The Rising Economic Interplay: Iraq and Turkey, 30 SEPT
In recent times, the economic relationship between Iraq and Turkey has seen significant developments. These changes have radically altered the trade dynamics between the two nations. As of August, Iraq has risen to become the third-largest importer of Turkish goods. This ascent signifies a substantial shift in trade dynamics, pushing Iraq to the forefront of Turkey’s economic relationships.
Simultaneously, Turkey’s exports have experienced an increase, indicative of its growing economic strength and influence in the region. However, on the flip side, Turkey’s imports have seen a decrease, suggesting a shift towards greater domestic production or a change in consumption patterns. These movements in trade offer key insights into the evolving economic landscapes of both Iraq and Turkey.
The World Bank Group has been instrumental in supporting the Government of Iraq’s efforts to stabilize its economy, improve governance, and support the rebuilding of livelihoods. The organization works closely with partners in the international community to buttress economic reforms that strengthen the long-term economy. In September 2020, the World Bank released a Country Economic Memorandum, analyzing the constraints and drivers of growth, and recommending policies for more diverse and inclusive economic models.
In August 2021, the World Bank Board approved its new Country Partnership Framework (CPF) with Iraq for the fiscal years 2022-2026. The framework outlines the main development goals it will support in Iraq. It proposes a series of strategic interventions to help the country respond to the pandemic, reform the economy, and rebuild its human capital. The framework is organized under two pillars: improved governance and public service delivery, and private sector participation; and strengthened human capital.
In 2021, Iraq exported 1.61 billion USD to Turkey. The main products that Iraq exported to Turkey were gold, petroleum coke, and refined petroleum. Over the last 25 years, the exports of Iraq to Turkey have increased at an annualized rate of 17.5%, from 28.5 million USD in 1996 to 1.61 billion USD in 2021.
In 2021, Turkey exported 11.1 billion USD to Iraq. The main products that Turkey exported to Iraq were jewellery, wheat flours, and poultry meat. Over the last 25 years, the exports of Turkey to Iraq have increased at an annualized rate of 19.9%, from 119 million USD in 1996 to 11.1 billion USD in 2021. This growth signifies Turkey’s growing economic strength and its expanding influence in the region.
In 2021, Turkey’s exports rose by 12.9% to 254.2 billion USD, reaching the country’s highest level ever. This surge highlights a boost in business confidence in Turkey, making it an attractive trade partner for many nations.
Overall, the evolving economic relationship between Iraq and Turkey is a testament to the changing dynamics of trade in the region. As Iraq emerges as a significant importer of Turkish goods, and Turkey’s exports continue to rise, these shifts provide a fascinating glimpse into the economic interplay between these two nations. As these trends continue, they are expected to shape the broader economic landscape in the region in the coming years.
The Central Bank is considering adopting the currencies of India, the UAE, and Turkey for foreign transfers
The Central Bank is considering adopting the currencies of India the UAE and Turkey for foreign transfersThe Governor of the Central Bank, Ali Al-Alaq, said today, Saturday, that the bank is studying the adoption of the currencies of India, the Emirates, and Turkey in foreign transfers, while he confirmed that there is a response and compliance from the 14 banks sanctioned by the United States to the specified standards.
The Central Bank announces dispensing with external transfer: We will adopt…
The Central Bank announces the dispensation of external transfer: We will rely on licensed banks
Al-Alaq in an interview with the official news agency, followed by Network 964:
The Central Bank views the exchange rate as something directly related to the general level of prices in the country, and that the bank has succeeded in covering the needs of importers at the official rate.
Monetary policy succeeded in maintaining the general level of prices through the most important indicators of inflation, which witnessed a decline, and this is the main matter that the Central Bank focuses on in the success of its monetary policy.
Maintaining the general level of prices and low inflation indicate the success of the monetary policy, especially after real traders engaged in the conversion process at the official price, which gave reassurance in the conduct of foreign trade.
Electronic platform:
At the beginning of its work, the electronic platform witnessed many difficulties that led to the reluctance of some people to enter it, indicating that the implementation rate in the electronic platform has now increased from 20 percent to 95 percent, and this gave reassurance that entering the platform provides speed and safety.
