“Already in Motion” – Mon. PM TNT Thoughts/News 8-2-21

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TNT

Tishwash:
Al-Kazemi announces the launch of the economic reform plan within the white paper

Prime Minister Mustafa Al-Kadhimi chaired the meeting of the Supreme Committee for Reform in Iraq.

Al-Kazemi said, according to a statement by his office, “Since we launched the reform white paper to address the rampant corruption in the country and we have been working to create an appropriate atmosphere for its application, and our meeting today is to announce the start of implementing the administrative and executive mechanisms for the economic reform plan within the white paper.”

He added, “We strongly aspire to restore the country’s economy to its strength after the situation reached very low levels as a result of rampant corruption. This plan would rebuild the Iraqi economy in a sound manner that would achieve sustainable development for the country.”

And Al-Kazemi continued during the meeting, “The reform plan will provide a solution to the chronic economic management crisis, which is represented by complete dependence on oil, and the lack of diversification of income sources. A comprehensive reform until it is completed within 5 years.

And he indicated that “the damage to the Iraqi economy is very great, and for this reason it is impossible to implement the reform plan in a short time, and whoever promises to do so is delusional. Our goal is to advance the Iraqi state, not the current government. Governments go and the state remains, and for this we want with all our insistence.” To restore Iraq’s economic prestige.”

Al-Kazemi said, “Since we took over the administration of the executive authority of Iraq, we have been working hard to implement reforms in order to get out with the least losses for all of us. The future of our children is more important than anything, they are the builders of Iraq, and they are the ones who will lead it, so let us leave our interests and think about our children.”

In October 2020, Al-Kazemi launched what is known as the “white paper”, which extends over 100 pages, which is a “project for a solution to the chronic economic management crisis, complete dependence on oil and the lack of diversification of sources of income.”  link

Our economy..and the black swan

The Iraqi economy still faces many crises, and the reason is due to its rentier nature and the spread of financial and administrative corruption in many of its joints, despite the attempts of successive governments after 2003 to find effective solutions to extricate the economy from its bitter reality, and because of this nature that colors this economy, the swan theory The black swan theory works according to specific mechanisms in the Iraqi economy, and the reader may wonder about the nature of the black swan?

What is the relationship of the economy with swans, whether they are black or white? It is useful here to give a simple conception of the black swan theory, as the Harvard Business Review terminology guide indicated that the economist John Stewart Mill, was the first to use this term in the nineteenth century, when talking about falsification in economic facts, and the idea of the black swan revolves in (Most people believed, even before the discovery of black swans in the eighteenth century in Western Australia, that all swans are white, and therefore seeing a black swan for the first time represents a surprise and shock for many, and this does not represent a stall for the horse, the issue is related to the limited knowledge derived from the observations historical and from observation and experience).

In general, the so-called black swan is an event that has three main characteristics: it is episodic, it is beyond expectations, or it is difficult to predict, and it includes very severe effects with strong and potentially catastrophic repercussions at times.

In order for an event to take the character of a black swan, it must be sudden, unpredictable, and have a great impact, and then after its occurrence, interpretations, expectations and analyzes appear.

Therefore, all disasters, internal and external wars and epidemics, can be called a black swan, especially since it occurs without precedent. Warning and be sudden and unexpected, and have negative effects and consequences on the overall economic activity.

And Iraq, as part of the global economic system, was affected by the global recession, which led to a decrease in demand for crude oil, which led to a decline in its prices, down to $ 32 a barrel at the beginning of the pandemic, and the matter did not depend on crude exports, but rather because of social distancing measures and restrictions, which It was imposed on society, and global and religious tourism declined, which greatly affected the formations of the gross domestic product.

The outbreak of the Corona pandemic was not a passing event like other waves of epidemics and diseases that struck the world, as neither the Great Depression nor all the waves of stagnation and crises over the past two centuries were with such great attrition and losses in just 6 months, and if we had called the black swans name Despite all the crises, events, disasters and epidemics that have passed on the global economy, the Corona crisis is a black swan that is different from its predecessors, due to its great economic and social repercussions on the entire global economy.   link

Harambe:
Zimbabwe to clear Paris Club debt | The Herald

(8/2/21)

Zimbabwe plans to begin payments to Paris Club creditors, to clear its US$3.9 billion longstanding debt, in the second half of this year, Finance and Economic Development Minister Professor Mthuli Ncube has said.

Paris Club is a group of officials from major creditor countries whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries.

The club’s permanent members include the United Kingdom, the United States, Switzerland, Sweden, Spain, Russia, Norway, Netherlands, South Korea, Japan, German, Australia and Italy.

Presenting the 2021 budget review to Parliament last week, Minister Ncube also said the country continued to make token payments to multilateral lenders, as its re-engagement efforts gather pace.

As at end December 2020, total public and publicly guaranteed external debt including RBZ external guaranteed debt amounted to US$10.5 billion, representing 71.2 percent of the country’s gross domestic product.

 The minister said external debt arrears alone make up over US$6.5 billion (77 percent) of total external debt. Zimbabwe is trying to clear its external debt to reopen external lines of credit, after the major ones ended at the turn of the millennium.

The southern African country remains unable to secure funding from global lenders like the International Monetary Fund, although it cleared its debts in 2017, due to the pari passu rule, which requires all global lenders to be treated equally).

“Mr Speaker Sir, Treasury, in March 2021, resumed quarterly token payments to the Multilateral Development Banks (MDBs), the World Bank Group, the African Development Bank Group and the European Investment Bank.

