By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.
Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
Banks End the Year with a Bang
The market, as measured by the Rabee Securities U. S. Dollar Equity Index (RSISX USD Index), was down 8.4% for the month, and down 1.0% for the year. The onset of the fasting month of Ramadan at the end of the second week provided the market, and its participants, with a much-needed respite from the powerful momentum of the last few months, and an opportunity to consolidate the solid gains of this momentum (chart below) – with the extent of the consolidation influenced by the fundamentals that drove these gains.
Key among them were the significant developments discussed a few months ago in “Banks to Fuel the Market’s Next Phase“, that would lead to an acceleration in the growth of net profit and equity values for the top quality banks. The extent of this acceleration can be seen from the stellar year-over-year growth in 2023 for country’s top-four banks (table below)- which are among the RSISX USD Index’s major constituents.
Rabee Securities U.S. Dollar Equity Index
(Source: Iraq Stock Exchange, Rabee Securities, AFC Research, daily data as of March 31st)
Today, Wednesday (April 3, 2024), Muhammad Mazhar Salih, the financial and economic advisor to the Prime Minister, revealed the size of Iraq’s foreign and internal debts, while indicating a government plan to pay them.
Saleh told “Baghdad Today”, “Iraq’s external debt is very small and constitutes less than (30%) of the country’s gross domestic product, and this percentage is less than the standard and safe percentage, which is (60%) according to European Union standards.”
He explained, “Iraq has a plan to repay these debts, and the remaining debt is less than $20 billion. Nearly a third of it will be paid during this year and may decrease significantly over the next few years.”
He added, “The largest debt is internal, and this debt does not pose any risk, as it is within government financial institutions, and is not a debt between individuals and the government, and about (98%) is debt between the government, government banks, the Central Bank of Iraq, and the Ministry of Finance,” indicating that “there is A plan to settle these debts in the future in a way that does not constitute any burden.”
The financial advisor to the Prime Minister indicated that “the internal debt is estimated at 50 billion dollars, but it is within the official government financial institution, and the central bank controls approximately (64%) of it,” stressing that “the external debt is the most important and Iraq is committed to paying it.”
Yesterday, Tuesday, the Council of Ministers approved the recommendation of the Ministerial Council for the Economy (24207) for the year 2024, which included the approval of the Diwaniyah Order Committee’s recommendation 23942, related to foreign debt. The recommendation included :
1- The Ministry of Planning’s study of projects canceled from loans; To discuss the possibility of including it in funding sources from the federal general budget .
2- The Ministry of Finance will verify the existence of any financial obligations that may result from canceling these projects with the loan donors when implementing the decision .
3- Canceling delayed loans, worth $1.05 billion, and completing important projects from government funding sources .
4- Canceling borrowing requests worth $5.8 billion for the Basra water desalination and sky train projects, financing the first project from the regional development budget, and financing the second project by offering it for investment .
5- Reducing the current external public debt, amounting to $10.5 billion, to $8.9 billion .
6- Redirecting World Bank loans for lagging projects and other surpluses towards implementing the vital railway link project (Faw – Rabia – Fish Khabour) .
7- Contracting with an international financial consultant to audit and manage foreign debts in the future.
{Politics: Al-Furat News} The leader of the Kurdistan Democratic Party, Wafa Muhammad Karim, revealed the details of Baghdad and Erbil regarding the salaries of the Kurdistan region.
Karim told {Al-Furat News} that: “It was agreed that the resettlement process for employees’ salaries in the Kurdistan region will be completed, and the process needs between 4 to 6 months to complete.” He added, “Prime Minister Muhammad Shiaa Al-Sudani indicated that the Baghdad government will send salaries until the resettlement process is completed.” Karim pointed out, “There is a problem in the resettlement process, as the federal government stipulated that resettlement be limited to the Rasheed and Rafidain banks, while the region objected and wanted resettlement to be through a bank account and a project specific to the region.” He added, “No agreement has been reached in this regard or the salaries that will be sent for the month of March.” The Prime Minister of the Kurdistan Regional Government, Masrour Barzani, announced today, Wednesday, that he had reached an “appropriate solution” with the federal government to the issue of allocating the salaries of employees and litigants in the Kurdistan Region. Today, the Accounting Department of the Federal Ministry of Finance launched the remaining salary funding for members of security institutions in the region for the month of February. She indicated that the funding came in accordance with what was stated in the letter of the Ministry of Finance and the Accounting Department No. 9133 on 4/3/2024 after fulfilling all the requirements followed in financing the salaries of federal government employees, and based on what was stated in the books of the Financial Supervision Bureau No. 8422 on 3/28/2024. And 8670 as of 4/1/2024.
{Politics: Al-Furat News} The Prime Minister of the Kurdistan Regional Government, Masrour Barzani, announced today, Wednesday, that he had reached an “appropriate solution” with the federal government to the issue of allocating the salaries of employees and litigants in the Kurdistan Region.
Barzani said in a statement to the regional government, a copy of which was received by Al-Furat News, “Thanks to God Almighty and the solid will of our beloved citizens, we have reached an appropriate solution to the issue of allocating the salaries of employees and litigants in the Kurdistan region, after diligent efforts and intense efforts made by the Kurdistan Regional Government team in close cooperation with the Kurdistan Regional Government team.” Prime Minister of the Federal Government.
