Prime Minister Mr. Muhammad Shiaa Al-Sudani chairs a meeting to follow up on the outcomes of the Washington visit •••••••••••
The Prime Minister, Mr. Muhammad Shiaa Al-Sudani, chaired, this evening, Tuesday, a meeting that included a number of advisors to the Prime Minister. The meeting discussed the file of the Washington visit, and the follow-up of the implementation of the agreements and understandings concluded by the official Iraqi delegation, headed by the Prime Minister, with the American side, during the last visit, based on the government’s approach in closely following up on all the files it is working on, including those related to foreign relations and understandings with Governments of countries, the latest of which is the relationship with the United States.
The meeting witnessed a discussion of the results of the meetings of the Supreme Coordinating Committee (HCC), concerned with activating the framework agreement between Iraq and the United States with its seven axes, as well as a discussion of the important economic partnership file concluded by the Iraqi private sector with major American companies.
Mr. Al-Sudani stressed the importance of following up on the understandings reached between Iraq and the United States in many areas, in order to arrange the bilateral relationship, in a way that serves the highest interests of Iraq. His Excellency pointed to the need to benefit from the competencies that the Iraqi communities abound in reconstruction campaigns and service provision, In implementing the priorities of the government program, His Excellency described these competencies as idle wealth.
The Prime Minister directed the advisors to arrange priorities in following up on the outcomes of the Washington visit, and for each advisor to follow up on a specific file, along with the relevant ministry and the Iraqi embassy in Washington, and to submit what is verified from it to His Excellency. He also directed to appoint a special secretariat for the Supreme Coordination Committee ( HSS), and emphasis on continuing periodic meetings, to follow up and review what has been accomplished.
Rentier countries seek to adopt a fixed exchange system (pegged) to a strong foreign currency or several currencies (a basket of currencies) to ensure the stability of foreign transactions, as long as they export one depleted commodity and import many goods and services, and they are called “small open countries.”
Despite the agreement that the floating currency system is considered the best in terms of relative response to the performance of the external economy and the lack of need for sometimes excessive use of foreign reserves to defend the official value in the peg system, the abundance of reserves and the need for stability in foreign transactions have a major impact on the economy. Overall, rentier countries are likely to adopt a fixed exchange rate system.
Iraq is one of the economies whose monetary authority adopts an openly fixed exchange rate system (De jure) and strives to be realistically fixed (De facto). The Iraqi dinar’s peg is classified as a “soft peg” peg that includes accepting a fluctuation of no more than 2% during the period. The last 6 months of IMF audit and 1% average volatility continuously (ereare, IMF, 2021).
When dealing with the dinar exchange rate, a distinction must be made between the fixed exchange rate that affects the market, and the contractual exchange rate between the central bank and the Ministry of Finance when selling its dollars to the central bank (which is proven in the budget for the public revenue account), and the market exchange rate remains the most important because it is dealt with in the markets as a value. Reference.
The official dinar exchange rate went through (roughly) the following stages:
From 2004 – December 2020: Buying: 1190 Selling: 1200
From the end of 2020 – February 2023: Buy: 1460 Sell: 1470
From February 2023 until now: Buying: 1310 Selling: 1320
It is noted that there are 10 points (10 dinars) between purchasing banking and non-banking financial units (exchange companies) and selling them to merchants (transfers/credits) or to individuals (in cash) (noting that there is a change within the ten points for motivational purposes, but it is not extensive) Therefore, during the years 2020-2023, the monetary authority did not leave the fixed exchange system, but rather moved from one fixed exchange rate to another fixed exchange rate, according to what it saw fit in the interest of the overall economy and well-being.
It is natural that the repeated transfers from one constant to another over a short period of time had an impact on the balance levels of the dinar and the size of the gap between the official and market exchange rates. This was reflected in the shifting of financial positions in favor of those holding the dollar again and again in favor of those holding the dinar. It even had an impact in changing The financial positions of creditors and debtors at each change, noting that those with dinar salaries and income are most affected by the gaps and fluctuations between the official value and the market value of the dinar, especially since changing the amount of the assessment was reduced (12-20-2020) and then raised (2-7-2023). It has a clear positive impact even on the macroeconomy, in addition to being a deviation from targeting stability by essentially adopting a fixed exchange rate system.
