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STATEMENT OF THE IRAQ ECONOMIC CONTACT GROUP OF THE G7, EUROPEAN UNION AND WORLD BANK, 15 DEC

 STATEMENT OF THE IRAQ ECONOMIC CONTACT GROUP OF THE G7, EUROPEAN UNION AND WORLD BANK, 15 DEC

U.S. EMBASSY & CONSULATE
IN IRAQ

Emergency Information for American Citizens

By U.S. EMBASSY IN BAGHDAD

5 MINUTE READ

DECEMBER 15, 2023

Statement of the Iraq Economic Contact Group of the G7, European Union and World Bank

December 2023

On December 12, the Iraq Economic Contact Group (IECG) held the final meeting of 2023, co-chaired by Italy and the United States.  As friends and partners of Iraq, Canada, France, Germany, Italy, Japan, the European Union, the United Kingdom, the United States, and the World Bank commit to supporting Iraq in the implementation of a comprehensive and ambitious reform agenda, paving the way to sustainable and inclusive economic development.

The IECG is eager to strengthen its engagement with the Government of Iraq (GOI) through regular dialogue at both the political and technical level.  This engagement is crucial to streamline cooperation between the two sides, identify and support common goals, and support the GOI’s priority reform areas.  The IECG commends Prime Minister Mohammed Shiaa al-Sudani for appointing business and economics experts within his office and looks forward to collaborating with them.  

The IECG was encouraged by Prime Minister Sudani’s announcement of new economic reform initiatives throughout 2023 and the passing of a historic three-year budget that laid the foundation for implementation of the government’s reform agenda.  In October, Iraq gained membership to the European Bank of Reconstruction and Development (EBRD) – a move strongly supported by the IECG as the first step to unlocking new sources of investment and enhanced cooperation with other multilateral and bilateral financial facilities.  

In the past month, the government convened conferences on Public Private Partnerships (PPPs) and tax reform, including a new bank sector reform project with Rafidain Bank.  Further, the GOI recently announced the establishment of the Iraq Fund for Development (IFD) alongside the Development Road project, and the Prime Minister strengthened economic ties with regional partners.  The GOI’s efforts to expand the use of digital platforms for financial transactions, with electronic payment and other e-commerce mechanisms, represent important steps to minimize the informal economy and reduce opportunities for corruption.

Looking ahead to next year, the IECG welcomes further cooperation in support of Iraq’s economic and financial sector development, including Prime Minister Sudani’s policies to strengthen the dinar and oversee monetary policy.  Clear communication of new dinar policies during the transition period will help avoid adverse effects on Iraqi households and businesses as well as on development cooperation projects and foreign investments in Iraq. 

The IECG also stands ready to support Iraq’s next steps to becoming an EBRD Country of Operations, its journey toward World Trade Organization accession, and its potential partnership with the European Investment Bank (EIB).  EIB’s expertise in road, railroad, water and sanitation investments, climate action, environmental sustainability financing as well as urban transmission initiatives will accelerate key infrastructure measures and help facilitate a green transition. 

The IECG urges further attention in 2024 to address the deficit and public sector wage bill, measures that would improve fiscal resilience.  Timely budget execution will be critical to the GOI’s ability to sustain important infrastructure investment, particularly in expanding domestic power generation, distribution, and expansion of green energy.  Long-term sustainable economic development is contingent on a dedicated response to pressing climate and environmental challenges.  Sustained investment in water management and infrastructure is critical to counteract the debilitating impacts of climate change.

To accelerate private sector growth, the IECG encourages government action to identify and address the challenges faced by domestic and international business, including efforts to promote transparent and predictable regulations.  In this vein, we welcome further progress on the PPP, Companies, Industrial Investment, Customs, and Arbitration laws as well as timely implementation of the recommendations from the recent PPP and tax reform conferences. 

On January 1, Italy and the United States proudly hand over the IECG to incoming co-chairs France and the United Kingdom.  Under their leadership, the IECG will continue to support an ambitious reform agenda, promote sustainable economic development, and stand by Iraq’s side as a reliable friend and partner in 2024.

