Thread: Archive News - Iraqi Dinar Think Tank - 01/10/09 - 27/03/10

Minister of Oil, ruling out an increase in oil prices during the meeting

Ruled Oil Minister Hussain al-Shahristani said the member states of the "OPEC" to increase prices during its meeting in Vienna next week.

Shahristani said in a press statement on Wednesday that he is not expected to change the Organization of Petroleum Exporting Countries (OPEC) production level at its target.

The oil minister that the world economy was recovering gradually, but demand did not rise enough to make the Organization reconsider its current production ceiling.

http://www.radiodijla.com/cgi-bin/ne...?id=2010-03-10

U.S. Ambassador Jones: the stability of Iraq to Kuwait positive

Stressed the U.S. Ambassador to Kuwait Deborah Jones that the Kuwaiti government is aware that Iraq's stability is a positive thing for the benefit of Kuwait and peace with its neighbors, stressing that Iran has failed to respond positively to the offers made to them, explaining that "the issue must be addressed is why we work with our allies and members of the Security Council to consider different methods of pressure on Iran to respond at the same time trying to open the door to dialogue, and we hope to respond, and it should say yes."

During their first mark on the British Embassy in Kuwait International Women's Day, she said that U.S. Vice President Joe Biden, during his visit, which started to countries in the region, you may visit to Kuwait, "but I can not confirm the visit close to the presidency now."

And on the withdrawal of U.S. troops from Iraq, she said "If we see the overall picture in Iraq and compare it to what they were two or three in terms of number of explosions will find a decline in numbers."

http://www.uragency.net/index.php?aa=news&id22=5559

Announcement of results of Iraq's parliamentary elections the final needs a long time

Preoccupation with the outcome of elections and political coalitions Stffersh winner, and the number of seats they will get all the coalition, which may qualify for forming the government without recourse to the game of alliances to be offset by interest and concern for public cleanliness and beauty of the capital Baghdad and claims of citizens of the entities that participated the elections need to remove the advertisements as soon as possible because it has distorted the features of Baghdad.

http://radionawa.com/ar/NewsDetailN....601&LinkID=158

Delay the announcement of preliminary election results

The representative of the Secretary-General of the United Nations in Iraq, Ad Melkert, Wednesday, that the announcement of preliminary election results will be tomorrow morning.

The Melkert at a press conference with Commission President Faraj Al-Iraqiya quoted by the semi-official "UNHCR alone can declare the results and there are more counting and sorting," indicating that "the initial results will be announced on Thursday morning.

"It will be discussed and to address all the complaints made by candidates and observers," noting that "it is very important to acceptance by all the results that are not final, but should be taken into account that the counting and Aelovesr is the process of faith, and the resultant elections winners relative and relative losers."

Mentioned that this is the second parliamentary elections which are being contested by more than six thousand candidate on the number of seats in the next parliament, consisting of 325 seats, of which 310 are distributed to the provinces, and 15 compensatory seats. The distribution of seats by 68 to Baghdad, 31 of Nineveh, 24 of Basra, 18 the one who Qar, 16 of Babylon, 17 of Sulaymaniyah, 14 of al-Anbar, 14 for Erbil, 13 of Diyala, 12 of Kirkuk, 12 of Salah al-Din, 12 of Najaf, 11 of Wasit, 11 of Qaddissiya, 10 of Maysan, 10 of Dohuk, 10 of Karbala, and 7 of Al Muthanna.

http://radionawa.com/ar/NewsDetailN....612&LinkID=158

Iraq completes three economic reform programs supported by IMF

Since 2004, Iraq has successfully completed three economic reform programs supported by the International Monetary Fund (IMF): one under the Emergency Post Conflict Assistance (EPCA) facility and two (precautionary) Stand-By Arrangements (SBA). During this period, Iraq has made considerable progress under very difficult circumstances, including a very challenging security situation. Iraq has successfully reduced inflation, showed fiscal discipline, and started rebuilding our economic institutions. These achievements have helped us to obtain generous debt relief from Paris Club and other creditors that has substantially improved our external position.