Second: An installed system
There is no doubt that the dinar exchange rate is determined through the dealings of the banking or non-banking financial units that buy the dollar at a fixed dinar price from the central bank (cash or promotion) with the importing public (merchants) or travelers (cash), that is, whoever determines the market dinar exchange rate ( Then the dollar exchange rate) these units deal with customers, and then following up on what happened since entering the platform at the end of 2022 until now, we find that the dinar’s story took two stages:
– The merchants’ stage: In the beginning, the importing merchants were obtaining dollars (remittances, credits: which are the largest part of daily currency window sales), at a price of 1,320 dinars/dollar, but the merchants set the margins of their imported sales according to the (parallel) cash price, and thus the merchants practiced speculation. The margin of the exchange rate gap, rather than the trading margins of their activity. This behavior is consistent with the state of profit allowed by the market and the prevailing nature of control.
This stage witnessed a gap of up to (1320 – 1550), meaning a margin of 230 points and an exchange gap of (approximately 17%).
– Participation stage: After the banking and non-banking financial units that buy the dollar from the Central Bank (1310 dinars/dollar) became certain that the gap between what they sell (1320 dinars/dollar) and what their merchant customers sell for
(1500-1550), began intervening to share the margin with these clients, and by imposing commissions amounting to
(3%-7%) on dollar sales to customers, whether in cash or promotions. Rather, it was transferred to cards and Western Union under the name of commissions.
So, the price of the dollar moved from (1320 to 1500) and thereabouts, being shared between banking and non-banking financial units and merchants, and it was almost (1320-1400) the share of financial outlets (so 1400 is the cost of purchasing the new dollar instead of 1320.
More than 1,400 are owned by merchants.
Therefore, the natural and legal public is faced with:
– The official price is 1320.
The price for banks is about 1,400 for transfers and credits.
The price for banking companies is slightly higher than 1,400 for cash and transfer.
The price for merchants is between 1400 and 1500.
Therefore, the exchange system became fixed (by cap) (not fixed) and the cost became approximately 1400 dinars / dollar, due to the cap set by the banking and non-banking financial outlets, and in this situation the fixed exchange system was lost (1310-1320).
Therefore, the continuous stabilization has become dependent on the mutual pressure forces between the merchants’ margin of the currency and the margin of the financial outlets of the currency:
Leaving the real margin represented by the added value resulting from financial and commercial activity.
The reflection of this does not stop at the crack in the fixed exchange system adopted by the monetary authority, which is published in the IMF documents through the Fund’s annual (ARERE) report, but rather goes beyond that to the disparity in the exceptional profits achieved by financial outlets compared to others (due to commissions) in a way that approaches monopoly. For the banking market, which is based on the difference in market share, due to the availability of important correspondents for this outlet compared to the other.
Returning to stability has become limited to the efforts of the following:
• Follow up on commissions (Central Bank).
• Follow up with customs for the entry of goods.
• Follow up with the authorities responsible for financial crime (reporting office, economic crime) to follow up on unregistered commissions for fear of their incorrect use.
The Trade Bank of Iraq decided, on Monday, to stop collecting commissions for five banking services.
The bank’s media advisor, Aqeel Al-Shuwaili, said in a statement reported by the official news agency, and seen by Al-Eqtisad News, that “starting with the start of the Financial Inclusion Week activities and to encourage savings, the management of the Trade Bank of Iraq (TBI) decided to stop collecting banking commissions for the services described below, as follows: –
1- Stop charging the commission for opening current accounts (free).
2- Stop charging the commission for opening savings accounts (free).
3- Stop charging the commission for opening deposit accounts (free).
4- Stop collecting the commission for issuing an electronic Visa Classic card (free).
5- Stop collecting the commission for issuing a golden Visa electronic card (free).
Shafaq News/ On Tuesday, the Iraqi Council of Ministers issued a number of economic decisions and obligated the governorates to develop a five-year reconstruction plan.
This came during its eighteenth regular session, which was chaired by Prime Minister Muhammad Shiaa Al-Sudani.
