Tuesday, August 20, 2024
Iraq Launches National Development Plan 2024-2028: SEARCHING SUSTAINABILE GROWTH AND STABILITY BY DINAR REVALUATION, 20 AUGUST
Iraq Launches National Development Plan 2024-2028
On August 20, 2024, Prime Minister Mohammed Shia Al-Sudani unveiled Iraq's ambitious National Development Plan (NDP) for the period 2024-2028. The plan, launched during a significant ceremony, represents a major milestone in the nation's progress towards sustainable development and economic reform.
Objectives and Collaborations
The NDP was developed as a collaborative effort between Iraq's Ministry of Planning and the United Nations Development Programme (UNDP), with support from the United States Agency for International Development (USAID). Its objectives are multifaceted, encompassing economic growth, infrastructure enhancement, social service improvements, environmental conservation, and sustainable resource management.
Strategic Direction and Partnerships
Dr. Muhammad Ali Tamim, Deputy Prime Minister and Minister of Planning, highlighted the plan's vision based on utilizing state capabilities and private sector involvement, promoting knowledge and technology, and building a social market economy. He also emphasized the commitment to reform policies and international cooperation, expressing gratitude to UNDP, USAID, civil society organizations, and the private sector for their support.
UNDP and USAID's Role
Auke Lootsma, UNDP Iraq Resident Representative, underscored the significance of the NDP launch as a testament to the collaborative efforts between the Ministry of Planning, UNDP, and USAID. This partnership is seen as a blueprint for Iraq's strategic direction and long-term prosperity.
Challenges and Opportunities
Inequality and Social Protection
A concurrent strategy, the Iraq National Strategy to Prevent and Reduce Inequalities in the World of Work for the Years 2024-2028, aims to address inequality in opportunities, wealth, outcomes, and treatment. It prioritizes comprehensive social protection, expanding coverage and ensuring access to social protection floors, and promoting gender equality in the workplace.
Economic and Educational Focus
During Prime Minister Al-Sudani's visit to the United States, there was a focus on economic, educational, and people-to-people domains, demonstrating Baghdad's desire to diversify its relationship with the U.S.
Security and Cooperation
The Higher Military Commission (HMC) was established to assess the ISIS threat and the operational environment, aiming to transition from the anti-ISIS coalition mission to bilateral security relations between Iraq and the United States.
Financial and Social Reforms
Iraq has embarked on significant reforms in banking and finance, including the launch of an electronic platform for foreign currency sales, the establishment of an Iraq Fund for Development, and the passing of a new social security law.
Regional Infrastructure and Natural Resources
Iraq's Development Road Project, a regional infrastructure initiative, aims to leverage the country's natural resources effectively and responsibly, reducing energy waste and enhancing energy independence.
Conclusion
The launch of Iraq's National Development Plan 2024-2028 marks a pivotal moment in the country's efforts to advance its development agenda. With a focus on economic, social, and environmental objectives, the plan aims to lay the foundation for sustainable growth and stability, building on partnerships with international organizations and the private sector.
SOURCES:
https://www.iraq-businessnews.com/tag/national-development-plan-ndp/
https://www.usip.org/publications/2024/04/baghdad-ready-new-chapter-us-iraq-relations
"THIS IS NOT A POSSIBILTY THIS IS A FACT!!! BY FRANK26, 20 AUGUST
KTFA
FRANK26: "THIS IS NOT A POSSIBILTY THIS IS A FACT!!!"...........F26
8/18/2024
Baghdad - WAA - Nassar Al-Hajj
The Prime Minister's Advisor for Financial Affairs, Mazhar Mohammed Salih, clarified today, Sunday, what is being circulated in some media outlets regarding the possibility of using the dinar instead of the dollar in oil sales.
