Al-Kazemi: A delegation heads to Kurdistan to solve the disputed territories crisis LINK
MilitiaMan » May 12th, 2021
Lets see if they iron out the kinks this week. The Government bears the responsibility in paying dues, yet, lets see what do, as they have a political agreement to sort things out.
Everyone in the ME and around the world is watching and waiting for them to set the terms (mechanism) for international trade… imo
It is coming. Even the pressure from SA is noticeable.. They would be wise to not have another meeting about investments unless of course they meet over the successes from the outcome, that is to come from them.. imo ~MM
Samson » May 12th, 2021
Inflation in the US is at its highest level in 12 years
Consumer prices in the United States recorded the largest increase in nearly 12 years last April.
The US Labor Department said today, Wednesday, that the general consumer price index jumped 0.8 percent last month, the largest increase since June 2009, after rising 0.6 percent in March.
Economists polled by Reuters had expected the index to rise 0.2 percent last April.
On an annual basis, the consumer price index jumped 4.2 percent in the twelve months to the end of April, and this figure is the largest increase since September 2008. LINK
The Bahraini Central Bank enters the world of digital currencies, in partnership with a US bank
12th May, 2021
The Central Bank of Bahrain said in a statement on Tuesday that it will launch a pilot project to settle digital currencies, in cooperation with JP Morgan and Arab Banking Corporation (ABC).
“ABC Bank and JP Morgan will initiate a joint experiment to transfer funds to and from the Kingdom of Bahrain between buyers and suppliers in US dollars,” the statement said.
“This process will result in paying suppliers faster and buyers transferring their payments in shorter periods of time without having to keep the money in advance,” he added, according to Reuters.
Central banks around the world are increasingly interested in digital cash, in an effort to fend off emerging threats to traditional money and to make payment systems smoother.
Fearing the spread of cryptocurrencies, central banks are researching and trying digital currencies.
Central bank digital currencies are essentially electronic money, just like traditional cash, as they give their holders a direct claim from the central bank and allow companies and individuals to make electronic payments and transfers.
Central banks fear losing control of money issuance and payment systems for cryptocurrencies, such as Bitcoin or even the Facebook-backed digital currency “Dim”.
The spread of forms of payment that are not supervised by any central or public authority may weaken the grip of central banks on the money supply, and thus economic stability. As the threat becomes deeper as cryptocurrencies are increasingly adopted.
China aims to become the first major central bank to issue a digital currency, the European Central Bank is exploring the launch of the digital euro within the next five years, and the Bank of England has intensified its research into what it has called “Britcoin” without making any firm pledges.
In turn, the US Federal Reserve said that it will not rush to issue any digital dollars. His boss, Jerome Powell, said this year would be important in “moving the ball.”
Even smaller central banks are also active, with the Bahamas last year becoming the first country to introduce a central bank digital currency nationwide. LINK
Don961 » May 12th, 2021
A “wacky” paragraph in the current fiscal year may “nibble” the surplus money from the oil price and demolish optimism by closing the deficit.
2021-05-12 Yes Iraq: Baghdad
The responsible and popular Iraqi authorities are counting on the rise in oil prices and the surplus funds that will be realized from the difference in the price of a barrel of oil in the budget set at $ 45 a barrel, compared to the realistic price that exceeded $ 65 and may touch $ 70 during the second half of this year.
However, this optimism may collide with another expected reality, as the failure of the expected non-oil revenues to “eat” the expected surplus revenues from oil prices, which means that the deficit will not be easily filled by the expected financial surplus from oil prices.
The Iraqi Economists Network says in a statement that “Yes Iraq” received a copy of it, that “through our follow-up of international oil prices since the beginning of this year, we have noticed a significant increase from the annual rate adopted in the Federal Budget Law for the year 2021, at $ 45 a barrel.” The lawmakers had expected to collect revenues from exporting crude oil at about 81 trillion dinars, based on an annual export rate of 3,250 million barrels per day and an exchange rate of 1,450 dinars to one dollar.
However, the amount of oil revenues that were mentioned in the budget law published in the Iraqi newspaper Al-Waqa’yat includes an arithmetic error, as it should be 77.4 trillion dinars, equivalent to 53.4 billion dollars (3,250 million barrels x 45 dollars x 365 days = 53.4 billion One dollar x 1450 = 77.4 trillion dinars) instead of 81 trillion dinars. The result of this accounting error increased the planned deficit to 32,3 trillion dinars instead of 28,7 trillion dinars, as reported in the Iraqi newspaper Al-Waqae He adds: “According to the data of the Iraqi oil export company SOMO, the actual export rate during the first four months of this year was 2.93 barrels per day from the Basra and Kirkuk fields (and without the oil exports from the Kurdistan region?). The average export price per barrel during the first four months was slightly less than $ 60, an increase of $ 15 over the rate of the estimated price fixed in the budget law.
He pointed out, “Assuming that this level of prices continues until the end of the year, we expect in the basic scenario that oil revenues will reach 64 billion dollars. Then an amount of 5.5 billion dollars will be added to it for the exports of the Kurdistan region agreed upon in the budget law, at a rate of 250 thousand barrels per day. Thus, we expect Iraq’s total oil revenues to rise to 69.5 billion dollars as a projection instead of the planned 53.4 billion dollars, an increase of about 16 billion dollars, equivalent to about 23 trillion dinars.
On this basis, the planned and corrected oil revenues will rise by us to approximately 100.8 trillion dinars. After adding the planned non-oil revenues by 20 trillion dinars, we will get the total budget revenues of 120.8 trillion dinars in exchange for total planned and corrected revenues instead of 101.3 trillion dinars as stated in the law, with an increase of 19.5 trillion dinars according to our projections.
