Parliament moves to hold the governor of the Central Bank and bank managers accountable for the dollar crisis
Baghdad - Iraq Today:
The Parliamentary Finance Committee confirmed that next week bank managers and the governor of the Central Bank will be hosted to discuss the dollar crisis.
Committee member Mustafa al-Karawi said in a press statement that "the parliamentary finance committee intends to host the governor of the Central Bank and bank managers to discuss the dollar file and the crisis caused by its rise."
Al-Karawi added that "the hosting will include a discussion of the reasons for non-compliance with the reform packages and the measures taken earlier to control the dollar exchange rate." He pointed out that "the features of the new plans to control the dollar file will be determined after hosting those concerned in this matter."
Article VIII implicitly states no member may impose without the Fund's approval restrictions on the performance of payments and transfers related to international commercial transactions ...
Article 14 implicitly indicates if the member is prepared to accept the obligations (which we haven't quite seen yet)...contained in sections 2, 3 and 4 of Article VIII it says thus the agreement encourages the free movement of capital between countries and the transfer of balances between other members...
to facilitate the performance of international payments and work to create a stable exchange rate system which provides the appropriate foreign investments..
.Article VIII...is the freedom of movement of capital. If you don't have it and you're not released to get it, you're not going anywhere.
The Central Bank of Iraq, the government of Iraq, the tripartite budget of Iraq - 2023, 24, 25 they haven't spend any money yet...Why
?
Because they haven't adjusted their exchange rate yet. Do they need to? I think they really do...June 12th they passed the trig-part type budget. It's in the Gazette. There's no amendments to it.
If anybody has them, I like to see them...[Gurus] Jeff...Pimpy...Frank26 you guys are welcome to do that. Let's see if they made any amendments to their budget. I don't think they have.
Article: "The Iraqi Central Bank issues a warning to banks regarding dollar deposits."
A fresh edict from the central bank...Spelling out that the citizens have the right to redeem their deposits in the banks and that the monies are guaranteed and it is their inherent right to do so through or by the year 2024.
None the less the unprecedented crowds ensued...What is unusual is...the way the Central Bank exposed those [banks] that didn't have the money on hand were apparently found to be speculating with depositors funds in dollars. That is not good and there will be consequences.
The Central Bank is now going to take measures against banks that abstain from taking care of their obligations to the citizens.
Parliamentary Energy: Work is continuing towards passing the oil and gas law, 12 OCT
Suhaila Al-Sultani, a member of the Parliamentary Oil and Energy Committee, has confirmed that the government and political parties are working tirelessly to resolve the oil and gas law. They aim to overcome all existing obstacles and prioritize the public interest to move towards legislating the law within Parliament.
Al-Sultani stated that various political parties are currently collaborating to settle the oil and gas law matter and bring it to completion. They aim to present it to the House of Representatives for discussion, reading, and voting during one of the upcoming sessions.
During the meeting, representatives from the Al-Sadiqoun bloc agreed on the importance of passing this law. They believe that it will ensure a fair distribution of wealth to all Iraqis and protect this wealth from any external influences.
She clarified that despite the political confusion surrounding this law, it is still one of the most significant laws for the Iraqi people, and it is in the best interest of the public for it to be passed in Parliament through consensus among representatives.
The Central Bank of Iraq suspends the “Western Union” service for international financial transfer, 12 OCT
The Central Bank of Iraq has suspended the Western Union service for international financial transfers until further notice.
The company has recently announced that it has suspended the Western Union service, effective from 10-12-2023. This decision was made in compliance with the directives issued by the Central Bank of Iraq. The suspension is temporary and has been put in place to enable the implementation of modern mechanisms and technologies to ensure that financial transactions comply with international best practices and the guidelines of the Central Bank of Iraq.
The company’s customers will be notified immediately upon relaunch of the service.
Last July, the US Treasury Department imposed sanctions on 14 Iraqi banks as part of a crackdown on Iran’s use of the US dollar for transactions.
Last September, the Governor of the Central Bank of Iraq, Ali Mohsen Al-Alaq, made an announcement that the bank will no longer be conducting “foreign transfers” from next year. Additionally, the bank has also decided to restrict internal commercial transactions to dinars instead of the US dollar, except for those transactions that are meant for travelers.
It’s worth noting that the Central Bank has recently implemented a new foreign currency auction mechanism that complies with the requirements and conditions set by the Federal Bank. The new mechanism aims to monitor the dollar and prevent any attempts to smuggle it out of the country. This has created high expectations among people, and everyone is eagerly waiting for its impact
[via PDK] Question: What is your gut saying right now Mark? My gut is screaming – right now!! I’m looking at all these diversions, and my gut is still screaming we are right on top of this thing…and that we are going at any moment…maybe even this week.
This is a big one and has got to have the US scrambling right now. “Al-Sudani confirms Iraq’s readiness to join the BRICS group” Why is this important? Iraq is signaling to the US they have a “PLAN B” that if they don’t let this go they can go without you. The US is holding billions of Iraqi dollars…and at some point they may just write those billions off so they can have freedom. I believe the US is now on a time schedule…they only have so much time left before Iraq joins the BRICS nations and no longer needs the US.
To me this is a huge story.
We do have people from the UN in Iraq today. “UN Security council to discuss Iraq: budget, security and human rights on the agenda” They are telling us how well the discussions went. They say Iraq is making great progress.