These hard-won gains of recent years could be undermined, however, by the large drop in oil prices from their peak levels of mid-2008. After reaching a high in July 2008, when Iraqi crude oil sold for $124 per barrel, prices fell to a low of $35 per barrel in January 2009, before slowly recovering to a level of around $68 per barrel in the second half of 2009. The average export price in 2009 was $57 per barrel, well below the average export price of $92 per barrel in 2008. In addition, due to dire infrastructural problems, the volume of oil exports in the early months of the year fell below 2008 levels (to 1.75 million barrels per day (mbpd) in the first five months). Iraq has been working to address these problems and oil exports reached 2 mbpd towards the end of 2009, bringing the average for the year to 1.88 mbpd.

As the proceeds from oil exports account for the bulk of our total export receipts, and for the majority of government revenues, the lower oil prices are posing considerable challenges to our internal and external economic stability. To maintain macroeconomic stability, and foster growth and employment, Iraq has adopted an economic adjustment program for 2010–11 for which it seek support from the IMF under a new 2-year SBA, as well as financial assistance from other international institutions and countries. This Memorandum of Economic and Financial Policies (MEFP) describes our economic objectives and policies, including the structural reforms, for this period.

Due to the temporary drop in oil production, real GDP growth is estimated to have slowed to 4 percent in 2009, from almost 10 percent in 2008. There are indications, however, that the improved security situation has supported economic activity in the non-oil sector. The Central Organization for Statistics and Information Technology (COSIT) estimates that real non-oil GDP grew by about 5½ percent in 2008 and that the pace of non-oil growth remained broadly unchanged in 2009.

The Central Bank of Iraq (CBI) has been successful in keeping inflation under control, by managing the exchange rate and by keeping the policy interest rate positive in real terms. When inflationary pressures emerged in 2008, the CBI stepped up the rate of appreciation of the dinar vis-à-vis the U.S. dollar (to about ½ percent per month until late 2008), which also helped counter dollarization. As a result, headline inflation fell to 6.8 percent by end-2008. Inflation remained well below the target of 6 percent in 2009, with prices falling by 4½ percent, mainly because of a further decline in fuel prices. Food price inflation has picked up more recently, however, and core inflation (excluding fuel and transportation) ended 2009 a 6 percent, down from 12 percent at end-2008.

With headline and core inflation low, the exchange rate has been stable since the beginning of 2009. The policy interest rate has been reduced gradually to 7 percent. Net international reserves increased to $50.2 billion at end-2008, but have fallen to $44 billion at end-2009, reflecting the drawdown of the government’s deposits with the CBI.

The government budget recorded a modest surplus in 2008 (almost 2 percent of GDP). Higher-than-expected oil revenues enabled us to increase spending. Particularly, and due also to our efforts to improve the e.xecution of the investment budget, Iraq was able to substantially increase capital expenditures in 2008, compared to the previous year.

With the drop in oil prices, the external current account is estimated to have moved into a large deficit in 2009, of over 20 percent of GDP. And as oil revenues account for the bulk of government revenues, the government budget is also estimated to have shifted into a large deficit, of over 20 percent of GDP in 2009. The 2009 budget, which was adopted at a time when sharply lower oil revenues were expected, was designed to support as much as possible our investment program and the required security outlays, while containing current spending. The bombings of the Ministry of Finance in August and December of 2009, however, affected our capacity to fully e.xecute our investment plans. Despite this, the 2009 budget deficit, based on preliminary financing data, is estimated to have recorded a deficit of over ID 17 trillion. This deficit was covered mainly by drawing down the balances the government had built up in the CBI and by mobilizing domestic resources through the issuance of Treasury bills.

The global financial and economic crisis has worsened Iraq’s external outlook significantly. The drop in oil export revenues, in particular, presents a major challenge in view of the country’s vast reconstruction and rehabilitation spending needs. Under these circumstances, Iraq is determined to strengthen fiscal discipline to better ensure that the reduced public resources are used more efficiently and that fiscal sustainability is preserved.