 “Token payments are part of the re-engagement process with the international community in line with the arrears clearance and debt relief strategy which is critical in regaining access to concessional financing from both multilateral and bilateral development partners.Payments to Paris Club Creditors will also begin in the second half of 2021,” he said.

Zimbabwe has continued to meet its external debt obligations despite present fiscal constraints and the devastating impact of the Covid-19 pandemic, Minister Ncube said recently.

 Figures from Treasury show that multilateral development banks are owed a total of US$2,6 billion (accounting for 32 percent of the total public and publicly guaranteed external debt), of which the World Bank Group is owed US$1,5 billion, the African Development Bank US$705 million, European Investment Bank US$330 million and other multilaterals US$66 million.

The total bilateral external debt amounts to US$5,48 billion (accounting for 68 percent of the total public and publicly guaranteed external debt), of which Paris Club creditors accounted for US$3,39 billion, and non-Paris Club, US$1,58 billion.

Around 70 percent of that debt consists of arrears and penalties for non-payment.

 According to the finance minister, although payments to other lenders were on-going, China had granted Zimbabwe a moratorium on payments.

“For China we have received a moratorium, which is actually complying with the G-20 resolutions, that between now and December they can give us a stay of execution in terms of those payments. But we will resume payments again once we are supposed to resume,” the minister said recently

 Earlier this year, the G-20 requested multilateral lenders to explore options for suspending debt service payments while maintaining the International Bank for Reconstruction and Development (IBRD)’s and the International Development Association (IDA)’s financial capacity, ratings, and low cost of funding.

The Covid-19 pandemic has affected most economies and has significantly affected many countries’ ability to service external debts, which may have a cyclical effect on the long-term performance of these economies.

“The impact (of Covid-19) globally has been devastating economies. We have seen the growth rate initially set at around 3 percent having been reviewed to around -8 percent for developing economies.

 “But we are optimistic that this will be a V-type growth scenario, which means there might be a big decline this year and then we can expect a recovery next year. And for Zimbabwe we expect the same,” said the Treasury boss.

Experts say unsustainable public debt levels can have a negative impact on capital accumulation and growth through higher longer-term interest rates, inflation and greater uncertainty about economic and fiscal policies, among other factors.

Bank Indonesia monetary policy in 2022 to focus on stability | ANTARA News 

(8/1/21)

Bank Indonesia (BI) will direct its monetary policy in 2022 towards maintaining stability after all central bank policy instruments are deployed to encourage national economic recovery, senior deputy governor Destry Damayanti has said.

“Meanwhile, macroprudential policies or the payment system in 2022 will still be pursued accommodatively for economic growth,” Damayanti said at an online discussion originating from here on Thursday.

The monetary policy will include efforts to stabilize the rupiah exchange rate through a triple intervention, including in the spot market, Domestic Non Deliverable Forward (DNDF) transactions, and the purchase of Government Securities (SBN) in the secondary market, she informed.

Such efforts are needed to prevent the impact of tapering off or reducing the purchase of assets of the US Central Bank, the Fed, which may be carried out in early 2022, she explained.

Furthermore, a monetary policy focused on stability will involve low interest rates and loose liquidity until the initial indications of a permanent increase in inflation emerge, Damayanti said.

“We will continue to maintain this low interest rate even though several countries in Latin America and Russia have started to raise their interest rates. Fundamentally, the conditions in some of these countries are indeed different from Indonesia,” she noted.

Through changes in BI’s monetary policy, which may only occur in early 2022, liquidity reduction will be carried out before increasing the benchmark interest rate, she said.

Stability will be supported through strengthening policy synergies, especially with the government, as well as the Financial System Stability Committee (KSSK), she added.

However, macroprudential policies will still be pursued accommodatively in 2022, which will include efforts to continue loose macroprudential policies, such as the Macroprudential Intermediation Ratio (RIM) and Loan to Value (LTV), to encourage credit and economic growth, as well as continue to innovate on loose macroprudential policies to encourage priority sectors and MSMEs, Damayanti said.

The payment system digitization policy will also be pursued to continue to support national economic growth through accelerating the digitization of the payment system through the Indonesian Payment System Blueprint, developing FPMI infrastructure and payment system operations, as well as industrial efficiency and competitiveness, including pricing policy, she added.

https://en.antaranews.com/news/181238/bi-monetary-policy-in-2022-to-focus-on-stability-official

Late Sunday Night:

Planning reveals the details of the “responsive” document and the reform and recovery plan tomorrow  LINK

DrBob:
Is the 9:300meeting important?  Will they announce the (<RV>) then?

Yada:
So, the meeting at 9:30 AM their time will reveal the details of the responsive document, and the reform and recovery plan, for the period 2021-2023, which it has completed ” Responsive means a Proposal that has substantially complied in all material respects with the criteria outlined in the Request for Proposal

In this case, the document should be the outline from the White Papers and what they’ve done in compliance. They’d been telling the people at least the last 4-5 weeks what they did and are doing and to me, telling them to hold onto their horses….Or goats if they are not rich enough to have a horse,,,,lol

DrBob:
I hope/pray/wish that this is finally over.

Yada:
I think it is already in motion,,

Kaseyko1:
In looking for info on today’s announcement in Iraq, came across a very interesting article on Iraq’s accession to the WTO, here’s the link: https://reliefweb.int/report/iraq/enhancing-agricultural-development-will-facilitate-iraq-s-accession-wto.

Here’s the interesting part: “WTO accession, and the economic reforms that it entails, represents a clear opportunity for Iraq to implement the goals of the White Paper. Being a full member of the WTO, will allow Iraq to improve its collaboration on trade and investment with all WTO members and ultimately support the creation of decent work for all Iraqis.”

Source: Dinar Recaps

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