In the optimistic scenario, we assume a breakthrough in the Corona crisis during the second half of this year, and at the very least in advanced industrial countries, which will lead to an increase in global demand for crude oil. Assuming the commitment of the OPEC Plus (+) group to the current levels of production, it is possible that the average global price of crude oil will rise to approximately $ 70 per barrel, which means achieving an annual average price for Iraqi oil exports of about $ 65 during the year 2021. On this basis we expect a rise in Iraq’s oil revenues amounted to about 77 billion dollars, equivalent to about 112 trillion dinars, an increase of about 35 trillion dinars over the revised plan in the 2021 budget.
At first glance, it seems to some that the amount of the increase in oil revenues in the first basic scenario will reduce the planned and corrected deficit from 32.3 trillion dinars to a planned deficit estimated at 13 trillion dinars, and in the second optimistic scenario to a planned and corrected surplus of 2.7 trillion dinars. In this regard, we must draw attention to the fact that this type of in-depth and offensive accounts of economic professionalism does not take into account that the level of actual deficit at the end of the year will in turn be subject to a second variable, which is the difference between the planned and actual non-oil revenues achieved at the end the year.
Therefore, we appeal to government agencies and members of the House of Representatives to be careful in their statements in the media, because of the possible confusion in public opinion.
We believe that the non-oil revenues that are planned to rise from an actual 7 trillion in the year 2020 to 20 trillion dinars represent unrealistic estimates, and we expect that they will be around 12 trillion dinars this year at best because of the rampant corruption in the government administrative apparatus, which determines who Achieving this type of revenue on the one hand, and the continuous economic downturn this year due to the Corona pandemic on the other hand. On this basis, we expect the actual deficit in the first scenario to reach 22 trillion dinars, which is more likely, which means the continued need for borrowing to ensure the financing of current spending and employee salaries. As for the second optimistic scenario, it will result in a deficit of 9 trillion dinars. On this occasion, we would like to emphasize our previous proposals regarding the only alternative to borrowing, which is to reduce the waste of financial resources, rationalize current spending, and eliminate financial and administrative corruption.
In all cases, the structural financial crisis associated with the nature of the rentier state is not expected to end and the achievement of financial sustainability this year, as the founding member of the network, Dr. Mazhar Muhammad Salih, explained in his recent research entitled Iraqi financial sustainability and the matrix of tax restrictions published on our network website in April 2021. link
Samson » May 12th, 2021
Restricted floatation or restricted citizen
11th May, 2021 by Zaki Al-Saadi
We all know that the government went towards a restricted float of the dollar and reduced the value of the local currency, the Iraqi dinar from 1119 to 1450, for reasons of its pride in financial inflation, curbing currency smuggling, supporting local production, and appealing to investors who have capital to come to the country by supporting the foreign currency in front of the reduction of the local currency. However, there is a real reason behind this restricted float, which is what the government faced in the fourth quarter of last year in terms of its inability to cover the salaries of employees, which is a major reason for them to go towards reducing the local currency against the dollar because Iraq depends in its budget on the value of the dollar resulting from the sale of oil ..
Which witnessed a significant decrease in 2020 in the shadow of the Corona pandemic, and reached its lowest levels, reaching $ 16. But oil began to recover at the beginning of this year, to reach $ 69, but the decision to float it was taken by the ruling authority.
Therefore, we conclude that the government has its reasons for reducing the Iraqi dinar, but he sees these reasons and aspirations achieved ??
What has been achieved is contrary to what the government had expected, as speculation in the price of the dollar occurred. The poor citizen and the simple employee bear the burden of the depreciation of the dinar, so the citizen was surprised that everything in the market increased by 35-100%.
As for what was mentioned about increasing the exchange rate, it helps prevent the leakage of hard currency, the US dollar, outside Iraq.
The return of the dollar sale window recently witnessed a large withdrawal of hard currency and its return to the same previous figures, as it witnessed at the beginning a remarkable decrease in sales of dollars from 250 million dollars to 50 million dollars a day, but now I began to return to figures similar to the previous one, therefore, one of the reasons that was a desired goal was not Checks.
Returning to the fact that the decrease in the dinar would have contributed to supporting the local product from industry and agriculture, this did not happen because the local product depends on the imported raw material in dollars, so the markets witnessed a very high value for the local product once this decline occurred. Domestic product is self-sufficient, regardless of its quality, which many of us have a negative indicator.
Before the devaluation of the dinar, specialists had to monitor and study the local market and study the amount of local production and the economic efficiency of the market in light of local production based on imported raw materials in hard currency.
It is also strange that the exchange rate rose also with the increase in the Central Bank of its sales of hard currency (dollars), and it was supposed to decrease as a result of its abundance.
Therefore, what happened in the first month of the devaluation of the dinar, the decline in the sale of the dollar by the central bank, is a result of traders’ fear of price fluctuation and the government’s decision.
It was expected politically to pressure the Financial Committee to return it to the old price, and therefore merchants in the previous months were reluctant to buy and went towards disposing of the dollar they had hoarded. Until the time came to confirm the new exchange rate in the budget, so sales returned to their previous state.
Moreover, there are voices rising from the World Bank recommending raising the price of the dollar to 1,600 Iraqi dinars, and therefore if the government responds to this voice, we are going to a policy of impoverishing society and reducing the standard of living, and this is a catastrophe with no consequences. The fact that society suffers from an unemployment crisis has also increased by 32%, which is a very serious percentage that needs review.
Restricted floatation, we will not be able to restrict it as long as the studies are not integrated, the industry is disrupted, the Iraqi market is uncontrolled, and the local product does not achieve self-sufficiency. LINK
Source: Dinar Recaps
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