“Change in the Exchange Rate is Possible” – Tues. PM KTFA Thoughts, News w/ Frank26, Tivon 6-28-22



Frank26 » June 28th, 2022


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Samson » June 28th, 2022

“In a quiet fire” .. a surprising and important statement by the Prime Minister’s advisor about changing the dollar exchange

06/27/2022 22:27:19

The financial advisor to the Prime Minister, Mazhar Muhammad Salih, surprised the Iraqis about the possibility of changing and reducing the exchange rate of the dollar against the dinar.

Saleh said on the program “Al-Mastra” broadcast by Al-Furat satellite channel this evening: “We need to cook on a quiet fire and monitor prices until the end of 2022, oil prices and foreign reserves,” stressing that “a change in the exchange rate is possible, but it requires patience and careful study

He pointed out that “there are fixed facts on the ground. The exchange rate of the dinar to the dollar follows stability, and it is not arbitrary, but rather a contract between the Central Bank of Iraq and the Ministry of Finance, because the foreign currency offer comes from the Ministry of Finance 100%, which is the only source for it in the country

Saleh added, “But the Central Bank deals in dollars to maintain cash reserves and prevent inflation, and the modern Iraqi financial history is witnessing cooperation in determining the dollar exchange rate between the Central Bank and the Ministry of Finance. He stressed that “the agreement with the Ministry of Finance to set the dollar exchange rate for a period of three years, but changing it became a surprise, and it is within the shock policy, and there are limits to the change in the dollar exchange rate, and it is not a political or populist issue

He noted that “the first limit according to commodity prices and the market, and at that time the central bank will defend the stability of prices according to the reserve, which is the highest in its history now, and we have an encouraging surplus for the end of the year from 8 to 10 percent.” He stressed, “If prices and financial policies fail to defend the livelihood of the poor and social protection salaries, the Central Bank will intervene by raising the purchasing power of the Central Bank through its foreign reserves

It is logical that the fiscal policy has a package to defend the livelihood, relieve the poor classes and social welfare, and compensate farmers for the differentials in grain prices, and the government maintains fuel prices and government services fixed, and this stability is a kind of support that rose to 15% of GDP

And regarding changing the dollar exchange rate, the Prime Minister’s advisor said: “Everything is possible, but we need patience in changing the dollar exchange rate in the event of high prices and the fiscal policy is unable and monetary policy is able to cover the dinar,” noting that “the Food Security Law if it cannot secure the requirements.” In the event of an increase in prices, the central bank will intervene to preserve the strength of the dinar against the dollar   LINK

Tivon » June 28th, 2022

This is either a wait and see. Or a initiate and hope.

Inflation seems to be less of an issue. But the volatility in the markets is what appears to be the deciding factor as to how long it take to feel comfortable with reinstating the Dinar

I guess they want to avoid shocking the markets. Not sure how they plan to get around the concerning issue at the expense of the citizens if they forecast any issues that cannot be offset appropriately or proficient enough where the CBI is forced to intervene.

But they still allude to going through with it in spite of and will just adjust on the fly as the rare gradually increase from 1:1. So the problem may not necessarily be coming out at equal value but maintaining it.

Ok, understood. Because we all know BUNA will be launching in the 2nd half of this year which starts on July 1st. Iraq has fail safes in place for marginal increases/decreases in the local and international prices based on their policies and the contracts that are in place which I said yesterday is the deciding factor of everything and not necessarily the rate alone.

As it means nothing if you don’t have precautionary measures in place for everyone who thinks merely not having a budget was always the issue. Then again maybe Al-Kazemi knows something that Mazhar doesn’t if he feels confident that this can be done at the earliest session. IMO

Pete2001 » June 28th, 2022

Tivon, greatly appreciate your perspective and understanding on all things, along w Frank, MM and Petra’s. Question, would this not be a headfake on timing..I mean they have spent over a year getting financial house in order…domestically and internationally w WB, IMF, etc. I mean cook all you want but the meat is gonna be well done to burnt if this takes to the end of year and is counter to putting all these new ATM’s etc.

“We need to cook on a quiet fire and monitor prices until the end of 2022, oil prices and foreign reserves,” stressing that “a change in the exchange rate is possible, but it requires patience and careful study”

Tivon » June 28th, 2022

I can see why the Iraqi citizens were surprised by this statement given the reasons listed as to the preparations that have been progressing with all of the different sectors of departments, institutions, and ministries for the past few years or more. Especially the reserves.

I mean they just announced an 35% increase. A spike in prices should not be of that much concern if you have more than enough in hard currency to protect against it.

 I don’t know if this is Iraq getting cold feet or just nervous. Because he says they have a fiscal policy to defend the Dinar and can protect the citizens. Ok, let’s eat if that’s the case. Because the Iraqis are at the table with a fork & knife in hand and they smell a well cooked meal on the stove.

What difference would the end of the year make if your concerns are based on a toss up that the markets will not telegraph or screen beforehand for you to feel confident enough to reinstate. It’s not a blind item. They have the tool sets to smooth out the rough areas once the rate set sails into the open sea.

What went on in the past five days where this aspect was not addressed that would make Al-Kazemi recommend at the earliest session to reduce the Dollar rate that made Mazhar Muhammad Saleh uncomfortable and state this today?

Were they were in two separate board meetings? Because I wouldn’t have suggested to 100 Deputies to sign on to anything if every area of concern was not discussed. IMO

Pattycakes77 » June 28th, 2022

All we have to do at this point is wait and see. July 1st is significant regarding BUNA, policies and contracts.