Saleh said in an interview with the Iraqi News Agency (INA): "The adoption of the dinar in pricing oil, or what is called (petro dinar), especially when the national currency is not one of the international reserve currencies, requires the availability of foreign reserve currencies or gold, as Russia did when it bought Russian oil with gold-backed rubles, which caused problems that we will discuss later."
He added that "these foreign reserves must be available (as a necessary condition) and operate according to a high standard of efficiency that guarantees the stability of the exchange rate linked to oil (the petro dinar) in order to hedge against oil price fluctuations to ensure the stability of the exchange rate (the petro dinar) itself from the beginning."
He added that “linking oil sales to the dinar on a fixed basis with oil prices instead of the foreign reserves base means linking the dinar to the oil asset cycle first, and that oil is sold according to global oil prices. If the exchange rate of the dinar (petrodinar) against the (petrodollar) is fixed, for example, and oil prices fall, then the demand for the dinar for accounting purposes will certainly fall, and the dinar will be exchanged for oil in larger quantities and the demand for the (petrodinar) will be lower, and vice versa.”
He pointed out that "any deviation between oil prices (petrodollar) and the exchange rate (petrodinar) according to international market data will be considered a cost that requires compensation by paying fewer dinars or collecting a higher dinar in the opposite case," indicating that "international reserve currencies are foreign currencies held by central banks and global financial institutions as part of their cash reserves. These currencies are used in international transactions and settling debts between countries, and are a standard for international payments and facilitating global trade."
He explained that "Russia suffered a lot when it priced its exported oil in rubles (petrorubles) and the ruble is a non-reserve currency and committed to a value for the ruble that was initially denominated in gold to ensure the stability of oil revenues. Here (petrorubles) were subject to two asset cycles at the same time (which complicated the scene of selling oil in local currency and stabilizing the value of the petrorubles)."
He pointed out that "the first cycle: is the result of the impact of what is called the gold assets cycle and its impact on the value of the (petroruble) or the local currency denominated in exported oil, while the second: is the oil assets cycle, and its impact on the value of a barrel of oil outside the global price and the reflection of that on oil revenues priced in that currency."
He stressed that "the two cycles are asset cycles that are linked and contradictory at the same time on the value of (the currency priced in the exported oil, such as the petroruble), which made pricing Russian oil in rubles as a local currency and according to the data of the global oil market a very complex issue."
He added that "the principle of using the dinar as a local currency in international oil exchanges (petrodinar) is not without many challenges, which is why those potential challenges must be carefully considered, especially the issue of the flexibility or stability of the value of the (petrodinar) itself to change and fluctuation, especially since we in the oil market are not price makers in it, but rather price takers . "
He noted that "the global oil market will control the fluctuation of the local currency (petrodinar), in addition to the importance of international recognition of it, and the financial infrastructure necessary to support such operations of (petrodinar), in other words, the strategy of relying the value of the currency directly on oil exports may make the value of the local currency vulnerable to fluctuations in the global market."
Saleh added that “the proposal to sell oil in dinars as a local currency must take into account an important theory in global trade called the Law of One Price, which is an economic concept that assumes that the same commodity must be sold at the same prices in all markets when the price is expressed in the same currency, provided that there are no transportation costs or trade barriers such as customs tariffs and others. The Law of One Price is the basis for many economic and trade models, and the theory is based on the assumption that markets operate efficiently.”
He added: “The single price theory is the basic path to understanding the pricing mechanism in foreign exchange markets, as the theory seeks to explain that currency exchange rates always reflect the difference in prices between two countries, and when oil is priced in dollars (petrodollars), the exchange rate of the dinar (petrodinar) should be consistent with oil prices without fluctuation and at the same time consistent with the (petrodollars) and also steadily, and these are two issues that are difficult to control because they are external international factors that determine the value of the local currency so that it operates regularly and in a stable price compatibility with the oil market and international foreign currencies at the same time.”