Entering the electronic platform in the external transfer process saves all parties from the risks of exposure to local and international sanctions. We warn against some merchants who cannot work in an organized atmosphere and are looking for chaos. The Central Bank is working to contain this challenge in coordination with the government to besiege these groups that are being… Diagnosis and follow-up.
The Central Bank’s sales, 90% of which are for remittances and external transfers, are proceeding smoothly and at the official price (1320), but the problem lies in the cash side, which represents 10% of internal daily sales.
The ten percent rate is sufficient to meet the needs of travelers, but some are trying to dominate by withdrawing the amount allocated to travelers, which creates pressure and an increase in the cash price, and these parties have been identified as carrying out illegal and criminal operations.
Al-Alaq revealed the development process for the cash sales system allocated to the traveler within a system prepared by exchange companies, and it is being developed to fill the gaps, and does not accept repetition and the unreal traveler,” denying that there is a tendency to stop selling cash dollars to travelers, and that the Central Bank has no problem in covering requests. The correct and legitimate ones are within the categories (travelers – study – treatment – private transfers), as the bank provided this through financial transfer companies represented by (Western Union and Mini Karam).”
Direct transfer:
The electronic platform is now being gradually transitioned to direct transfer between the Iraqi Bank and the correspondent bank, mediated by an international auditing company, as the Central Bank has cut the 60 percent that does not pass through the platform, but rather is a direct transfer.
Next year, the Central Bank will permanently cease being an intermediary in the process, and the electronic platform will end next year and become direct transfer operations as internationally approved. This is a major shift that will put things on the right path, accelerate transfer operations, and intertwine relations with international banks.
The truth about Iraq losing 27 trillion:
The idea of linking the exchange rate to filling the general budget deficit is an inaccurate view, and that the central bank is responsible for determining monetary policy, determining the exchange rate within its existing indicators, and achieving the goal of monetary policy.
The calculation process for those who say that Iraq lost 27 trillion from the exchange rate change difference is wrong, and 30 percent of oil revenues do not enter the Central Bank, because the Ministry of Finance uses them for external payments, while the second part is that the exchange rate should not be linked to achieving balance. In the budget.
US Treasury:
During her visit to Iraq, the US Assistant Secretary of the Treasury praised the measures taken by the Central Bank to organize the external transfer process, implement compliance rules, combat money laundering and terrorist financing, and direct coordination between the Central Bank, the US Treasury and the Federal Bank, and there is very great American satisfaction in this context.
Sanctions on banks:
The Central Bank is conducting a review and audit process to diagnose violations against the 14 banks that were imposed restrictions and deprivation of obtaining the dollar, “as the Central Bank indicated the presence of a response and compliance from the 14 banks to the specified standards.”
The American side does not restrict demand for the dollar, and there is coordination regarding cash shipments through an annual agreement on the number of shipments and their dates.
The Central Bank prefers to use non-cash payment tools through the use of cards (Visa and MasterCard), which has recorded a significant increase over the past months, and this is a good indicator that reduces the focus on the use of cash, and reduces the hassle of checking with companies to obtain cash dollars.”
Regulating trade with Iran:
There are ongoing discussions to regulate the import process from the Iranian side in a way that does not expose Iraq to any problems by violating sanctions and agreements.
The Central Bank will reach a clear formula in regulating the trade process, especially since part of it is through barter.
There is an agreement to settle the debts incurred by Iraq from Iranian gas imports through a new method through which these amounts are paid.
Adopting new currencies:
There is work to adopt the UAE dirham, the Turkish lira, the Indian rupee, and the euro as part of the process of facilitating external transfer by opening direct outlets in the currencies of the countries we deal with.
The trade balance with India amounts to $3 billion, and there are also high numbers for imports from the Emirates and Turkey.
The Central Bank has reached advanced stages of understanding in adopting the currencies of these countries, which will facilitate the external transfer process.
Dinar support campaign:
The campaign to support the Iraqi dinar is multi-faceted and multi-party. Its goal is the sovereignty of the local currency in internal transactions instead of foreign currencies, which are being limited. There is a gradual transition process within the Prime Minister’s directive to limit dealing in the Iraqi dinar internally, and oblige companies to do so, a large percentage of which responded.
Industrial initiative and housing loans:
The industrial initiative has not stopped, but the amounts approved for it have been exhausted, with the volume of loaned initiatives amounting to more than 13 trillion dinars.