According to a statement issued by Al-Sudani’s office and received by Shafaq News Agency, the session witnessed discussion of the general situation in the country, discussion of a number of service and economic files, consideration of the topics on the agenda and making the necessary decisions regarding them.
In the field of monitoring energy projects and the progress of implementation of the government program in this important sector, the Council of Ministers approved the recommendations of the Ministerial Council for Energy, as follows:
First/ Recommendation of the Ministerial Council for Energy (24034 I) for the year 2024, which includes:
1. Proceed with the signing of the contract (Mansouriya gas field) between the Ministry of Oil / Central Oil Company and the consortium (the Chinese Jira Company and Petro Iraq Company) in initials.
2. Agree to the following:
a . Providing the financial share of the Central Oil Company (51%) of the project, amounting to (506 million dollars), for the first three years of the project’s life. The share will be recorded in the bank account of the Middle Oil Company for the purposes of this project in particular, and by:
– ($73 million) for the first year, ($187) million for the second year, and ($246) million for the third year.
B. The share shall be owned by the Ministry of Finance and the Ministry of Oil/Middle Oil Company shall be authorized to manage it, in accordance with a contract signed between the two parties to undertake the task of operating and managing the share in accordance with applicable laws and legislation.
C. Including the project as a component within the licensing rounds to pay dues with crude oil or condensates, according to the contract, similar to licensing round contracts.
Dr . Proceed with the final signing procedures in accordance with the contexts approved by the Ministry of Oil.
Second: Recommendation of the Ministerial Council for Energy (24028 i) for the year 2024, which includes approval to amend the Council of Ministers’ decision (24102 for the year 2024) regarding the mechanism for implementing social benefit projects for licensing round contracts, by approving the updated mechanism for the year 2023, as well as amending paragraph (2) of the Council’s decision. Ministers (23169) for the year 2023 according to the following:
– Obligating local governments to develop a five-year or (3) year plan after coordination between them and the relevant ministries for drawing up urban policies, in line with the amounts allocated annually, provided that this plan is approved by the (Provincial Council), and expenditures are directed to the sectors of health, education, municipalities, and the environment, and to the administrative unit. Where the oil field is located.
Third/ Recommendation of the Ministerial Council for Energy (24030 I) for the year 2024, which includes the referral of the tender numbered (MOD-2024) for the operation and maintenance of diesel stations for the stations (North Diwaniyah, East Diwaniyah, East Holy Karbala, and North Amara) under the responsibility of the company (DASSOFF PETROLEUM SERVICE LLC). At a price of (13.5) dollars per megawatt-hour, using the (Take and Pay) method, and for a period of (5) years, according to the decision of the Central Committee for Review and Approval of the Referral in the Ministry of Electricity.
As part of the Council’s follow-up of the development road project, it was decided to approve the following:
1- Authorizing the Ministry of Transport to contract with Oliver Wyman Company to provide consulting services for the Iraq Development Road Project, as an exception to the Instructions for Implementing Government Contracts (2 of 2014) and the controls attached thereto.
2- Excluding the project from the listing requirements and conditions if it is listed as an investment project.
3- The investing company shall bear the return of all consulting contract fees, which will be paid by the Ministry of Transport.
4- Authorizing the Director General of the General Company for Iraqi Railways to sign the contract.
As part of following up on the affairs of the youth and sports sector and preparing the necessary requirements and requirements, the Council approved the minutes of the meeting (Property No. 4/20264 M11 Hamdi Farm) according to the following:
1. Continuing to allocate (Property No. (4/20264 M11 Hamdi Farm) to the Ministry of Youth and Sports, which is owned by the Ministry of Finance, in accordance with Legislative Order No. (6) of 2004, with the two parties (the Ministry of Finance and the Ministry of Youth and Sports) taking over the management. Procedures for canceling all lawsuits filed between them in the courts.
2. Coordination between the Baghdad Investment Authority and the State Real Estate Department in the Ministry of Finance; To proceed with the procedures for replacing the investment license for the same purpose, as an exception to the procedures for announcing the investment opportunity, taking into account the nomination of the alternative plot of land from the Ministry of Finance/State Real Estate Department.
