Saturday Morning Iraq Economic News Highlights 2-25-23
Dollar Crisis.. 5 New Directives From The Central Bank Of Iraq
2023.02.24 – 22:23 Dollar crisis Baghdad – Nas The Governor of the Central Bank of Iraq, Ali Al-Alaq, received a number of leaders of the security services and owners of exchange companies and brokers in the sale and purchase of foreign currency.
“Nass” channel on Telegram.. our latest updates — A statement by the Central Bank, which “NAS” received a copy of on Friday (February 24, 2023), stated that “Al-Alaq discussed ways of coordination and procedures between the Central Bank and the concerned agencies, and defining roles and tasks in light of the directives of the Commander-in-Chief of the Armed Forces.”
During the meeting, the following was directed:
1- The Central Bank is the sole authority responsible for monitoring and inspecting banks, exchange companies, and non-banking financial institutions licensed by the Central Bank, based on its law.
2- The transfer of cash (in dinars and dollars) and any other currencies is permitted inside Iraq for all natural and legal persons, including banks, exchange companies and mediation companies in the sale and purchase of foreign currency, and their branches in all governorates.
3- With the aim of preventing the exit of cash funds across borders and ports, which exceed what is specified in the instructions of the Central Bank (10,000) ten thousand dollars, the competent security authorities follow up and inspect vehicles on the roads and paths leading to the borders to prevent smuggling and take legal measures in coordination with the Central Bank, with Providing the bank with the amounts of the discovered banknotes and their serial numbers.
4- The sums sent from banks and companies to their branches are accompanied by documents from the sending party showing the details of the sender and the recipient, and they are presented at the external control points upon request, and in the event of a suspicion or a need for confirmation, a contact is made with the Banking Control Department at the Central Bank on the numbers (07809224663 – 07853330555). – 07721111418).
5- Banks and companies shall notify the Central Bank in the event that they are subjected to procedures or inspection visits, or interference in their business by non-employees.
Al-Alaqin praised “the role of the security authorities in uncovering attempts to smuggle dollars in the past days.” https://www.nasnews.com/view.php?cat=102695
The Dollar Crisis.. A Decision To Prevent Exchange Companies From Being Inspected By The Security Authorities
Economie Ultra Iraq 24-February-2023 Among a number of decisions reached by a meeting between the management of the Central Bank, exchange companies and leaders of security agencies, within the framework of procedures to solve the currency exchange crisis, a directive was issued to prevent the inspection of exchange companies and banks by the security authorities.
The past weeks witnessed raids on stock exchanges and exchange companies that ended with the arrest of many people on charges of prohibited dollar speculation , which prompted company owners and banks to stop buying and selling dollars, except in a limited range, for fear of being subjected to similar measures.
The new decision, issued Friday, February 24, stipulates, according to a statement by the central bank, that “the central bank is the sole authority responsible for monitoring and inspecting banks, exchange companies, and non-bank financial institutions licensed by it, based on its law.”
It also allowed banks and companies to inform the Central Bank in the event that they are subjected to procedures, inspection visits, or interference in their business from non-bank employees.
The directives also included allowing $10,000, as a maximum, for money transferred outside the country, through border crossings and airports, provided that the security services monitor measures to prevent the removal of larger sums. LINK
Parliament is still awaiting the budget.. 3 “urgent” requirements depend on it
Posted On2023-02-25 By Sotaliraq The head of the National Approach bloc, Ahmed Taha Al-Rubaie, called for the need to expedite sending the draft financial budget law for the year 2023 to the House of Representatives for the purpose of its legislation.
Al-Rubaie said in an interview, “We are on the cusp of the month of March, and we are still waiting for the budget to arrive to be passed because many service projects and programs related to segments of the poor and others will be linked to approving the budget.”
And he stressed “the importance of the budget and it must be passed, especially since last year did not witness the passing of the budget law, and therefore it has become necessary to send it for discussion and add what can be added in relation to the segments of society or even the possibility of adding new job grades, as there are great entitlements for graduates and citizens that must be obtained.”
Al-Rubaie added, “The budget for the current year will include many projects for the governorates, especially Basra, for which a budget can be allocated that can complete previous projects in it and add projects for the secretions that were previously distributed.”
It is noteworthy that the Prime Minister, Muhammad Shia’ al-Sudani, announced during his attendance at the meeting of the International Administration coalition on February 20 that “there has been great progress in completing the draft federal budget law and its presentation to the House of Representatives for a vote.”
On the same day, the First Deputy Speaker of Parliament, Mohsen Al-Mandalawi, announced that “the budget will reach the House of Representatives next week. LINK
The Fifth Licensing Round… Billions Of Dollars In Revenue, And Experts Diagnosing Loopholes
Economy |Yesterday, 19:54 | Baghdad today – Baghdad overnment officials estimated revenues of up to 300 billion dollars from the revenues of the fifth licensing round contracts signed by Iraq recently, while experts diagnosed “gaps” in the contracts.
