Iraq-Kurdistan Tensions Expose Fragile State of Nation’s Economy, 2 NOV

Iraq-Kurdistan Tensions Expose Fragile State of Nation’s Economy

In the heartland of Mesopotamia, where the Tigris and Euphrates rivers gave birth to some of the world’s first civilizations, modern-day governance continues its fragile dance. Amidst the economic and political tensions that have become the leitmotif of Iraq’s post-Saddam era, the latest act unfolds between the Federal Government of Iraq and the Kurdistan Regional Government (KRG). The plot: a delayed payment of 450 billion dinars to the Kurdistan Region’s bank account for the salaries of government employees.

A Dissonant Interlude

The KRG, which shoulders the responsibility of reimbursing public sector employees in the region, has long awaited a package of 700 billion Iraqi dinars from Baghdad. This recurrent delay in payments strikes a discordant note, undermining previous agreements crafted between the regional and central governments. The frustration is palpable, echoing through the corridors of power in Erbil, the capital of the Kurdistan Region.

In a previous attempt at harmony, the central government had dispatched 700 billion dinars to Erbil in September to cover salary payments. But, disputes between Erbil and Baghdad disrupted the financial symphony, halting the transfer. The encore: an agreement by the Iraqi government to transfer 2.1 trillion dinars to the Kurdistan Region to cover three months’ worth of unpaid salaries.

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Declining Dinar: A Crescendo of Concern

Superimposed on the salary delay discord is the concern over the depreciating value of the Iraqi dinar against the US dollar. The implications reverberate beyond the government and employees, affecting everyday life. Pensions are dwindling, the Iraqi market is trembling, and the public’s faith in the government and the central bank is eroding.

Some parliamentarians have sounded the alarm, calling for novel measures to stabilize the currency. A rapid decline in the value of the dinar in recent days has provoked criticism of the government and the central bank’s lackluster response to control the exchange rate.

The Banking System: A Fugue of Mistrust

A crucial element in resolving the currency crisis is restoring public confidence in the banking system. An estimated 85% of the issued monetary mass in Iraq currently resides outside the banking system, with people hoarding money outside of banks. The impact is profound: it hampers the role of banks in driving economic development through their lending policies.

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The Central Bank has issued a circular urging banks to simplify procedures and create incentives to attract depositors. However, this initiative faces a formidable obstacle – the overarching lack of trust in the banking system. Overcoming this skepticism is fundamental to encouraging people to deposit their money in banks.

One potential solution lies with the Deposit Insurance Company, established to guarantee public deposits in the event of a bank collapse. The company needs to enhance its performance, actively market its activity, provide guarantees to depositors, and distribute official papers explaining the deposit insurance policy.

Simultaneously, the fluctuation of the dollar exchange rate needs to be addressed. Stability is key to reducing chaos and mistrust.

Long-term Harmonics: Local Production and Twin Policies

For a long-term resolution, experts recommend supporting local production to reduce the demand for the dollar for import purposes. They also suggest creating a clear map of the relationship between the demand for hard currency and the capacity for increasing local production to cover these demands. This involves understanding import destinations and harnessing opportunities for local growth. Furthermore, aligning monetary policy with fiscal policy can control commodity prices and financial transfers, providing a stable rhythm to Iraq’s economic symphony.

In conclusion, the ongoing economic and political tensions between Baghdad and Erbil have resulted in delays in salary payments for government employees in the Kurdistan Region. The declining value of the Iraqi dinar against the US dollar further complicates the economic landscape. Stabilizing the economy and improving the value of the currency requires a symphony of measures, from restoring public confidence in the banking system to implementing long-term strategies that support local production.

https://bnn.network/breaking-news/economy/iraq-kurdistan-tensions-expose-fragile-state-of-nations-economy/

Delayed Salaries in Iraqi Kurdistan: A Crisis of Confidence, 2 NOV

 Delayed Salaries in Iraqi Kurdistan: A Crisis of Confidence

As the sun begins to rise in the Kurdistan Region of Iraq, the day holds a familiar uncertainty for the thousands of government employees in the region. A new month brings forth the same old question – will they receive their salaries on time? The Ministry of Finance, which recently declared that it would commence the distribution of monthly salaries from the first six days of each month, has been grappling with this issue for several months now.