Iraq has adopted a budget for 2010 that aims to further reduce non-priority current outlays and align the investment budget with our national priorities and implementation capacity. Iraq seeks to reduce the government’s budget deficits during 2010 and 2011, with a view to returning to a budget surplus in 2012. In addition, Iraq aims to maintain a financial buffer in our accounts equivalent to three months of government wages. Appropriate management of the exchange rate and an interest rate policy aimed at keeping the policy interest rate positive in real terms will continue to be the main instruments to keeping inflation under control. Iraq will also continue to advance our structural reform agenda, with a particular emphasis on public financial management and financial sector reforms.

By continuing to pursue sound economic policies and intensifying our efforts to boost oil production, Iraq aims to accelerate the pace of economic growth. Iraq seeks to increase average crude oil production and exports to 3.1 mbpd and 2.5 mbpd, respectively, by 2012. As a result, Iraq expects real GDP growth to increase to almost 7 percent in 2010 and to 7½-8 percent in 2011 and 2012. Iraq will also strive to keep inflation at around 5–6 percent in the coming years.

As oil prices and production are expected to rise in the medium term, the current account deficit would narrow markedly in the coming years. Since the decline in oil revenues is expected to be temporary until oil production reaches higher levels, Iraq intends to secure adequate financing to avoid a major economic contraction. The international reserves held in the CBI and the DFI (excluding the FMS subaccount) are expected to fall from $55 billion at end-2009 to $46 billion by end-2010 and to broadly remain at that level in 2011 and 2012, before increasing in the following years.

The 2010 Budget
The 2010 budget aims to contain current spending to limit the deficit and create room for higher investment outlays. In this regard, Iraq will contain the government’s wage bill by refraining from granting new wage increases following the large catch-up in salaries in 2008, which carried over into 2009. In addition, net hiring of non-security personnel in 2010 will be limited to new teachers and doctors, until the civil service census is completed. To limit spending related to the in-kind Public Distribution System (PDS), Iraq has initiated reforms that seek to target the benefits of the program to the poorest Iraqis. In addition, Iraq has decided to reduce the number and volume of goods distributed under the PDS system. At the same time, Iraq plans to expand the new targeted cash transfer system. Generalized transfers, in particular to state-owned enterprises, will be sharply reduced, reflecting the improved financial position of many of these enterprises. As a result of these measures, current spending will be curtailed at ID 62.9 trillion (in the IMF’s presentation). By doing so, Iraq has been able to increase the capital budget to ID 25.8 trillion, with an increased focus on electricity, water and sanitation, health, and agriculture. The overall deficit will be limited to ID 17.9 trillion (19 percent of GDP) in 2010 (in the IMF’s presentation).

As our financing needs in 2010 will still be substantial, Iraq will step up our efforts to mobilize domestic financing through the Treasury bill market. To that end, Iraq will conduct regular auctions, and refrain from cancellations, while allowing interest rates to be determined by the market. This will have additional benefits by determining a benchmark interest rate, while the development of a secondary market for treasury bills will allow banks to improve their liquidity management. Also, to ensure integrity in our payment and budget systems, Iraq will refrain from accumulating domestic expenditure arrears.

Global Arab Network

Extracted from letter of Intent of the government of Iraq, which describes the policies that Iraq intends to implement in the context of its request for financial support from the IMF.

http://www.english.globalarabnetwork...ed-by-imf.html

UPDATE 2 - Iraq expects to step up T-bill activity in 2010

Iraq expects to step up its treasury bill activity in 2010 to help plug continuing budget deficits and foster a secondary treasury market, the Central Bank and Finance Ministry said in a submission to the IMF.

Iraq, only just emerging from sectarian war but still battling a stubborn insurgency, also wants to develop foreign exchange markets outside the framework of dollar auctions currently conducted by the Central Bank.

That included the establishment of an interbank foreign exchange market and dinar forward market, the submission said.