The Central Bank raised the interest on the housing initiative to 2 percent, which is a low rate compared to international countries.
The stated interest does not include complexes that have received previous payments, while it includes new complexes.
[via PDK] I am continuing to hear very positive stuff on expectations of a rate change. They are giving us dates from this weekend to sometime in the first week of October.
The Hydo Carbon Law...Its where they share money, profits, revenues from oil-natural gas etc…with the citizens of Iraq including the Kurdish region.
We have been told for many years this is a key piece. And Very soon after the HCL was implemented we were told that we would see the dinar value changes.
I have had some whales reach out to tell me they have a potential for weekend travels. A number of sources believe it’s this weekend and others think between the 5th and 12th of Oct...Just stay calm and know things are quickly moving.
Question: When they announce the new rate in Iraq- will we get the same rate when we exchange?
MarkZ Answer: I am told when we go to exchange and use one of the “qualifying banking centers” in other words has the staff with special training and the special verifying equipment…
I am told our rate is “pre-determined” and we don’t have to pay fees and get better service…all of those things.My bankers still believe there is a bonus to be gained in the rate offered to us because of the “Oil For Dinar” program…and they will be offering us a higher rate.
The Rising Value of the Dollar: A New Economic Dynamic in Iraq, 30 SEPT
The US dollar has recently seen a significant increase in value in the markets of Baghdad and Erbil, two of Iraq’s major cities. The surge in the dollar’s value is a phenomenon that has taken place not just in the stock exchanges but also in local markets across the capital, Baghdad, where exchange shops have raised their selling prices. The exchange rate reached a peak of 156,200 Iraqi dinars for every 100 dollars, a stark contrast to the previous day’s rate of 154,600 dinars for every 100 dollars. This remarkable rise in the dollar’s value is a nationwide trend within Iraq, stirring up concerns about its potential impact on the overall economy.
Central Bank’s Plan to Bolster Iraqi Dinar
While the surge in the dollar’s value is a cause for concern, it’s crucial to note that the Central Bank of Iraq has a new plan to strengthen the value of the Iraqi dinar against the US dollar. This plan includes measures such as reducing the US dollar to the Iraqi dinar exchange rate for travel or internet purchases from 1,470 dinars to 1,465. The bank also aims to help private banks strengthen their foreign currency reserves that are not in US dollars, specifically naming the Chinese yuan, the euro, the Emirati dirham, and the Jordanian dinar. There’s also a provision for selling foreign currencies in government banks for the purpose of travel, medical treatment, and study.
Despite the bank’s efforts, the potential implications of the rising value of the dollar are complex and far-reaching. For Iraqis who are paid in dollars, the devaluation potentially gives them more purchasing power. However, people paid in dinars may lose purchasing power since imports and exports are paid for in dollars. A devaluation also means imported goods become more expensive in the local currency. Given the economic hardships Iraq has experienced, these are critical factors to consider. As the value of the dollar continues to rise against the Iraqi dinar, the impact on the economy and the lives of ordinary Iraqis will become more apparent.
The Economic Challenges of Iraq
Over the years, Iraq has faced numerous economic challenges. Despite several landmark achievements, the country’s quest for economic independence has been riddled with internal divisions and economic uncertainties. The situation has been further compounded by external threats, such as legal and financial constraints imposed by Baghdad’s federal government and the threat of Iranian and Turkish attacks. As a result, the country has had to shift its dependency from foreign aid to oil revenues.
The Kurdistan Regional Government (KRG) has played a significant role in Iraq’s economic landscape over the years. The KRG has experienced its share of economic boom and bust cycles. However, it faces its own set of challenges, including internal divisions, weak institutions, and a lack of a clear vision for its future. The KRG’s economic development efforts have seen it attract significant local and foreign capital, and it has become an important regional trade route and destination. However, the KRG’s economic future is uncertain, given the current economic dynamics, primarily the rising value of the dollar.
The rising value of the dollar in Iraq is a significant economic event that could potentially impact the nation’s economy and the lives of its citizens. While the Central Bank of Iraq has plans to mitigate the impact of this shift, the overall implications are far-reaching and complex. As Iraq navigates these economic changes, close attention must be paid to the strategies used to strengthen the dinar and mitigate the impacts of currency devaluation. The outcome of these efforts will undoubtedly shape Iraq’s economic future.