Comment: I think the US is holding up the process. MarkZ: I think they were…I don’t think they are now. I think they desperately need it now...guess what the US desperately needs right now for stability? They need Iraq to RV.
The citizen wonders: When will exchange rates be controlled, 12 OCT
In general, the average citizen does not have a direct interest in the dollar or its associated exchange rates. The majority of the population consists of employees, retirees, earners, those covered by social protection, the unemployed, those with special needs or those who are unable to work, and most of them manage their livelihoods with the dinar. They receive salaries, wages, subsidies, or other methods of payment, which are often limited and may not meet the requirements of subsistence living. Although the dollar has been involved in important events, such as smuggling, waste, and money laundering operations, most citizens have nothing to do with it.
The Central Bank has opened the currency window to protect people from dollarization, and through it, business owners can trade dollars by importing goods that constitute a significant percentage of consumption. This means that the majority of Iraqis can obtain their needs for local and imported goods and services at almost stable prices because the dollar is insured for those who need it. Therefore, the poor can give up the dollar in exchange for the relative stability of prices in the markets. The dollar is only necessary for specific cases, such as travel, study, immigration, or treatment.
The government led by Mr. Al-Kadhimi triggered a crisis in the livelihoods of the people by changing the exchange rates to 1,450 dinars per dollar in agreement with the Central Bank and some politicians, without adequate measures to compensate for the decrease in purchasing power and the consequent rise in prices, which affected many categories of people. This caused great difficulties for those with limited income and the destitute, forcing them to adjust to the new reduction in dinar prices without any change in the salaries of employees and retirees.
The change also led to the manipulation of prices by some unscrupulous sellers and exploiters, even though the exchange rates were only 1,480 dinars per dollar on the black market. When the Al-Kadhimi government was replaced, many hoped for a return to the previous exchange rates. The new government, led by Mr. Sudan, initiated a series of reforms aimed at improving the lives of its citizens and decided to reconsider the exchange rate, setting it at 1320 dinars per dollar. While this still exceeded the previous rate, it was seen as a positive step towards reducing prices and achieving a balance between family income and spending requirements.
It is believed that the increase in oil prices will lead to an improvement in living standards. Last September, the country earned $9.494 billion from the sale of oil. However, it is puzzling how the price of eggs could jump from 6 to 8 thousand dinars within days despite the country’s huge revenues. This is especially concerning as the salaries of employees and retirees have not increased in dinars, and workers in the private sector are experiencing a decrease in income due to market downturns and economic recession.
The government and the Central Bank have implemented measures to control the dollar exchange rates on the black market, however, the situation has not improved and is in fact worsening. The current exchange rate is 1640 in the markets, compared to 1320 for the official rate. This means that the Central Bank is selling more than 240 million dollars a day to meet import needs.
It is reasonable to question the effectiveness of these sales, as the logic of reason suggests that if the markets require 50 million dollars to meet the demand for the dollar, then where is the impact of the sales, given that remittances amount to ten times the demand in black? Furthermore, where do the billions go when the state covers travel needs and other expenses? It is not reasonable for these millions to be smuggled in cash while the state has a constitution, security, judicial and regulatory apparatus, and spends trillions on them. This raises numerous questions, and the citizen should not be blamed for asking them. There are concerns that the price will exceed 1,700 within days and may cross the 2,000 dinar barrier in the coming weeks.
There is growing concern over the rise in the dollar exchange rate. This is due to expectations of stability being dashed again and again, as has been the case since February. Despite economic advisors’ predictions, the situation has not improved. Just yesterday, the Prime Minister’s Advisor for Investment Affairs predicted that stability in the dollar exchange rate against the Iraqi dinar in the parallel market would return within two months. He noted that what should have been achieved in six years is now being attempted in just one year, which has significantly impacted the dollar exchange rate.
He also highlighted widespread corruption within certain banks and banking companies, which has led to the smuggling of dollars. When asked if the price of the dollar will continue to rise, the answer was yes, it may continue for a while. However, it is expected that within a month or two, the exchange rate will begin to decline due to 70% of trade in Iraq moving to the electronic platform.
In a related development, the State of Law coalition has proposed a new government project that involves the adoption of currencies other than the dollar for trade exchange with three countries, including China, Iran, and Russia. A leader in the coalition explained that if implemented correctly, this project could help reduce the demand for dollars in Iraqi markets.
He stressed that the current rise in the dollar exchange rate in Iraq cannot be reduced by any party, including the Central Bank, as long as the demand for it remains high. Regarding America’s position on this new project, he clarified that the US has nothing to do with it. It does not matter whether or not America agrees with the project to create a currency other than the dollar for Iraqi commercial transactions, as long as there is a will from Iraq and the other countries involved.
If we rely on the statement that assumes prices will be controlled after two months or on the statement that introduces a new plan for trading in non-dollar markets, without specifying its duration, we must ask ourselves: How can the average citizen cope with the dinars he receives or earns? Does he manage his finances day by day or month by month? Who can guarantee that the prices of goods and services will not continue to rise when there is no hope of increasing salaries for employees and retirees in the near future?
Any increase in salaries is directly linked to the budget that was prepared for three years, and it suffers from an annual deficit of more than 60 trillion dinars. Furthermore, our economy is highly dependent on oil exports, the value, quantity, and prices of which are subject to international variables and events that are becoming increasingly complex. Therefore, we need practical solutions to answer all these questions. When we ask these questions, our goal should not be to give in to despair but to formulate actual solutions to what is happening and not to fill pockets with wishful thinking.