The country's letter of intent submitted to the International Monetary Fund for a $3.6 billion standby arrangement was dated Feb. 8 and can be accessed here

Iraq, which on Sunday held its second election for a full-term parliament since the 2003 U.S.-led invasion, said it would not return to a budget surplus until 2012.

"As our financing needs in 2010 will still be substantial, we will step up our efforts to mobilize domestic financing through the Treasury bill market," Iraq's Central Bank head and finance minister wrote.

"To that end, we will conduct regular auctions, and refrain from cancellations, while allowing interest rates to be determined by the market. This will have additional benefits by determining a benchmark interest rate, while the development of a secondary market for treasury bills will allow banks to improve their liquidity management."

Iraq's banking sector, for decades dominated by the state, is basic after years of sectarian slaughter that followed the invasion. The Central Bank does issue a form of treasury note to local banks to cover some of the government's financing needs, but it sets the interest rate. There is no secondary market.

"They are going to shift to building a local market, they have ample cash, loan-deposit ratios are very low and they will benefit from oil," said Turker Hamzaoglu, emerging market economist at BoA-Merrill Lynch.

"They have to develop a domestic bond market but it's still baby steps, it's still too early, it's not even a frontier market," he said, adding that Gulf Arab and Lebanese investors could be interested in Iraqi domestic paper.

SALES TAX AND OTHER IDEAS

Central Bank Governor Sinan al-Shibibi and Finance Minister Bayan Jabor said in the letter to the IMF that the country planned to introduce a sales tax, as a precursor to a Value Added Tax, "in the coming years".

Iraq's gross domestic product expanded by 4 percent in 2009 compared with almost 10 percent the year before, their submission reported. GDP growth would rise to almost 7 percent this year and 7.5-8.0 percent in 2011 and 2012, they said.

That improvement would be rooted in an increase in Iraqi oil output to 3.1 million barrels per day by 2012, from around 2.5 million bpd now, and exports of 2.5 million bpd, compared to just over 2 million bpd now.

That outlook might be conservative following the signing of 10 multibillion-dollar deals with global oil firms to develop Iraq's vast reserves. If all the deals work out, Iraqi oil capacity could soar to 12 million bpd in six to seven years.

Amongst other things, the IMF submission said Iraq's Central Bank planned to create a foreign exchange market outside the framework of regular dollar auctions now conducted by the bank. The bank uses the auctions to set the exchange rate, which has been held at 1,170 dinars per dollar for many months.

"To improve the functioning of foreign exchange auctions, we plan to develop organized exchange markets outside the central bank, including an interbank foreign exchange market," it said.

"Our aim is to establish a forward market in Iraqi dinars in the near future."

http://www.reuters.com/article/idUSLDE6292F520100310

Iraqi provinces to reap $1 per each barrel produced from their oil fields

Iraqi provinces will have the right to reap $1 from each barrel their oil fields produce, the cabinet has announced.

The decision is part of the draft projects which need to be approved by parliament before turning into law.

Government spokesman Ali al-Dabagh said the government hoped the parliament will pass the draft law and that the allocations for the oil-producing provinces will be part of the 2010 budget.

Previously, the provinces were only given 50 cents for each dollar.

The measure, when applied, will substantially add to budgets of some provinces.

For instance, the impoverished Province of Basra, whose oil fields currently produce up to 2 million barrels a day will earn more than $700 million a year.

Another winner will be Kirkuk whose fields produce up to 500,000 barrels a day.

The measure is good news for other southern provinces such as Missan where gigantic oil fields of billions of barrels await development.

Other oil-related decisions by the government include the approval for the drilling of 45 oil wells in Basra’s Rumaitha field by a Turkish firm.