A Recurring Delay

Initially, the salaries were delayed for eight months, and then it was extended to 37 days. The second payment for the month of August, which was supposed to be paid on time, has not yet been disbursed. The Ministry of Finance has stated that the delay is due to the lack of funds and the government’s inability to transfer the salaries. This situation has sparked frustration among government employees who rely on these salaries to meet their daily expenses.

From Social Media to Parliament

The collective voice of discontent has reverberated across the vast digital landscape of social media platforms and echoed within the hallowed halls of the parliament. Many employees have expressed their concerns about the financial difficulties they are facing due to the delay in salary payments. Members of parliament and local officials have also criticised the delay, describing it as a failure of the regional government.

Loans and Financial Constraints

Addressing the issue, the Ministry of Finance announced it would borrow 250 billion dinars each from the Rafidain Bank and the Rashid Bank to cover the salary payments. However, this amount is insufficient to cover the salaries of all government employees. The ministry has also mentioned that it is grappling with financial constraints, which prevent it from paying the salaries on time.

Impact on Livelihoods and the Economy

The delay in salary payments has had a significant impact on the daily lives of government employees in the Kurdistan Region. Many are struggling to pay their bills and provide for their families. Some have even resorted to borrowing money or selling their personal belongings to make ends meet. This situation has not only created a sense of uncertainty and frustration among the employees but has also had a negative impact on the local economy. With government employees struggling to meet their financial obligations, consumer spending has decreased, leading to a slowdown in economic activity.

Looking Ahead

The delay in salary payments is a stark reminder of the financial challenges facing the Kurdistan Region’s government. It highlights the need for immediate action to resolve the salary payment issue and ensure the well-being of its employees. More than just a question of financial mismanagement, it is a call to action for the government to reassess its priorities and put the well-being of its employees at the forefront. The future stability of the region lies in the balance, hinging on the government’s ability to resolve this issue and restore faith among its employees.

https://bnn.network/finance-nav/delayed-salaries-in-iraqi-kurdistan-a-crisis-of-confidence/

The End of Petrodollars: China's Groundbreaking Crude Oil Purchase with ...

"RV UPDATE" BY MNT GOAT, 2 NOV

 Mnt Goat  

 My contact from the CBI has told me...that January 2024 is their target and is the best most opportune time to reinstate the dinar.  In my last conversation with my contact I was toldthey were given the green light to begin the re-education criteria to teach the citizens about the newer lower denominations and how the conversion back to the lower denominations as they had before 2004 is going to take place...I am still being very hopeful for a January 2024 reinstatement...

 I...want to make it VERY, VERY clear to everyone that the IQD is NOT yet reinstated on FOREX...“NOT YET TRADING ON FOREX”. Yes, if you go to FOREX there is a benchmark rate for the IQD but it is a linked rate only, linked back to the CBI.  It is a page holder. Yes, this is still a very good thing and I don’t want to down play it either...The IQD rate is there...only in preparation for the future. But there is not yet any trading ability to buy or sell.

Article:  "NEW STATEMENT FROM OIL ON THE DRAFT OIL AND GAS LAW"  Quote:  “the government is committed to approving this law.” Within the current government session, and it is also within the government curriculum.”  This is of course excellent news for us... 

US Dollar Stages a Ballet with the Iraqi Dinar, 2 NOV

 US Dollar Stages a Ballet with the Iraqi Dinar

As the sun rose over the bustling markets of Baghdad on Thursday, the exchange rate of the US dollar against the Iraqi dinar took an upward leap. The dollar began the day at 162,250 dinars for every 100 dollars, a considerable upswing from Wednesday’s rate of 162,000 dinars. As the day unfolded, local exchange shops saw the selling price surge to 163,250 dinars, while the purchasing price hovered at 161,250 dinars for every 100 dollars, hinting at a mounting demand for the US currency.

A Tale of Two Cities

Meanwhile, in Erbil, the capital of the Kurdistan Region, the dollar’s narrative took a slightly different turn. The selling prices in banking shops settled at 161,700 dinars, and the purchase price at 161,600 dinars for 100 dollars, signifying a modest decline.

Global Shifts: The US Dollar’s Dance

While the US dollar’s dance with the Iraqi dinar played out, a parallel performance was unfolding on the global stage. The US dollar fell against most currencies on Wednesday, a seemingly counterintuitive response to Federal Reserve Chairman Jerome Powell’s statements, interpreted by investors as a hint that the central bank may be putting a pause on interest rate hikes. The Federal Open Market Committee (FOMC) left rates unchanged in the 5.25-5.50 range, where they have been since July. This, coupled with data revealing a slowing US economy, put the dollar on the defensive for parts of the session.