3. Obliging the Ministry of Youth and Sports to implement its projects on the property in question exclusively for its purposes and activities, in accordance with the applicable laws in coordination with the relevant authorities.
4. Coordination between the Ministry of Youth and Sports and the State Real Estate Department; To find appropriate solutions for the land occupied by the Ministry of Interior and the Popular Mobilization Authority within the boundaries of the aforementioned property.
In the same context, the Prime Minister directed that the draft law on the first amendment to the National Federations Law No. (24) of 2021 be sent to the State Council for proper scrutiny, within a maximum period of two months.
As part of efforts to address the causes related to lagging projects, the Council of Ministers approved the following:
First/ Increasing the amount of reserve and the total cost of the project (establishing the College of Education in Sabaa Abkar).
Second: Increasing the amount of reserve for the project (Land Hajj Road, Phase 1 (50 km), to implement compensation for uncompleted work, for the difference in the exchange rate of the dinar against the dollar, and increasing the amount of reserve for the (Land Hajj Road, Phase 2, 50 km) contract, to implement spare order No. (3), as well as increasing the total cost of the project.
Third: Increasing the reserve amount and the amount of the consultant contract /28/P/2171/PMC/2013 included in the contracts for the (Karbala Refinery) project, and increasing the total cost of the (Karbala Refinery) project, based on the controls and powers in force, provided that this amount is recovered from revenues. The financials achieved by the liquidator; Because the beneficiary company is a public company (self-financing) and is subject to Instructions (4 of 1999), directing the Ministry of Oil to take all measures to transfer the project to the custody of the beneficiary government agency, operating the project (Middle Refineries Company), to avoid future requests to sign contract annexes, for the purpose of operation and maintenance. Consultations without preparing the specialized staff concerned with managing and operating the project from the government entity that benefits from the project’s outputs.
Fourth: Increasing the amount of reserve for the project (construction of the Doura/Yusufiyah road (first and second phases) south of Baghdad intersection), and increasing the total cost of the project (constructing the Doura/Yusufiyah highway for highway traffic with a length of 14 km).
With regard to health projects, the Council approved the assignment of the relevant municipality, with the approval of the competent minister, to allocate the plot of land numbered (2251/28 Al-Tajiyat), owned by the Municipality of Baghdad, to the General Secretariat of the Holy Shrine of Hussein, for the purpose of establishing a hospital project for cancer diseases and a specialized center for autism. Based on the provisions of Article (60/4) of the amended Municipal Administration Law (165 of 1964).
Within the framework of the financial and administrative reform decisions, and what is related to the reform of the banking sector, the Council approved what was stated in the letter of the Prime Minister’s Office on April 3, 2024, regarding contracting with an external auditor for the Trade Bank of Iraq. For the purpose of auditing the bank’s accounts, the bank deals with a network of reputable international banks.
In view of the urgent need to allocate plots of land for school projects, and for the purpose of eliminating double and triple permanent shifts within the Sadr City/1 sector, which suffers from overcrowding, the Council of Ministers approved the following:
1- Allocating an area of (3 dunums) from the plot of land numbered (67162/4), so that it is possible to build (3) schools (capacity of 18 classrooms, 24 classrooms, and a kindergarten within the work of the Ministry’s project No. (1).
2- Authorizing the Minister of Education to delete the sites that companies have not started and the sites where it is not possible to complete construction work, and then add that piece under spare orders for construction purposes for companies that own ready-made construction plants, and with advanced completion rates within the work progress schedule, and the trade-off will be price. Depending on the completion period.
The session witnessed the approval of the recommendation of the Ministerial Council for Social Services (24008 KH), which includes writing off the financial amounts owed by Maysan Governorate employees amounting to (425,191,548 dinars), and counting them as beneficiaries receiving plots of land in accordance with the controls and instructions in force, based on the provisions of the Federal Financial Management Law (6 of the year 2019) amended, provided that the Ministry of Finance allocates the write-off amount and pays it to the land owner.