The cabinet has also agreed to add 500 billion dinars (a U.S. dollar is worth 1,250 dinars) to the capital of the Southern Oil Company based in Basra.

http://www.azzaman.com/english/index...03-09\kurd.htm

Our policy aims to protect banking institutions from collapse

Said Chancellor at the CBI d. The appearance of Mohammed Saleh, said that State-owned banks still dominate 80% of banking operations in the private banking sector Aihtl only about 20% of them suffering from low capital and is unable to launch and participate in development due to factors surrounding precautions and bias toward profitability, lack of savings. Saleh said in an interview (morning)

Instructions that the central bank had the recent expansion of private banks in lending to eight times what it was but that is not taken at the expense of the low capital that they suffered and to address that by raising the ceiling of the capital and central bank policy designed to protect this hard-line institutions, and ensuring non-bankruptcy in addition to maintaining the savings of citizens and the inviolability of the borders, but according to applicable laws and regulations and legislation banking It is usually that people behave banks deposits, and allowing banks to use 20% of their funds for development and economic activities and lending to Ngenbha any financial problem may occur when it exceeds this limit.

It is unfortunate to hear that always calls and claims from private banks on central bank policy, which they describe Balmichddp This is incorrect because the central bank system is based on international banking standards, proven, successful and avoided a financial crisis could occur.

And that most of the action taken under penalty ranging control to protect financial institutions and funds of depositors. Counsel said that the banking concept of development we have a minor as long as the State is the owner of great wealth and if moving the labor market and investment market toward partnership, interaction and the creation of the real development, the case will remain on what is it, the call for the establishment of companies violating the state contributes to the private sector and objectives set for projects agricultural and industrial capital ranges between 10 and 15 billion dinars, can bring about real development can not be private banks to hesitate or reliable in activating factors Altnumeiputalma that people have desires to obtain loans, the role required from the banks support the development and not an alternative to development.

Must also be moving private capital that we believe a significant and should be opened in front of prospects and investment and the investment made unremitting efforts to bring foreign capital and investment to interact with local capital and create opportunities to advance the development factors, and that is through partnership between the government and rehabilitation and the market.

http://www.alsabaah.com/paper.php?so...page&sid=99059

CBI concludes DIFC Week estimated at 251 million dollars

Concluded the Iraqi Central Bank said on Thursday the fifth session entered its tenth Financial buying and selling foreign currency and the dollar high level of Sales of the dollar to 251 مليون and 565 thousand dollars, after rising at its previous meeting To 181 million and 850 thousand dollars and a stable exchange rate was 1170 dinars per dollar.

The Information Office of the Bank's bulletin received A copy of the grand total for sales of the bank ranging from the 11 million and $ 990 thousand cash transactions for cash at a bank shot for a stable exchange rate was 1183 dinars per dollar, including a $ 13 bank fee dinars per dollar.

The amounts transferred out of the country $ 230 مليون and 575 الف Dollars in cash and bank shot at a stable conversion reached 1173 dinars per dollar, including the World Bank commission of $ 3 dinars per dollar.

Did not make the 10 banks participating in the auction any offers to buy The dollar, noting that the CBI Itqdy commission of $ (13) dinars per dollar with a discount (8) dinars per Short of the amount purchased.

The central bank held five meetings during the Iraqi DIFC Week for the sale and purchase of foreign currencies and the dollar.

http://al-iraqnews.net/new/iconomi/58198.html

The continuation of talks between the political blocs to form the next government

Informed sources said that the committees concerned with dialogue in a coalition of law and the Iraqi National began its work in order to identify mechanisms to negotiate with the main blocs in order to agree the nomination of the President and the cabinet and the Presidency of the parliament.

Meanwhile sources ruled in coalition with the Kurdistan Alliance list after Iraq's Tareq al-Hashemi told the Iraqi leader rejected the election of Talabani as president of the Republic.

In this regard, the candidate told the National Coalition for the Sadrist Qusay Abdul Wahab, told a press conference in the Iraqi National Coalition headquarters in Baghdad, said that "the results recorded by observers of the coalition and the 45 thousand observers showing their coalition rule of law, the coalition of the Iraqi National narrowly, while the solution Third, the Iraqi coalition."

يذکر the new parliament is composed of 325 members will elect a president and prime minister, who will in turn form a government for the next four years.

http://www.radiodijla.com/cgi-bin/ne...?id=2010-03-11