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Kaperoni: The government and the central bank repacking world confidence of the Iraqi economy

August 16, 2017    Iraq is currently going through an economic crisis, big and difficult challenges, causes the control of the organization “Daesh” terrorist on the vast tracts of it; and the decline in oil prices globally, affecting the budget for the years 2014 2017, as the current year amounted to about $ 95 billion, and a deficit of about $ 20.5 billion , and cause damage to the non – oil economy through the destruction of infrastructure and assets, disrupting the movement of trade and the deterioration of investor confidence, and the external sector and the growth potential for the medium term.

And to face all the political and economic challenges experienced by Iraq ‘s central bank has taken a number of measures to correct public finances and financing conditions, while continuing commitment to the linked exchange rate system, while the Iraqi government is moving at the same time after the completion of the war against “Daesh”, towards planning and economic development ; thus contributing to shift the quality of the Iraqi economy.

He said the central bank governor, on the Keywords, that an international group to monitor money move confirms the world ‘s confidence in Iraq financially, and plans to remove Iraq from the gray list to the white, indicating that the Bank is working to activate the Anti -Money Laundering Office of the money and give him the powers of the administrative and financial portfolios and full independence,

and conduct operations rehabilitation of its capabilities with international support, and coordinate with international organizations, and the financial action Task Force, which is an intergovernmental body to study money laundering trends and techniques, and preparing policies for combating it , and the financing of terrorism locally and internationally.

Keywords noted that this step will increase the confidence of the world in Iraq financially and economically, were the result of the reforms undertaken by the government and the Central Bank of Iraq, which contributed to the reduction of the fiscal deficit gap.

The issuance of the Central Bank of Iraq, the currency of 50 thousand Iraqi dinars category, a successful step in strengthening the performance of the Iraqi dinar, without affecting the exchange rate against the US dollar, as carrying sophisticated and high protection , such as the transparent window and a sign of Spark , which limit the counterfeiting of currency operations , security mark.

He stressed Keywords that “issuing high categories Hassan from the performance of the Iraqi dinar and reduced dependence on the dollar in large transactions, as it became the performance of large transactions in Iraqi dinars, and there is no policy to raise the value of the dollar against the Iraqi dinar, noting that” the central bank has a foreign currency is the currency weakness existing local market “; which is reassuring.

And the application of compatible working practices with the best international standards of the Central Bank of Iraq ‘s cooperation with “Global Foundation for International Professional Services” Talal Abu – Ghazaleh Group, which developed a plan for the training of human resources for the Bank and development in the field of information technology, as part of the Bank ‘s plan and its extensive to obtain certificates in the axes related the application of international standards for information technology.

Keywords added that the general approach of the Central Bank, is the development of banking services and the introduction of new banking products and electronic payment systems; based on advanced technologies to meet the challenges facing the banking sector, and the establishment of an advanced control system for all electronic banking activities and services.

A group Talal Abu – Ghazaleh presented the Governor of the Central Bank on the work of audit information and evaluation mechanism, and the training of the Iraqi Association of private banks to train all employees of risk management in the Iraqi banking circles through a specialized course in the field of risk management,

and held the Iraqi Association of private banks and a workshop entitled (IT Development) based on the instructions of the Central Bank of Iraq with the participation of 90 employees in Iraqi banks, and the importance of governance and focus attention management of information technology and management risks based on the global Standards.

He said the Central Bank of Iraq adviser, Walid Idi, that Iraq ‘s reserves of hard currency will reach $ 62 billion in 2018, indicating that there are no dangerous decline in reserves to $ 49 billion, and added that the “reserve currency according to international standards, should be enough for six months as a requirement or an international scale,

stressing that the hard currency reserves in Iraq , enough to pay off the debt and taking into account the geographical diversification is sufficient to the need of the domestic market of goods and services and economic and social requirements of paying retirees abroad salaries for the purposes of study, travel and religious tourism treatment. ”

And the “International Monetary Fund in his study: that there are Arab countries exceed their reserves real spending, including Iraq, Saudi Arabia, Algeria, Lebanon, Kuwait, Bahrain, and this is proof of the stability of Iraq ‘s reserves of hard currency.”

Fund predicted that “Iraq ‘s reserves up in 2018 to $ 62 billion, and then rise to $ 91 billion in 2020; as a result of improvement in the conditions of the Iraqi economy and oil exports and its derivatives and sufficiency of electricity imported for some provinces and gas export and promotion of tourism, industry, and all economic resources augur well” .