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"STATUS OF THE RV" BY DINAR IRAQ & DONG VIETNAM, 15 DEC

 STATUS OF THE RV

First I want to address some more weird news that I feel is not giving the entire picture of what is going on in Iraq with the financial reform process.

These articles can be deceptive if you didn’t already know better and read articles from the past that contradict them.

Today, Thursday (December 14, 2023), the Central Bank of Iraq announced the end of its meetings with the delegation of the Federal Reserve and the US Department of the Treasury in Dubai.

The meetings resulted in a number of agreements related to supporting the policies of the Central Bank of Iraq in its orientation to support Iraqi banks in establishing relationships with correspondent banks and the gradual transition of operations to enhance the advance balance of the accounts of these banks, and this is consistent with what the Central Bank of Iraq previously announced in its plan to gradually reduce from relying on the electronic platform to ending its work within the next year 2024 and limiting it to recording financial transfers for the purposes of control, auditing and analysis.”

According to the statement, the Governor of the Central Bank of Iraq, Ali Al-Alaq, confirmed that “the Central Bank is determined to support Iraqi banks, enhance their capabilities and prepare them to work in accordance with international practices,” while the statement explained that “it was agreed and approved by the above authorities to meet the requests of the Central Bank of Iraq for cash shipments for the year 2024″.

Meanwhile Iraqi Banking expert, Mahmoud Dagher, on Wednesday said it was impossible for the Central Bank of Iraq to prevent dealing in dollars in the country.

He said and I quote from the article – “The Central Bank cannot prevent dealing in the dollar.

There is nothing in the banking law or in the instructions of the Central Bank that supports this approach”

He claimed they have no right, and dealing in the dollar will continue as dealing with the dinar.

But what does this last statement really mean.

Does it mean dealing in dollars in the hands of the citizen or the banks?

I want add that as investors we read the CBI policy that will begin Jan 1st 2024 and it did not say that there would be no dollars used in Iraq.

What Ali al-Alaq did say as a new policy, is that the banks will still maintain accounts for depositors in dollars.

However, within the country of Iraq, if these dollars are withdrawn from the banks they will be converted to dinar.

This is the end result of the de-dollarization process of 2023.

So, in part Banking expert, Mahmoud Dagher is correct but in part is seems he is barking up the wrong tree in emphasizing to correct something that does not need correction.

The CBI policy was stated very clearly and he should go read it first before publishing such statements.

Such statements only add to the confusion in people’s minds.

We have to be careful in the translation from Arabic to English as meanings are also lost.

Then there is Economist Ziyad Al-Hashemi who said on Wednesday that the financing process for the Development Road Project has reached a dead end, after Iraqi efforts to obtain the investment financing necessary to launch this project faltered.

He added, the latest is the Turkish President’s efforts to persuade Qatar and the Emirates to invest in this project, which seems to have not led to a satisfactory result.

But we know that China has already invested billions into the “Silk Road” project, as we read these articles too in the recent past.

So, we must consider why Turkish, Qatar and Emirates investors do not, as this time, want to invest in this project.

It is not that the project “faltered” but rather they do not wish to compete with China.

Last week we read about the Central Bank of Iraq began covering retailers’ imports from Turkey with tens of millions of euros as an initial payment, in implementation of the banking arrangements agreement concluded with Turkey last week.

This period of news we read news about another country with international payment arrangements made outside of using the US dollar.

So recently the Governor of the Central Bank of Iraq, Ali Al-Alaq, met in Dubai with the Chairman of the First Abu Dhabi Bank Group, Hanaa Al-Rustamani.

During the meeting, according to a statement by the Central Bank, a copy of which {Al-Furat News} received, “it was agreed to launch financial transfer operations between the two countries and to finance trade and imports between Iraq and the United Arab Emirates in the UAE dirham currency (not the dollar) through the First Abu Dhabi Bank, as transfer operations in the UAE dirham began this day, Wednesday.” December 13.”

