Frank26: "THE MONETARY REFORM EDUCATION IS LOUD EVERY DAY IN IRAQ!!!".......F26
The Sudanese advisor details the government measures to curb the dollar
12/28/2023
The financial and economic advisor to the Prime Minister, Mazhar Muhammad Saleh, on Thursday, detailed the government measures that contributed to curbing the dollar’s momentum.
Saleh told {Al-Furat News} that: “Credit cards, with their high flexibility in use, have provided a direct role in providing easy payments in foreign currency for travel purposes.” He added, "The demand for foreign exchange was also met by withdrawing from citizens' dollar accounts after banks were allowed to import dollars from foreign foreign markets in cash for this purpose."
Saleh pointed to “trade regulation with neighboring Turkey to finance trade in the Turkish lira through solid banking channels,” considering all of these factors as “positive that have contained the noise of the illegal parallel exchange market.”
He continued, "In addition to the role of economic policy in enabling the state's commercial arm to provide an additional commodity supply with stable prices, by adopting four additional baskets to provide basic commodities and market support supplies financed at the official exchange rate of 1,320 dinars per dollar."
Saleh described this policy as “price defense that led to a decline in annual inflation growth to 3.7% currently, after that annual price growth was about 7% in the accounts at the beginning of the year.”
I was able to talk to my CBI committee member contact yesterday and I will review the content of our conversation with you today, what was said and why they put the project to delete the zeros on a temporary hold.
So, these past weeks we have read multiple articles on the decline of the dollar against the dinar and the official CBI rate. These articles tell us it won’t be much longer until the dollar issue is resolved. We all asked ourselves if this might be the reason for the delay. So, in my call to Iraq I asked this question.
I was told this is the issue involved in the holdup. This is exactly what they needed to see in the decline of the parallel market rate as it was holding up the final blow to the dollar and to allow them to continue on with the next steps in the process to get to the reinstatement.
I asked how close does the parallel black market rate of the dollar have to get to the official CBI rate of the dollar?
I was not given an exact figure because even my contact did not know. Of course a very close almost exact would certainly be the target, as common sense must prevail in our thinking on this too. But having told this to me, I was also told that it is not long before the decline is completed with the measures as the CBI in now making with agreements with many of Iraq’s trading partners and future trading partners to use their foreign currency in making trade payments in place of the dollar. I was told this is how Iraq used to do business prior to the sanctions.
I was also told that in the coming months, we will witness what was described as a rapid decline in the parallel market, suggesting that it will reach a level close to the official rate soon then at this time an American green light to release the currency reform process to move ahead again will be given. Of course, this is the expectation of my CBI contact and they know much better than I what is really going on in these meetings.
But here is the most interesting news from our standpoint. I was then told that at some point when the parallel market is stabilized to the official CBI, they plan to conduct one more rate change to the program rate, closer to 1000 from 1320 and then monitor it for inflation for a period of time and then if all goes well, initiate the swap-out of the three zero notes for the newer lower denominations. We all should know comes next after this step is completed……hint…hint…
Frank26: "THE 2023 BUDGET IS BEING IMPLEMENTED"..............F26
The Minister of Finance directs the completion of funds and depositing them in the accounts of the spending units of the ministries and governorates
12/28/2023
Minister of Finance, Taif Sami: The continuation of the working hours of employees of the accounting and budget departments, the Central Bank of Iraq / the Department of Information Technology and Computers, and the branches of the Rafidain and Rasheed banks on the next Friday and Saturday, to complete the transfers for investment projects and include the salary differences and the associated transfers on current expenses, in addition to completing and releasing financing from...
It is accepted by the Accounting Department and deposited in the accounts of the spending units of ministries, governorates, and entities not affiliated with a ministry, in the branches of the relevant banks, including the Central Bank of Iraq. LINK
Many of my blog readers ask me: Why didn’t Iraq just take the needed steps right from the very beginning in January 2023 to put together foreign currency swap deals with other countries to pay for imports.
This way they wouldn’t have had to take an entire year to combat the parallel dollar market. To answer this question I must go a bit deep. I hope you don’t mind because I know many of you have limited attention spans.
I will tell you why. It is because since the sanctions, the US has held a strong grip on their economy and remember they still have to authorize the dollar shipments to Iraq to satisfy the demand for the dollar. This is like “blackmail” to get Iraq to go along with them even though they are now out of sanctions. So, in 2022 the US Treasury contracted with a software developer firm to build the “electronic platform”. This new platform was rolled out in January 2023 to audit and monitor the currency auctions. This was the start of serious de-dollarization. But who initiated it? Was it the US or Iraq. It was the U.S. and so Iraq has to follow the lead and cooperate this effort and move at the pace suggested by the US Treasury, who was there to help in the process.
Of course, this process of obtaining dollars is now being moved away from the CBI requesting them from the US Treasury to the private banks requesting dollars through inter-banking practices, as other non-sanctioned countries traditionally already operate under. This is all so very good!
I also need to point out, as told to us in one of the recent articles in today’s news, is that the government did not spend the budget in 2023 so that it would not be exploited in the local elections by parties and candidates at the time. In 2024 Iraq is calling on the government to start spending the budget more than it was spending in 2023 in order to be a facilitating factor for the market and exchange rate to stabilize.
So, there are many forces working against the parallel black market and will only help to stabilize the dinar official rate yet more. These forces will prevent not only large fluctuations of the dinar against the official CBI rate but also to bring the rate to a stable point to the official CBI rate. I will recap these points of these many factors they are now using:
1.Emphasising the dinar as the “National Currency” and will be the only currency used in country. There will be only one currency in Iraq and it is the Iraqi dinar;
2.Banks allowed now to import cash blocks of foreign currencies;
3.In addition to the recent measures and the consensus with the US Federal to agree to deal with the Turkey lira, UAE dirham, the euro, the Chinese yuan and the Indian ruppe, all contribute to reducing the exchange rate.”
4.We are told the dollar exchange rate will stabilize with the broader launch of the budget in 2024;
5.Banks will be forced to support the industrial initiative, which will gradually work on some industries to become their production internally to reduce the demand for the dollar as they produce in country goods for foreign trade.
6. Iraq must deal with a “basket of currencies” in addition to the dollar gradually so that it is not governed by federal instructions in addition to reducing imports.
See #3 and 6: I believe this is not “the basket” of currencies I talked about many times already to re-peg with the dinar when it goes live on FOREX. These currencies are just temporary pseudo-pegs like currencies being used to gradually get off the dollar more and more when dealing in trade with other countries. So, there is yet another major step to take to get where they need to go globally and that too is coming. Remember “first things first”!
So, we can see what is slowly happening is that Iraq is moving back to a normalcy of their financial system an international normalcy. It takes much more than just putting in place the banking reforms, the means and the mechanisms to do it as we have witnessed over the past years. But now they are actually doing it. It may be slow but remember they are still under the strong arm of the US Treasury on this matter too and are working very closely with them at their pace. In many ways this is good as we want the US to support this process when it comes time to give the “green light”. This is why so many visits by the US Treasury to Iraq, Get it?