Keywords also stressed that Iraq has overcome the greatest financial challenges faced in the past year, noting that he also managed to maintain an acceptable level of cash reserves, noting that ” the central bank , and despite the decline in imports of dollar from the sale of crude oil to 70% managed to keep on an acceptable level of cash reserves which is estimated at a group of hard currency and gold by $ 49 billion. ”

Economists confirm that the Iraqi government developed in 2017 , the plan of the Central Bank ‘s economic and financial reform, in cooperation with the International Monetary Fund, consistent with the emergency conditions experienced by the country, the decline in global oil prices by 70% compared with the beginning of the year 2014, and that the plan took into account of the non – oil resources available.

In spite of all critical conditions plaguing the country, but the Iraqi government, his head Haider al – Abadi, the central bank governor, succeeded in developing a court economic plan this year to cope with the economic crisis, in cooperation with the International Monetary Fund, and the recovery of the Iraqi economy indicators began to appear significantly after the relative rise in global oil prices; after the implementation of the OPEC agreement to cut production and reduce the supply in the oil market in the world.

In the light of the correct monetary policy, followed by the Central Bank of Iraq in the development of new applications and mechanisms in line with its strategy for the years of “2016 2020”, with economic and financial reform program , which was agreed upon with the International Monetary Fund and in particular the first and second , which took place between the Iraqi delegation and the delegation for review the World Bank in Washington, which was reflected in the rise in the value of the Iraqi dinar.

The tight monetary policy adopted by the Central Bank of Iraq in the framework of its strategy aimed at achieving stability, showed that Almdolr the financial system, towards a gradual decline and that the phenomenon of partial dollarization are lower today than before, due to the launch of freedom of foreign exchange, and the adoption of monetary policy to enhance the value of Foreign Iraqi dinars, which rose during the last five years.

It embarked on monetary policy in Iraq, to establish a framework to strengthen confidence in Iraqi dinars, which help to create a strong and deep conditions in the financial stability of the system, ie the transfer of the impact of the operational objectives of monetary policy to achieve the immediate objectives of the same policy, stressing that the power to address the dollarization, is a measure of the effectiveness of the policy cash in providing an impressive signal to make the Iraqi dinar more attractive, which is usually reflected the stability of monetary demand, or decline in money circulation and stability of the speed, ie , due to the effect of the exchange rate and interest rate variables are positive effective in stabilizing the monetary demand, strengthen mechanical Finalize function The cash at the same time.

He noted are interested in the affairs of the monetary policy of the country that the gradual decline in the inflationary phenomenon has positive effects on the Iraqi Central Bank ‘s policy in strengthening the Iraqi dinar exchange rate , which gave strong effects on the stability of commodity tradable prices, which he referred to at the same time , the annual inflation expressed by the price index consumer prices.

The International Monetary Fund said that the activity of the Iraqi economy will remain limited in the current year, due to reduced oil production by 1.5% under the agreement with (OPEC), and the modest recovery of the non – oil sector.

The Fund said that the real growth of the GDP of Iraq reached 11% last year, supported by a substantial increase in oil production , which benefited from previous oil investments, it was agreed to prepare credit with Iraq, which led to correct the fiscal balance and the balance of the external position, and improve management public finances, while protecting social spending.

The head of the IMF mission to Iraq Christiaan Coconut, said that the sharp decline in oil prices caused lower total international reserves of Iraq , from 53.7 billion US dollars at the end of 2015 , the level is still comfortable, of $ 46.5 billion, at the end of December / December 2016

, he added in order to support economic growth and diversification in the economy, there is a need for further reforms to create fiscal space inclusive growth, and enhance the business environment, reduce corruption, and reform of the banking sector and the start of the Iraqi authorities and experts of the international Monetary Fund discussions on the second review of the agreement to prepare credit.

Here we come to the conclusion: that the policy adopted by the Central Bank of Iraq as the first official as stated in the law (56 of 2004) for the supervision and control of the banking system and run it according to its means in monetary policy applications and its impact on the overall economy on the grounds that the financial and monetary adviser to the government add to its core functions in maintaining the Iraqi dinar exchange rate against foreign currencies and to build a foreign cash reserves and reducing inflation, all that needs government support and study and analysis of the reality of the rentier Iraqi economy ,

which relies on a single resource is oil, which accounts for about (54. 60%) of Domestic product output, and needs to be coordination between the fiscal and monetary policies and different economic policies, according to the new building of the economy “market economy” to reach the central objectives set out in addition to the organization of work in the legislation of economic laws governing the development process.

One of the challenges faced by the banking business in Iraq, creating an executive means for the application of what is stated in the government program with respect to the banking sector, and set a time ceiling for it with a program to monitor the work and hosted, and strengthen the role of measures proactive to curb laundering and the smuggling of money, in order to address the financial collapses that some private sector banks experienced because of the current circumstances until overcome after the improvement of the financial situation of the country, and the stability of world oil prices.