I just do not see Iraq kicking the can down the road much further with all the wonderful news that came out in the past weeks leading up to now. Why the ATMs if things are not imminent ? Things just wouldn’t  make sense.

My hope is in the days to follow leading up into the weekend. God be with us all and we all must pray to break any evil powers that maybe holding the Iraq dinar hostage. I believe also there is a demonic spirit holding it up because it knows God’s will, will be done.

Frank26 » June 28th, 2022


Samson » June 28th, 2022

Al-Kazemi: We have obligations that we must fulfill, and mistrust with others is not in our policy

06/28/2022 17:34:42

The most important statement of the Prime Minister, Mustafa Al-Kazemi, during the cabinet session held today, Tuesday

🔵 This government came in exceptional circumstances, and it worked and is still working in exceptional circumstances, and despite all these challenges, it succeeded in overcoming many difficulties… The challenges were not easy, and the government’s slogan from the first day was that it is a government of word and deed.

🔵 We focused on the practical aspect of citizens’ needs, we succeeded in some of them, while others need more time to address them.

🔵 A while ago, we laid the foundation stone for a project to build 1,000 schools in all governorates of Iraq, which is the first meal within the Iraqi-Chinese framework agreement.

🔵 This agreement was obtained with great confusion by some parties that tried to promote the government’s lack of seriousness in implementing the agreement or did not want to implement it. 

🔵 The government is the one who implemented the agreement, and we started with the project of 1,000 schools out of a total of 8,000 schools across all governorates, in the form of stages. 

🔵 Unfortunately, we sometimes hear campaigns in some media and social media platforms, the aim of which is to break the resolve of the government’s work, and our response is silence, we do not want to enter into political rivalries for the sake of Iraq and the Iraqis, and we focus on work to move towards the future. 

🔵 The House of Representatives voted on the law on emergency support for food security, and we must work to implement it with full force in order to serve the people, and I would like to remind that the law is not a budget, but came because we are going through an exceptional circumstance, and we, as a caretaker government, have no right to enact laws, so we resorted to the Food Security Law which requires us to work very hard to implement it for the benefit of the Iraqis.

🔵 We need all political parties to cooperate with us to implement the Food Security Law, with our need for a supervisory role as well, which must take place within the public interest, and not for pressure or personal purposes, or within agendas to weaken the government.

🔵 The government is working at the end of its session, and we expect the political parties to work with full force to form a government that represents the aspirations of the Iraqi people, so that it can present a vision to address these challenges.

🔵 This government remains in action until the last moment until its tasks are handed over to the next government, and for this I remind the political elites of the importance of expediting the formation of a government that does its duty, and at the same time we will work for the last moment to follow up on all the details.

🔵 We have commitments that we must implement and continue with, and despite the many internal challenges, we have succeeded in the policy of external balance, and this was a major goal from the first moment in working to restore our relations with neighboring countries and friendly countries and with our brothers.

🔵 Praise be to God, we put Iraq’s interest in the first place, and this balance stems from the interest of Iraq, the Iraqi people, and we will continue with this policy, and we will not go to any axis at the expense of another axis.

🔵 We put an equal distance with everyone in order to bring to Iraq investments and support, in order to compensate for the failures, frustrations and absurd wars that have left their repercussions on the Iraqi people.

🔵 What is required is to rebuild our relations on the basis of the Iraqi interest and on the basis of good faith with all partners. As for the policy of fear, isolation and mistrust with others, it is not in our policy.

🔵 We think well of everyone so that we can reconcile with ourselves and others, and liberate us from the absurd policies that took Iraq in the past to semi-isolationist or escalatory policies with neighboring countries, and this will be part of the past.

🔵 About my recent visit to the Kingdom of Saudi Arabia and the Islamic Republic of Iran, the visit to the Kingdom of Saudi Arabia was very good, in which we discussed common issues, Saudi investments in Iraq and future prospects, and we talked about the electrical connection and many projects that benefit Iraqis, and the importance of the region being stable and calm and for Iraq to lead His role in humidifying the atmosphere for the interest of Iraq and the region.

🔵 We talked about global challenges due to the war in Ukraine and its repercussions on food security, and how to cooperate in order to provide the needs of our peoples to provide this security.

🔵 During our visit to the Islamic Republic of Iran, we spoke about the same points, and about joint files, as well as working on the issue of energy and water.

🔵 The Brotherhood in Iran has expressed its willingness to send the Minister of Energy to Baghdad to talk about the issue of water and electric energy and solve all problems. 

🔵 We need to work hard to overcome the challenges that the region is going through and that affected everyone and Iraq in the first place, and in particular the issue of climate change, and for this I ask the competent ministers to pay attention to this aspect regarding water and climatic changes that affect agriculture and the lives of citizens.

🔵 We must remember that these relations and this balance prove to the world and to the Iraqis that Iraq has a great depth in history, and its role and position are very important in helping to build relations that serve the interest of our people.

🔵 Iraq works and seeks to be part of the region and its stability, and that we cooperate with all countries in order to avoid the repercussions of the war in Ukraine in terms of food and energy security. 

🔵 Our work will continue until the last moment of the life of this government, until the formation of a new government, we must work day and night to overcome all obstacles and challenges.

Media Office of the Prime Minister
28 – June – 2022   LINK

Source: Dinar Recaps


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