He added, “I would like to extend my sincere thanks and appreciation to Federal Prime Minister Muhammad Shiaa Al-Sudani, and to all the forces and parties that supported and supported us in overcoming these obstacles and obstacles together.”
Barzani continued, “The Kurdistan region has faced, during the recent period, many attempts to harm its citizens and incite despair in them. I would like to express here my deepest thanks and appreciation to the employees and salary recipients in the region for their steadfastness and steadfastness. We will seek to distribute the salaries of the month of March before the blessed Eid Al-Fitr, especially “With the completion of the process of distributing February salaries within the next two days.”
Mawazine News – Baghdad, the financial advisor to the Prime Minister, Mazhar Muhammad Saleh, confirmed today, Wednesday, that the World Bank plays a positive and supportive role for the Iraqi economy, and its team in Baghdad represents the advisory arm for the government program. Saleh said, “The World Bank Group in Iraq launched its new relationship with our country in accordance with what was stipulated in UN Security Council Resolution 1483 in May 2003, and it is undertaking the task of mobilizing financial and technical assistance to support Iraq’s efforts to restore confidence in the economy, build its foundations, and reduce the burden of its debt in cooperation with the Fund.” International Monetary. He added, “After years of wars and conflicts that affected the country’s infrastructure since the 1980s and Iraq’s severance and isolation from the world and multilateral international organizations, the bank contributed by taking its active role after the year 2003, especially in managing a number of development financing funds for the benefit of our country’s economy.” He continued, “This was done by managing the funds provided by donor countries to Iraq under the Madrid Donors Conference held in October 2003, or by contributing to supporting the private sector through the role assumed by the International Finance Agency (IFC) as one of the arms of the World Bank Group active with the private sector.” As well as through the Bank’s role in supporting some aspects of development and facilitating ways of stabilizing our economy, including providing soft loans provided by the World Bank to support the national economy on various occasions during the last twenty years, specifically during the dual financial and security crisis to confront the ISIS terrorist gangs and the decline in oil prices after… The year 2014.” He added, “The World Bank also played a role in improving the governance of economic life and rebuilding the requirements of a more powerful and modern digital and development era for the benefit of our country in many areas, in addition to contributing to rebuilding livelihoods by enabling social welfare programs and providing them with plans and programs that address issues of combating poverty.” He pointed out, “The World Bank works closely with international partners to support economic reforms, specifically in the financial, banking, and public finance sectors.” Saleh continued, “The World Bank today is not only a financing institution, but rather a bank that provides knowledge and its tools based on its accumulated experience that has reached nearly eighty years. Since its founding in 1945, Iraq was at the forefront of the founding countries of the World Bank Group and the International Monetary Fund, and this is how the bank is viewed.” The International Bank is currently considered an “information and knowledge bank.”
The Central Bank of Iraq announced, on Wednesday, its hard currency sales, reaching about $256 million in today’s transactions, according to the official 1310 price.
The bank’s data showed that the total internal cash withdrawals were $11,710,000, while the total amounts of overseas transfers involving remittances and credits were $244,703,014, while the total sale was $256,413,014.
The Ministry of Finance announced, on Wednesday, the launch of the remaining salary funding for employees of security institutions in the Kurdistan Region of Iraq for the month of February in accordance with the decision of the Federal Court.
The ministry said in a statement received by “Economy Nboz”: “Based on the procedures of the Ministry of Finance in financing the salaries of the region in accordance with the decision of the Federal Court, the Accounting Department of the Ministry launched the financing of the remaining salaries of employees of security institutions in the region for the month of February, according to the letter of the Ministry of Finance of Accounting Department No. 9133 in 2024/4/3.”
She added that “this came in fulfillment of all the requirements followed in financing the salaries of federal government employees, and based on what was stated in the books of the Financial Supervision Bureau numbered 8422 in 2024/3/28 and 8670 on 2024/4/1.”
The Parliamentary Investment and Development Committee revealed on Wednesday steps by the Central Bank to lift the ban on 28 banks, while noting that the private sector will participate in many strategic projects by the public sector.
The head of the Parliamentary Investment and Development Committee, Hassan Al-Khafaji, said in a statement followed by “Economy News”: “The committee proposed to the Governor of the Central Bank Ali Al-Alaq to support private private banks and involve them in loans,” explaining that “the governor confirmed its support after lifting minor violations from some banks.”
He pointed out that “the Governor of the Central Bank promised to submit a report to the US Treasury to lift the ban on Iraqi banks, which number 28 private banks,” expecting “the ban on those banks will be lifted during the coming period.”
The Chairman of the Parliamentary Investment and Development Committee stressed “the support of his committee to the private sector as it is the partner and strategic ally of the public sector and a country cannot progress and prosper without the private sector,” pointing out that “the private sector will participate in the public sector with many important strategic projects, electrical, industrial and others.”
{Political: Al-Furat News} Turkish President Recep Tayyip Erdogan plans to visit Iraq on April 22 for the first time in 12 years, according to Turkish media.
Turkey’s {A Haber} channel reported that “a visit to Baghdad has been actively prepared over the past few weeks. A package of agreements and memorandums, including in the field of counterterrorism, is scheduled to be signed during Erdogan’s negotiations in Iraq.”
Erdogan is also scheduled to visit the United States in May, where he plans to meet with U.S. President Joe Biden on May 9.
In May, Egyptian President Abdel Fattah al-Sisi and Greek Prime Minister Kyriakus Mitsotakis will visit Turkey to meet Erdogan.
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