“For example, if a barrel of oil is sold in the United States at $76 and in Europe at 72 euros, the single price theory predicts that, taking into account the exchange rate between the dollar and the euro, the price of a barrel of oil should be equal after adjusting the currency, provided that there are no transportation costs or trade barriers. This requires that the value of oil sold to Europe and America be consistent with the fluctuations in currency prices in order to ensure that the single price theory is in place. Thus, adopting the local currency in global trade is a very complex issue to ensure the stability of oil prices consistent with the value of the Iraqi dinar (petrodinar), especially in a fixed exchange rate system (exchange rate), unless discounts are granted or differences are charged in oil marketing operations or floating (petrodinar). Then, for example, the Oil Marketing Company (SOMO) will play a dual role in oil and monetary policies, whether in the field of oil pricing or pricing the oil dinar exchange rate (petrodinar),” he continued.
He added: "The strength and stability of the Iraqi dinar will remain linked to the factors of real growth and diversity in the national economy, in addition to achieving an appropriate surplus in the current account of the balance of payments, and linking the national currency to a basket of foreign currencies that provides stability in the value of the dinar itself. In light of the above, introducing mechanisms for stabilizing the dinar exchange rate into a single rentier economy exclusively based on the oil dinar is an economic trend with ambiguous results and is very vague, in addition to entering the (petrodinar) system, which requires risks (the aforementioned single price theory) to ensure its stability in light of the fluctuations in the oil assets cycle and a single rentier economy, not to mention not knowing the adopted exchange system (petrodinar). Will it be a fixed exchange system supported by foreign reserves or will it be a flexible exchange system in which the (petrodinar) changes with the change in oil prices? These are paths that have no answers on the ground and are really very ambiguous."
########
Government advisor explains the possibility of using the dinar instead of the dollar in oil sales
8/18/2024
Baghdad
The Prime Minister's Advisor for Financial Affairs, Mazhar Mohammed Salih, clarified today, Sunday, what is being circulated in some media outlets regarding the possibility of using the dinar instead of the dollar in oil sales.
Salih said in an interview with the official agency: "The adoption of the dinar in pricing oil, or what is called (petro dinar), especially when the national currency is not one of the international reserve currencies, requires the availability of foreign reserve currencies or gold, as Russia did when buying Russian oil with gold-backed rubles, which caused problems that we will come to later."
He added that "these foreign reserves must be available (as a necessary condition) and operate according to a high standard of efficiency that guarantees the stability of the exchange rate linked to oil (petro dinar) in order to hedge against fluctuations in oil prices to ensure the stability of the exchange rate (petro dinar) itself from the beginning."
He added that "linking oil sales to the dinar on a fixed basis with oil prices instead of the foreign reserves base means linking the dinar to the oil asset cycle first, and that oil is sold according to global oil prices. If the exchange rate of the dinar (petrodinar) against the (petrodollar) is fixed, for example, and oil prices fall, the demand for the dinar for accounting purposes will certainly fall, and the dinar will be exchanged for oil in larger quantities and the demand for the (petrodinar) will be lower, and vice versa."
He pointed out that "any deviation between oil prices (petrodollar) and the exchange rate (petrodinar) according to international market data will be considered a cost that requires compensation by paying fewer dinars or collecting a higher dinar in the opposite case," indicating that "international reserve currencies are foreign currencies held by central banks and global financial institutions as part of their monetary reserves. These currencies are used in international transactions and settling debts between countries, and are a standard for international payments and facilitating global trade."
He explained that "Russia suffered a lot when it priced its exported oil in rubles (petrorubles) and the ruble is a non-reserve currency and committed to a value for the ruble that was initially denominated in gold to ensure the stability of oil revenues. Here, the (petrorubles) were subject to two asset cycles at the same time (which complicated the scene of selling oil in local currency and stabilizing the value of the petrorubles).
He pointed out that "the first cycle: is the result of the impact of the so-called gold asset cycle and its impact on the value of the (petrorubles) or the local currency denominated in exported oil, while the second: is the oil asset cycle, and its impact on the value of a barrel of oil outside the global price and its reflection on oil revenues priced in that currency."