Mawazine News – Baghdad The Council of Ministers announced, today, Tuesday, the approval of contracting with an external auditor for the Trade Bank of Iraq; For the purpose of auditing the bank accounts. A statement from the Prime Minister’s Media Office received by Mawazine News stated, “Within the framework of financial and administrative reform decisions, and what is related to reforming the banking sector, the Council approved, according to the statement, what was recorded in the letter of the Prime Minister’s Office on April 3, 2024, regarding contracting with an auditor.” External to the Iraqi Trade Bank, for the purpose of auditing the bank’s accounts, as the bank deals with a network of reputable international banks.” Today, Tuesday, Prime Minister Muhammad Shiaa Al-Sudani chaired the eighteenth regular session of the Council of Ministers.
{Political: Al-Furat News} The Acting Speaker of the House of Representatives, Mohsen Al-Mandalawi, met today, Tuesday, the Prime Minister, Mohammed Shia Al-Sudani, to discuss the latest local developments and political efforts to complete the constitutional entitlements, by resolving the selection of a Speaker of the House of Representatives.
Al-Mandalawi and Al-Sudani agreed, according to a statement to the First Bureau, a copy of which {Euphrates News} received, “on the need to complete the budget law schedules for 2024, and to expedite them to the House of Representatives for the purpose of discussing and voting on them, because of their link to the lives of citizens and their focus on investment spending for new projects.”
The two sides stressed “the importance of integrating the work of the legislative and executive authorities and its reflection on the speedy adoption of important laws, and supporting the efforts of implementing the government program and anti-corruption steps.”
The Parliamentary Finance Committee announced on Tuesday that the Council of Ministers will vote in today’s session on the budget schedules for 2024. Committee Chairman Atwan Al-Atwani said in a statement followed by Mawazine News, “We look forward to resolve this file as soon as possible and send the tables to the House of Representatives for a vote in order to start the process of reconstruction, construction and development within the framework of the government program.” Al-Atwani stressed “the commitment to apply the provisions and paragraphs of the Federal General Budget Law for the years (2023 _ 2025), and to include its financial allocations in this year’s schedules, especially with regard to appointments and contracts that were not implemented during 2023, and other rights that affect the lives of citizens.” He stressed “supporting the governorates and empowering them to implement their service plans and development programs and completing the requirements for the inclusion of strategic projects in a way that achieves a qualitative leap in the level of providing services to citizens.”
The Parliamentary Oil and Gas Committee confirmed today, Monday (April 29, 2024), that the visit of Prime Minister Muhammad Shiaa Al-Sudani will have positive results on the investment sector, especially related to energy .
Committee member Bassem Al-Gharibawi told “Baghdad Today” that, “Certainly, Prime Minister Muhammad Shiaa Al-Sudani’s foreign visits to countries in the region and the world are a special mission, and he is working to bring investment to various sectors, especially in the field of energy and gas . ”
Al-Gharibawi stated, “Iraq has become an important investment arena for all countries of the region and the world, and there are certainly Saudi and international companies working to obtain investment opportunities, and the Sudanese visits all encourage investment and strengthen the Iraqi economy, and the results of those visits on the economic situation may be felt in the near future through the entry Various companies to the Iraqi arena .”
Al-Sudani arrived in the Saudi capital, Riyadh, yesterday morning, Sunday, to participate in the World Economic Forum, which bore the title “International Cooperation, Growth, and Energy for Development,” while the government spokesman revealed that Al-Sudani discussed during his participation the development road project and the war on Gaza. Al-Sudani also met with representatives of the company “Vertical Future” concerned with vertical agriculture, and Al-Sudani stressed his interest in modern irrigation methods, before returning on Sunday evening to the capital, Baghdad.
{Political: Euphrates News} Prime Minister Mohammed Shiaa Al-Sudani received, today, Monday, the President of the Kurdistan Region, Nechirvan Barzani, in Baghdad.
On Saturday, Barzani began a visit to Baghdad, during which he met with senior state officials and heads of parties and prominent political figures, to discuss several files of the Kurdistan region, Iraq and the region. Barzani’s visit to Baghdad is his second during the month of April, after the first one that took place on the fifth of this month. The spokesman for the presidency of the region, Dhad Chehab, announced that Barzani’s meetings in Baghdad continue today,” noting that his talks focus on “solving the issues of salaries and elections.”
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