In an official ceremony at the Ministry of Oil, Iraq signed contracts with foreign companies last Tuesday as part of the fifth round of licensing oil for oil patches and border fields.
The Sudanese Prime Minister, Muhammad Shia’a, pointed out that the delay in implementing the fifth round of oil licensing for 5 years has caused the country great losses and environmental damage, stressing that “the trend towards investment in associated gas and natural gas stems from a firm conviction, to achieve economic reforms, which are a main focus of the program.” government.”
Iraq produces more than 4.5 million barrels of oil per day, and the sector’s imports represent more than 94% of the country’s GDP, at a time when Iraq is the second largest country in burning natural gas in the world after Russia, with losses estimated by the government at about $6 billion annually.
The importance of the fifth licensing round lies in the fact that it will invest in the border fields with neighboring countries, as they will be converted into productive fields that add large quantities of crude oil and gas to local production, according to Oil Ministry spokesman Assem Jihad.
Regarding the reason for the delay in signing these contracts, Jihad explained, “The delay, which extended for 5 years, was due to political interference,” noting that “the fields included in this round include 6 fields in the governorates of Diyala (east), Maysan, and Basra (south).
As for the production rates from these fields, they will reach 250,000 barrels of oil per day, in addition to the production of between 800,000 and one million standard cubic feet of gas per day, with the possibility of doubling this production during the progress of development operations that will be sponsored by the companies, which contributes to In providing part of the local need for gas to produce electric power, as well as stipulating contracts to operate the Iraqi workforce at a rate of 90%.
In this direction, the appearance of Muhammad Salih, Advisor to the Prime Minister for Financial Affairs, goes, who added that Iraq began for the first time investing in the field of gas associated with oil production operations, especially since the country annually spends $12 billion to import foreign gas.
Saleh adds, “Iraq began for the first time investing in joint fields with neighboring countries such as Iran and Kuwait,” expecting that “the financial revenues from the last licensing round will reach about $300 billion.”
Type Of Contracts
And at a time when a spokesman for the Ministry of Oil indicated that the contracts for the fifth licensing round are service contracts, not participation, the economic advisor to the Prime Minister confirmed this, noting that the specificity of the recent contracts lies in the costs of oil production, which will decrease in the event of a decline in oil prices, according to an agreed formula. on her.
Saleh pointed out, “Iraq needs nearly 3 years to exploit the gas extracted according to these contracts.”
On the other hand, Professor of Economics at Al-Maqel University in Basra, Nabil Al-Marsoumi, does not agree that the contracts for the recent licensing round are service contracts, indicating that they are primarily partnership contracts.
Al-Marsoumi – who specializes in oil affairs – indicates that Iraq had initially signed this round in 2018 during the era of the government of former Prime Minister Haider al-Abadi, and then returned to sign the final contracts last Tuesday after a 5-year delay.
He explained that there is a disagreement between the Ministry of Oil, which describes these contracts as “sharing contracts” in profits, while the media office of the Prime Minister describes them as service contracts.
He continued, “The difference between the two contracts is very large in the basic elements and contractual obligations, and therefore in order to solve this problem and achieve transparency and consistency with Iraq’s membership in the Extractive Industries Transparency Initiative, and consistent with Article 111 of the Iraqi constitution that stipulates the people’s ownership of oil wealth, it is of great necessity.” Publication of the original texts of these contracts to the Iraqi people.
One of the drawbacks of recent contracts, according to Al-Marsoumi, is that oil costs are very high, and because foreign companies control costs, more than half of the oil revenues will be obtained by those companies.
His estimates are inferred by comparing the contracts of the fifth round with the oil contracts of the Kurdistan region, as he indicates that the region obtained only 44% of the total oil revenues in 2022, despite the passage of about 8 years since the start of production in the region.
And Al-Marsoumi indicated that foreign companies are keen to keep costs high in order to maximize their profits, and therefore, it is expected that foreign companies will acquire about half of Iraqi oil revenues.
The matter does not stop at that, according to the oil expert, as the peak of production was not specified in the contracts of Kurdistan and in the fifth round as well, in addition to the fact that most of the companies that were contracted with in the Kurdistan region are small companies and are not known internationally, which applies to the licenses of the fifth round that were transferred. In which the six fields belong to the UAE Crescent Company and the Chinese Geo Giad Company.
In addition to all this, the share of the government partner in most of Kurdistan contracts amounts to 20%, while there is no share for the government partner in the fifth round, at a time when the economic advisor to the Prime Minister confirmed that ownership of the fields will remain with Iraq by 100%.
The fifth licensing round is better than the previous rounds, according to many experts who explained that investing in common fields is better than neglecting them, especially since neighboring countries had already begun to invest in these fields, and that Iraq had incurred large economic losses as a result of its neglect in recent years. LINK