He stressed that "the two cycles are asset cycles that are interconnected and contradict each other at the same time on the value (of the currency priced in exported oil such as the petrorubles), which made pricing Russian oil in rubles as a local currency and according to the data of the global oil market a very complex issue."
He added that "the principle of using the dinar as a local currency in international oil exchanges (petrodinar) is not It is free from many challenges, which requires careful consideration of those potential challenges, especially the issue of the flexibility or stability of the value of the (petrodinar) itself to change and fluctuation, especially since we in the oil market are not price makers in it, but rather price takers.
He noted that "the global oil market will control the fluctuation of the local currency (petrodinar), in addition to the importance of international recognition of it, and the financial infrastructure needed to support such operations from (petrodinar), in other words, the strategy of relying the value of the currency directly on oil exports may make the value of the local currency vulnerable to fluctuations in the global market."
Saleh added that "the proposal to sell oil in dinars as a local currency must take into account an important theory in global trade called the Law of One Price, which is an economic concept that assumes that the same commodity should be sold at the same prices in all markets when the price is expressed in the same currency, provided that there are no transportation costs or trade barriers such as customs tariffs and others, as the theory of one price here is the basis for many economic and commercial models and the theory is based on the assumption that markets operate efficiently."
He added: “The single price theory is the basic path to understanding the pricing mechanism in foreign exchange markets, as the theory seeks to explain that currency exchange rates always reflect the difference in prices between two countries, and when oil is priced in dollars (petrodollars), the exchange rate of the dinar (petrodinar) should be consistent with oil prices without fluctuation and at the same time consistent with the (petrodollars) and also steadily, and these are two issues that are difficult to control because they are external international factors that determine the value of the local currency so that it operates regularly and in a stable price compatibility with the oil market and international foreign currencies at the same time.”
“For example, if a barrel of oil is sold in the United States at $76 and in Europe at 72 euros, the single price theory predicts that, taking into account the exchange rate between the dollar and the euro, the price of a barrel of oil should be equal after adjusting the currency, provided that there are no transportation costs or trade barriers. This requires that the value of oil sold to Europe and America be consistent with the fluctuations in currency prices in order to ensure that the single price theory is in place. Thus, adopting the local currency in global trade is a very complex issue to ensure the stability of oil prices consistent with the value of the Iraqi dinar (petrodinar), especially in a fixed exchange rate system (exchange rate), unless discounts are granted or differences are charged in oil marketing operations or floating (petrodinar). Then, for example, the Oil Marketing Company (SOMO) will play a dual role in oil and monetary policies, whether in the field of oil pricing or pricing the oil dinar exchange rate (petrodinar),” he continued.
He added: "The strength and stability of the Iraqi dinar will remain linked to the factors of real growth and diversity in the national economy, in addition to achieving an appropriate surplus in the current account of the balance of payments, and linking the national currency to a basket of foreign currencies that provides stability in the value of the dinar itself. In light of the above, introducing mechanisms for stabilizing the dinar exchange rate into a single rentier economy exclusively based on the oil dinar is an economic trend with ambiguous results and is very vague, in addition to entering the (petrodinar) system, which requires risks (the aforementioned single price theory) to ensure its stability in light of the fluctuations in the oil assets cycle and a single rentier economy, not to mention not knowing the adopted exchange system (petrodinar). Will it be a fixed exchange system supported by foreign reserves or will it be a flexible exchange system in which the (petrodinar) changes with the change in oil prices? These are paths that have no answers on the ground and are really very ambiguous."
🚨Iraq HCL Done & Completed!!! BY REINALDO JC, 22 NOV
Reinaldo JC @SmoothRey Iraq HCL Done & Completed!!! According to the Acting Minister, Erbil and Baghdad have now reached an agreemen...