It is the means of implementing what is stated in the government program, the preparation of programs and policies for continued cooperation between the government and private banks with the unification of the transaction for both parties,

and to develop criteria for the classification and evaluation of banks in the light of the financial indicators and measure the efficiency of its performance and its role in economic development, support and activation and development of the Iraqi Central Bank ‘s initiative to allocate the amount of ( 5) trillion Iraqi dinars for specialized banks (housing, agricultural, industrial) and trillion Iraqi dinars to finance small and medium enterprises and creating new job opportunities and contribute to the economic and social development plans

that target the Iraqi Central Bank president, is the application of a Government program, properly and in particular the statement’s axis by encouraging the transformation of the private sector and paragraph (d) thereof, which define paths and general mechanisms for the development of banking ,

which is definitely needed to make great efforts of the relevant government agencies with government banking and the private sector to overcome the challenges and obstacles in front of the Iraqi banking sector reform and development,

and to propose the foundations and strategies for the actors to build introductions and features of the transition from the banking to the developmental role through the process all the mistakes and lapses in economic construction in the coming years, with the drawing paths of success and achievement of goals.

Governor of the Central Bank of Iraq on the Keywords also announced, laying the foundations to improve the rate of monetary policy applications and the development of the Iraqi banking sector and support a way that achieves the stated government program;

it is the central bank independent organization HTA state government manages key financial functions, such as a country ‘s currency issue, maintain cash value, and contribute to regulate the amount of money supply, and follow up on all private commercial banks operations,

the central bank is defined as the National Bank of the States, and contribute to providing a range of banking and financial services to the Government of the States Which followed her, and is interested in following up the commercial banking system, and the implementation of government fiscal and monetary policies, is also interested in development of financial plans of the state government, and contributes to its implementation, and controls the funds within the economic sector.

Central Bank is a monetary institution affiliated with public ownership; the Governments of the States administration, and supervision handles through a set of laws under which define the duties and objectives of its own, as it is the central bank at the forefront of the banking system;

it has the authority to control the commercial banks, and its goal is profit, but its existence depends on the achievement of the general interests of the state, and is characterized by the central bank ‘s ability to transform with the true nature or fixed assets, such as real estate assets into cash.

The central bank is a financial institution that has a monopoly of money issuance process, and is linked to a strong relationship with commercial banks, and has different methods and the power to influence events and activities of these banks; thus contributing to the achievement of the country in economic policy, and has an independent monetary policy management, and do not interfere with the executive nature of his work.

Many economists and called for the independence of the central bank legally, financial, administrative, with the survival of much of the link between him and the state, as the role that the state lead is very important; in building a strategy for the development of small and medium – sized enterprises, and is an important element in the success, the fact that the government that has the financial potential in the rentier economy,

the role of the private sector which is weak, to a large degree, can not be promoted in this sector without having a plan for the development of this sector and build a clear and declared mechanisms in which the private sector is actively involved so that it can be transformed from a small child to the government sector to Prime partner, Then to the commander of the investment and construction operations.

Shatha Khalil      Economic Unity
Links for Research and Strategic Studies Center

Tobyboy: So the way I read they plan to remove Iraq from the gray list to the white indicating that the Bank is working to activate the anti-money laundering office of the money.

So according to this they have not activated the anti-money laundering after all these months giving the crooked parliament group plenty of time to keep stealing the money. They got off the black list by passing this law with no intentions of activating this until they were forced against the wall..

These people were real slick pass it but not activate it just like a lot of other laws pass but don’t activate. This way kept them off black list for future stealing how nice.

?Chasting:  and Warka isnt held accountable for anything. no confidence there.

Kaperoni:  I do think they have begun to activate the AML through the banks, but as stated a few months ago, the IMF and UST wants to see more.

Punisher:  There it is folks.   Iraq ‘s reserves of hard currency will reach $ 62 billion in 2018, indicating that there are no dangerous decline in reserves to $ 49 billion,

Kaperoni:  Punisher, you know as well as anyone, Iraq has a tendency to boast without actually doing the work to achieve the results.  Time will tell if they get in compliance and open the banking system for investment.

Punisher:  Kap, it is my understanding that the IMF sees reserves going back up and not down over the next several years with the path they are on. Am I wrong?

Mike:  Like Kap said, IF Iraq does what the IMF has advised them, the reserves will go up. Things like enforcing tariff’s, reducing government payroll/expenses and diversifying the economy, all of which will reduce the need for the CBI to prop up the Iraqi economy and cause a loss of the reserves.

Kw: Or they could float like Egypt and watch them go up.

Justwaiting:  Have to get into IMF VIII ~~


American Contractor
Article 140 & IQD

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