This is all good news for our investment.

Yes, this may be good for our reinstatement of the dinar process but de-dollarization can be very bad for the value of the dollar throughout the world.

Remember the dollar is the standard of median of exchange throughout the world.

It has helped stabilize the values of other currencies as it was the standard to which all other currencies gauged.

But with the massive debt caused by careless spending, especially during the Biden administration, the dollar is actually worthless with over 35 trillion of national debt.

It is only through the speculation and the petro-backing of the dollar called petro-dollars (selling oil in US dollars) that has kept the dollar a float though its high demand.

But this too the Biden administration seeks to kill, talking now in the latest Summit on so-called climate change, to get off oil as a standard energy supply just decades away.

What does this all mean for Iraq?

Well we already read multiple articles from Iraq pushing the U.S. to release their oil revenue funds from the US banks.

Next will come selling oil outside of the petro-dollar.

Trust me on this one it is coming.

However, one thing they do keep talking about if the reenacting of the Gold standard provisions for currencies.

Is this why the sudden de-dollarization we are witnessing taking place not just in Iraq, but in Iraq is this why they had to get off the sole de facto peg to the US dollar with the dinar?

So, there are multiple reasons why, what is happening in Iraq is happening.

It is just not all about the revaluation.

If it was then where is the currency swap out?

It is mid-December already.

Where are all the articles we were promised would happen with the re-education process to identify the newer lower denominations and explain to the citizens just how the swap out will work?

Then today out pops an article telling us the currency auctions will not end in early 2024.

My Conversation with my CBI Contact 12/13/23:

Recent talk about the disputes going on with the US forces and all the bombings.

This is important I was told.

It was confirmed to me that this is all a movement to rid Iraq once again of US forces.

There is lots of propaganda being told to the people about this to get pressure on the government to rid them of the US.

Remember too, the Iranian militia has remained in Iraq post ISIS war.

That was over 16 years already since the war ended (2007) and so many look at them now as Arabic, Moslum brothers compared to the western armed forces, at least this is what many Iranian Shia think.

Remember there are patriotic Shia and then there are Iranian Shia.

But even the citizens are afraid (mostly Sunni) of what will happen if the US forces do pull out entirely again.

Who will fill the gap this time as there will be a gap and the Iraqi forces are not strong enough yet.

It is like a double-edged sword.

This time, if the US does pull out, it is widely felt by the average citizen the Iranian Hezbollah militia forces and not ISIS the citizens will fear the most.

They walk the streets in their uniforms with arms.

They claim they are still here to protect the Iraqi people from ISIS.

But, my contact says this is just an excuse to occupy Iraq and a contradiction.

Like the US forces, but there are even more Iranians, they too are occupiers.

My contact does not understand why the US does not challenge them as occupiers too and put this issue on the table with the government.

Then we changed the subject and talked about the currency reform.

I asked about the impact of the confrontations with the US over their military stationed in Iraq.

I was told the situation it does impact the progress of the planned events for December as the committee was brought into a meeting with the leadership and told everything was now “on hold”.

But I know for a fact that January is the best and most opportune time to revalue and drastically change the program rate to an international rate on the global exchanges.

But the program rate is already on a pseudo-float within the country.

I asked what the next targeted steps where and I was told that the committee does not even know and were told just to standby and the CBI is going to try to “push” to continue as they are ready for the next step in the process.

I was told the IMF is negotiating the new peg for the dinar but to remember it impacts all countries in this new peg not just Iraq.

I was told this is close to being completed and should be done this week ending.

This lines us up for next week to begin the currency sway out, but they told me it is delayed until further notice.

So, at least we now have a timeline when they did plan it and still could do it based on what happens with the US bombing issue.

My contact did reiterate that the process now is irreversible” and must go forward.

The US had already given assurances they would not back out if the CBI moved ahead.

So all I can say is let’s sit tight and watch what does happen in the coming week.

