Sat. AM TNT News Articles 10-2-21

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TNT

Tishwash:
For this reason?.. The Iraqi Stock Exchange stopped its activity for one day

The Iraq Stock Exchange announced, on Saturday, the suspension of its activity for one day.

And the market said in a brief statement that “Mawazine News” received a copy of it, that “based on the decision of the Iraqi Council of Ministers to declare tomorrow Sunday an official holiday, the market management will not organize trading sessions for this day,” adding that “activity will be practiced after the official holiday starting from after Tomorrow, Monday, according to its official timings.  link

Raising the credit rating of Iraq through reforms and activating the private sector

The Ministry of Finance announced that the Iraqi economy will continue to maintain its credit rating as a result of economic reforms.

The GCR, which is abbreviated to (global credit rating), is defined as a measure of estimating the borrower’s ability to meet its obligations in the face of lenders, or in other words, the risk of the lender (the issuer of the bond) not paying its obligations (the value of the loan and its interest) to the borrower (the bond holder).

A ministry statement received by Al-Sabah stated that “according to a report submitted by Standard & Poor’s on the credit rating, the Iraqi economy continues to maintain its credit rating as a result of the ongoing economic reforms of the financial policy in Iraq.”

The two international institutions, Fitch and Standard & Poor’s, have set Iraq’s credit rating at -B with a stable positive outlook, at a time when specialists in economic affairs see the possibility of raising the rating to A or -A by activating the private sector and providing job opportunities that will boost GDP. to height. 

The statement added that “the new classification came to reflect the continued maintenance of the level of foreign currency reserves that exceeds the service of the external public debt and the fulfillment of other external financial obligations, as a result of the rise in crude oil prices and their recovery in the third and fourth quarters of this year.”

Iraq had obtained a rating of B-, which is the first credit rating issued by international rating institutions for Iraq, after the year 2003. Economists confirm that Iraq’s obtaining of a sovereign rating at a better degree than the current one means that the country is considered one of the stable and attractive areas for investment. 

According to the statement, the agency confirmed the possibility of improving Iraq’s credit rating, in the event of a high rate of economic growth in Iraq, diversification of the state’s oil and non-oil public financial revenues, an increase in the per capita income share of national income, and the continuation of measures to reform the financial and economic policy as stated in the economic reform paper ( White Paper), which will enhance the financial and economic policy of the government.  link

Updated cash sterilization (10/2)

Updated cash sterilization is a process by which monetary authorities ensure that foreign exchange flows from abroad do not affect the monetary basis, as the monetary basis is one of the components of the overall money supply.

Many countries are trying to influence the value of their local currency in the foreign exchange market, through the operations of buying and selling that currency against the foreign currency. If the monetary authority sells the local currency, which was not in circulation before, this measure will expand the local monetary base (increase), and the same is true if the monetary authority buys more of its local currency, and does not enter that currency into circulation, the effect here will be deflationary (declining) on a monetary basis.

In Iraq, the circulating monetary sterilization is the window for selling foreign currency by withdrawing the Iraqi dinar from the market in exchange for providing the market with foreign currency, which is the (dollar). As for the new monetary policy mechanism, which is the updated monetary sterilization by offering national bonds with the first two issues in the amount of (500,000) Dinar with annual interest (6%) for two years, and the second issue in the amount of (1,000,000) dinars and annual interest (7%) for four years, for the purpose of withdrawing liquidity from the public through banks and at the same time called building bonds.

Public requests are submitted through all banks, and then the bank pays these requests to the Central Bank of Iraq, for the purpose of providing the bank with the required bonds. During the other banking operations carried out by the banks, in addition to the fact that the banks did not focus only on the foreign currency sale window, but rather moved the other goals undertaken by the banks.

 In my opinion, it is called (the updated monetary sterilization), as the Central Bank of Iraq continues to achieve its development goals towards a sustainable economy, as well as being the only lung of the Iraqi economy in all crises, starting from 2015 until now.

In conclusion, the Ministry of Finance should direct its government banks (Al-Rafidain, Al-Rasheed, Al-Iraqi Trade) to support this method carried out by the Central Bank towards achieving development goals, as well as reducing the financial deficit, based on the Federal General Budget Law of the Republic of Iraq No. (23) of 2021 / Article II – Deficit / Paragraph 2 – A – 2, which authorized the issuance of national bonds to the public, in support of the budget, and do not forget that there are national bonds issued in 2021 with an amount of (8.5) trillion Iraqi dinars, which is part of the sources of financing the planned deficit in the 2021 budget.   link

Source: Dinar Recaps

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