Reading the Iraqi Dinar’s Pulse

Against this backdrop, the Iraqi dinar’s dance with the US dollar can be read as a barometer of Iraq’s economic health. The country grapples with high inflation and a large fiscal deficit, factors that could be contributing to the rising demand for the US dollar. The inclination towards the US currency might be driven by a lack of confidence in the stability of the Iraqi dinar.

Global Implications and Future Projections

The decline in the US dollar can impact countries and sectors differently. It can benefit countries exporting to the US, making their goods more competitive. It also eases the burden of dollar-denominated debt for emerging market economies. Contrarily, it can lead to higher import prices and inflation in countries heavily reliant on imports. As for the future, a keen eye on the Federal Reserve’s stance, the health of the US economy, and the economic stability within Iraq will be critical in forecasting the dance of these currencies.

https://bnn.network/sports/us-dollar-stages-a-ballet-with-the-iraqi-dinar/

Iran’s Railway Extension to Iraqi Kurdistan: A New Chapter in Regional Diplomacy, 2 NOV

 Iran’s Railway Extension to Iraqi Kurdistan: A New Chapter in Regional Diplomacy

In a move that could redraw the economic and diplomatic contours of the Middle East, Iranian President Ibrahim Raisi recently announced an ambitious plan to extend a railway line from Iran’s Kurdistan Province to the Bashmakh border crossing in Iraqi Kurdistan. Made during the inauguration of the Hamedan-Sanandaj railway road in Sanandaj, the capital of Iran’s Kurdistan Governorate, the proposed project aims to enhance rail transport, facilitating passenger and goods transportation between Iran and the Kurdistan Region in Iraq.

Connecting Borders, Building Bridges

The proposed railway extension signifies a significant development in the economic and diplomatic relations between Iran and Iraq. It is poised to transform transportation links between the two regions, potentially boosting trade and economic cooperation. The railway line would offer an efficient and cost-effective mode of transportation for both passengers and goods, paving the way for increased cross-border trade and economic integration.

Iran’s Growing Regional Influence

The railway line extension also underscores Iran’s expanding influence in the region. By investing in infrastructure projects in Iraq, Iran is fortifying its economic and political ties with its neighbor. This strategic move unfolds at a time when Iran is striving to increase its regional influence and counterbalance the sway of other powers, particularly the United States.

A Diplomatic Dance: Kurdistan and France

In parallel, another diplomatic choreography unfolds as the Kurdistan Region in Iraq strengthens its ties with France. The President of the Kurdistan Region is planning a visit to Paris, a move that could further deepen bilateral relations. This development underscores the growing importance of the Kurdistan Region in regional politics and its growing recognition by major powers.

Challenges and Concerns

Despite these positive developments, the region is not without its challenges. The Baghdad Conference III, intended to convene regional and international stakeholders to discuss Iraq’s challenges, was postponed due to security concerns. This delay reflects Iraq’s fragile security situation and ongoing tensions among different factions and external powers.

Moreover, Iraq and Iran have engaged in discussions over shared water resources, highlighting the escalating importance of water resources in the region and the need for cooperation in addressing water scarcity and managing water resources effectively.

Economic Pivots

In the economic sphere, fluctuations have been observed in the USD/IQD exchange rate, closing higher in Baghdad but ticking lower in Erbil, reflecting the intricate economic situation in Iraq. In the oil sector, Russia’s LUKOIL has inked a significant agreement with Iraq to double the production of the West Qurna 2 oil field, one of the world’s largest. This pact could have a transformative impact on Iraq’s oil industry and its economy.

In conclusion, these developments underscore the complex geopolitical dynamics and intricate interplay of economic, political, and security factors shaping the region. The planned railway line between Iran and Iraqi Kurdistan, the strengthening diplomatic ties between the Kurdistan Region and France, and the discussions over water resources between Iraq and Iran all epitomize the evolving regional dynamics and the unrelenting efforts of different actors to enhance their influence and secure their interests.

https://bnn.network/world/iraq/irans-railway-extension-to-iraqi-kurdistan-a-new-chapter-in-regional-diplomacy/

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