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🔥Iraqi Dinar🔥Between $2 and $3🔥News Guru Intel Update IQD Value to USD🤑💵🤑🎉

"RV UPDATE" BY PIMPY, 15 DEC

  Pimpy  

 Question:  "Can Iraq get into the World Trade Organization with the currency exchange rate of 1310 to 1 US dollar?"  

One of the key requirements for joining the WTO is establishing a convertible currency at a "realistic exchange rate"...the exchange rate of 1310 to 1 USD raises concerns about the convertibility and stability of Iraq's currency... There is no specific threshold for what constitutes a "realistic" exchange rate...It has to be a stable currency which means... Iraq must have a stable economy...When 95% of your budget is totally relied on oil sales that is not a stable economy.  Iraq is going to have to build their private and public sectors...

Can Iraq go into the World Trade Organization with an exchange rate of 1310 dinar?  Yes...if the dinar is stable.

When this thing happens and it's gonna happen...we have no idea about 2024.  That doesn't mean it can't happen in 2024.  I'm anticipating a rate change happening in the first quarter as they get away from using the dollar and they use the dinar more, as they start doing business with these countries they did a currency swap with, the demand for dinar will increase and is it'll go up in value.

Sudanese: Economic reform is the gateway to financial and banking reform, 15 DEC

  Sudanese: Economic reform is the gateway to financial and banking reform

12/14/2023

The Prime Minister, “Mohamed Shiaa Al-Sudani,” said today, Thursday, that: “Economic reform is the gateway to financial and banking reform,” while noting that “the government is committed to providing the dollar at the official rate, and stressed its keenness to end the suffering Kurdistan employees due to the delay in their salaries” 

Al-Sudani said in a televised interview followed by “Al-Mutalaa” that: “Conducting the population census is the first step in implementing Article 140 of the Constitution. It was postponed to May 2024 after it had been scheduled.”

It was held this year due to the provincial council elections,” pointing out, “It is time to remove the outstanding problems between Baghdad and Erbil, which lie in the border crossings and the budget.” He added, “We went to borrow from the Ministry Finance to pay the salaries of Kurdistan Region employees, and we are in favor of finding a solution with a legal amendment that considers Kurdistan Region employees as equal to the rest of Iraq’s employees,” stressing that “the government is keen to end the suffering of the Kurdistan employees’ salaries crisis.”

He stressed on the part of Another, “Economic reform is the gateway to financial and banking reform, and the issue of the exchange rate requires this reform, and we are committed to providing the dollar at the official rate to merchants, investors, contractors, students, and travelers.”

He pointed out that “95 percent of our trade now passes through Through the electronic platform, there are those who circumvent the law and buy the dollar at the parallel price. Because he does not want to apply legal procedures.” He stressed, “We will not accept that the official dollar price is equal to the parallel price; Because this encourages smuggling.”

Regarding foreign trade, Al-Sudani said: “There is no problem on the Iranian side in dealing commercially with Iraq in the dinar or toman currencies.”

He continued: “The problem of commercial transfers to Turkey was solved by opening accounts in the Turkish lira.” He stressed that “food prices maintained their stability, despite the attempts of manipulators to speculate on the price of the dollar.”  LINK

"RV UPDATE" BY MARKZ, 15 DEC

  MarkZ

  [via PDK]  A lot has happened over the 14th and the 15th and more is expected to happen over the next couple of days. We have seen tremendous progress over the last few days…behind the scenes...I absolutely think we are finally here.

When we first got into this and looked at the Vietnamese dong we were hopeful it would come out around .30 to .36 cents. Which is still amazing. But I have not heard it was going to be that low.  I am still hearing it will be between $2 and $3.

  In Iraq:  “Central Bank achieves a new step in the right direction to regulate foreign trade.”  Also the CBI just wrapped up meetings with the US Treasury and the Federal Reserve about “Becoming International” and they are content with the changes they have made for Iraq to be fully recognized internationally. 

Most of my Iraqi people think we are within a couple of days. My banking people think we are within a couple of days. Just remember we don’t know the timing.  But I am super excited.