal would be reviewed, in the remarks carried by Kuwait-based newspaper Al-Seyyasah.

“The coming review before the implementation would resolve what had been disputed upon,” King Abdullah was quoted as saying.

“The atmosphere for reviewing the monetary union agreement is open and the Emirates has an alert leadership. We do not doubt their keen [interest to safeguard] the strength of our Gulf council.”

UAE's Minister of State for Foreign Affairs Dr Anwar Mohammed Gargash has affirmed that the Emirates need no mediation with fellow GCC countries over its decision to withdraw from the Gulf monetary union. Gargash was quoted on Tuesday. by the Kuwait News Agency (KUNA) as saying the UAE was an active Gulf state that supported the GCC and had open communication channels with other member states.

"Having different views on some issues is a normal matter," he told KUNA. Gargash said the United Arab Emirates still believes that it makes a perfect location for the GCC Central Bank "which would benefit a lot from the country's open banking environment.

"The United Arab Emirates views that the procedures followed to select the location were not right."

"Therefore, it demanded, through an official memorandum, to halt discussions on the matter. The United Arab Emirates opted not to raise the issue with brothers in order for them not to take a negative turn," he stated.

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Demand for dollar goes down on Wednesday

Demand for the dollar dropped further in the Central Bank of Iraq (CBI) auction on Wednesday, reaching $119.770 compared to $150.942 million in the previous session.

“The demand hit $58.710 million in cash, covered by the bank at an exchange rate of 1,176 Iraqi dinars, and $61.060 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

None of the 16 banks that participated in today’s session offered to sell dollars.

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