DINAR REVALUATION UPDATE: January is a pivotal month for Iraq, particularly concerning the anticipated rate change , 9 JAN

 DINAR REVALUATION UPDATE: January is a pivotal month for Iraq, particularly concerning the anticipated rate change 

Highlights

Summary

Here we discusses the current state of affairs in Iraq, particularly focusing on economic developments and governmental actions from October to January. 

The period has been relatively quiet, with few significant events aside from the appointment of a new parliament speaker, the Kurdistan elections, and the implementation of a new electronic transfer system by the Central Bank. 

Key discussions revolve around the currency auctions and remittances, which are critical for financing imports, as Iraq lacks a tradable currency. 

The upcoming launch of housing loans through an electronic platform on February 2, the first phase of a railway development project, and the ongoing parliamentary discussions regarding the budget and accountability for governmental ministers. 

The analysis suggests that January is a pivotal month for Iraq, particularly concerning the anticipated rate change and approval of the budget.

• 💰 Currency Auctions Continue: Despite claims to the contrary, Iraq’s Central Bank continues to conduct daily currency auctions to fund imports.
• 🏠 Home Loans Launch: Iraq will begin accepting applications for housing loans starting February 2, potentially allowing foreign ownership.
• 🚆 Railway Development: The first phase of a railway project linking Baghdad and Baji is set to begin, emphasizing the need for a convertible currency.
• 🏛️ Parliamentary Accountability: A parliamentary movement seeks to hold ministers accountable for failures and corruption amid ongoing political tensions.
• 🔍 Budget Delays: The Iraqi budget for 2023 is still pending approval, which is contingent on changes to the currency rate.
• ⚖️ Personal Status Law: The Coordination Framework is advocating for the approval of a controversial law governing marriage and family matters.
• 📈 Critical January: January is highlighted as a crucial month for potential economic changes and developments in Iraq’s financial landscape.

Key Insights

• 📊 Importance of Currency Auctions: The Central Bank’s currency auctions are vital for Iraq’s economy, as they facilitate the import of goods. Despite misinformation, these auctions are ongoing, indicating the government’s need to fund its imports while operating within the constraints of a non-tradable currency. This system is crucial for maintaining economic stability and ensuring the flow of essential goods into Iraq.

• 🏡 Impact of Home Loans on Foreign Investment: The introduction of housing loans through an international platform is a significant step towards encouraging foreign investment in Iraq’s real estate market. By allowing foreigners to apply for home loans, Iraq is attempting to attract diaspora investment, particularly from the Iraqi community abroad. This move could have long-term implications for the housing market and economic growth.

• 🚧 Infrastructure Development as Economic Catalyst: The commencement of the railway project is a promising sign of infrastructure development in Iraq. This project is expected to create jobs and enhance connectivity within the country, which can stimulate economic activity. However, the success of such projects relies heavily on the availability of a convertible currency for payments to foreign contractors.

• 🏛️ Political Accountability and Governance: The push for accountability among ministers reflects an evolving political landscape in Iraq, where citizens and political factions are increasingly demanding transparency and responsibility from their leaders. This movement could lead to significant political changes and impact future governance.

• 📅 Budgetary Implications of Currency Rate Change: The ongoing delays in approving the 2023 budget underscore the interconnectedness between the currency rate and governmental financial planning. The anticipation of a rate change creates uncertainty in budget discussions, suggesting that the government is holding off on finalizing financial commitments until this critical economic adjustment occurs.

• 📜 Legislative Developments on Personal Status Law: The Coordination Framework’s efforts to advance the personal status law highlight the importance of legal frameworks in addressing social issues in Iraq. The law’s approval could have profound effects on family and social structures, particularly within the Muslim community, which could lead to both support and opposition from various factions.

• 🔍 January as a Pivotal Month: The emphasis on January as a critical month for Iraq’s economic future indicates that stakeholders should closely monitor developments during this time. Any changes in the currency rate or significant legislative approvals could have far-reaching implications for both domestic and international investors, influencing confidence in Iraq’s economic recovery and stability.