Shafaq News / The Kurdistan Regional Government (KRG) announced, on Friday, that more than 25,000 government employees have received their salaries through the “My Account” project.
According to KRG’s Media and Information Department, employees with bank cards enabling them to receive their salaries via ATMs will receive their payments gradually by the end of next week.
Earlier, Kurdish Prime Minister Masrour Barzani had confirmed that one million employees would have access to banking services by the end of this year, with financial services accessibility in the Region expected to reach 35% by late 2024.
KRG shed light on the My Account payroll system’s advantages, assuring that civil employees have more control over their balances with lesser fees compared to other options.
In a statement, KRG’s Information and Media Department highlighted key features differentiating “My Account” (Hesabi) from the “Domiciliation” project.
“My Account”, according to the statement, empowers employees to select their preferred bank, unlike domiciliation where a bank is assigned based on pre-existing agreements.
The new system includes six private banks, according to the statement. The other system involves five state-owned and 38 private banks.
“My Account” also offers free ATM withdrawals at the chosen bank. Conversely, employees who have their salaries domiciled should pay extra charges upon withdrawals through agents or ATMs.
“Enrolling in the My Account system is free, unlike Domiciliation, which may charge up to 25,000 IQD depending on the bank,” the statement continued.
“My Account utilizes debit cards that can be used all over the globe, whereas the Domiciliation system typically employs, salary cards’ not linked to other accounts.”
Up until April, over 300,000 civil servants have already registered for My Account. KRG said it is actively expanding its ATM network to ensure convenient access for registered employees. The current count of 231 ATMs is expected to quadruple by the end of 2024.
Yes, we all want to know what is the holdup of the RV and I say there is no holdup, only time...The process must just play out. The plan of Dr Shabibi must be executed and there are many stumbling blocks and deviations along the way. But Iraq must and does, always come back to the 2011 Dr Shabibi plan... I know through the past articles and my CBI contact that the reinstatement will happen and has to happen if Iraq is to regain their national sovereignty.
Article: "THE DOLLAR IS REELING FROM A FATAL BLOW AND THERE ARE FEARS OF A COLLAPSE OF THE DINAR" ...let me say with 1000% certainty the dinar is NOT going to collapse...
Can you see just how close Iraq is to fulling Al-Sudani’s promise of making the dinar a proud national currency once again. Also remember too that he did say it “was” valued over a dollar already...
Article: IRAQ TALKS ABOUT PRODUCING ONE MILLION LITERS OF GASOLINE DAILY
Quote: “increase refining capacity production rates and improve production in national refineries to reach self-sufficiency and gradually shift to exporting them to global markets..." Well…well…it's about time that Iraq got these refineries up and running. Lots of articles about this effort over the last ten years. Did I hear of another export product here?
I feel we have been in a critical period of the currency reform program since January of last year 2023.
Now we are in a “vital” period. Like a game of chess, we are now in a waiting mode for the Central Bank to make their next move and rollout the second-rate change in-country to just over a dollar, that we were told is coming.
Since they told us they now control the parallel “black” market, and that negotiations were successful in lifting sanctions on many Iraqi banks.
I feel we have been in a critical period of the currency reform program since January of last year 2023. Now we are in a “vital” period. Like a game of chess, we are now in a waiting mode for the Central Bank to make their next move and rollout the second-rate change in-country to just over a dollar, that we were told is coming. Since they told us they now control the parallel “black” market, and that negotiations were successful in lifting sanctions on many Iraqi banks.
In what they have already accomplished just in the last 16 months, it would be silly to turn back now. Amazing progress in such a short period of time compared to 30 years.
They have come further than ever before. I say this not for hype or for the sake of being overzealous. Instead, I stick to the FACTS of what the news has been telling us recently and what my CBI contact has been telling us...Iraq has kicked the proverbial can down the road long enough and it is time...time to go global...Iraq will not survive unless they do something BIG with their currency soon and I mean very soon!
The report showed important data for the Iraqi economy during the period (2020-2023) actual and the outlook for 2024 and then the forecasts of the economic policy course during the period (2025 – 2029), and according to the data of the main table listed below, the data of SDR, inflation and crude oil production came to some extent stable, but the other data came unstable, and some of them even portend the risk to come for years, especially the fiscal policy, in which the volume of the government’s interventionist economy emerged in terms of large expenditures, specifically the salary and wages and retirement paragraphs, as well as the rise of public debt to the levels of the risk zone of (60%) of GDP.
Although oil output accounts for about 40% of real GDP, non-oil output represents only a fraction of total revenues and exports, making Iraq highly vulnerable to oil price fluctuations. Moreover, the public sector wage bill (under increasing pressure from mandatory recruitment policies) remains the highest in the region.
This challenge is exacerbated by a lack of development in the private sector, which is hampered by factors including the footprint of the large state, corruption, bureaucracy, underdeveloped infrastructure and poor access to credit. Unemployment rates remain high and levels of labor force participation are low, especially among young people and women, and despite improved domestic stability, public reforms are still lagging behind in key areas.
* The red color indicates a danger facing the Iraqi economy, yellow to relative stability, green to economic growth. First: Economic policy discussions
Current policies significantly increase the dependence of the Iraqi economy to oil prices, and to protect macroeconomic stability and sustainability, a financial reform (adjustment) focused on controlling the wage bill and mobilizing non-oil tax revenues while protecting vital social and investment needs must be complemented by the acceleration of structural reforms to stimulate private sector development, including through labor market reforms, restructuring of state-owned banks (Al-Rasfida and Al-Rasheed in particular) and ongoing anti-corruption efforts. Second: Financial policy The fiscal situation is expected to deteriorate in 2024 and beyond, adding to weaknesses, and although IMF employees expect only partial implementation of the investment budget due to capacity constraints, total government spending is expected to continue to continue to increase by 3.8% of GDP in 2024, of which 3.4% is due to higher salaries and pensions (including transfers to the KRG).
Thus, the deficit is expected to rise to about 7.6% of GDP in 2024 due to high government expenditures, and in light of the weakness of non-oil revenues and the continued dependence on oil revenues, the fiscal deficit is expected to deepen further under the assumption that there are no changes in fiscal policy, which forces the government to rely on monetary financing, which means the Central Bank financing the government’s expenditures in exchange for securities (deduction of treasury transfers). This increases government debt from 44% of GDP at the end of 2023 to more than 86% by 2029, leading to a high-term signal of risk in the medium term.
Fiscal policy reform requires a number of the following measures (mobilizing non-oil revenues and restricting current expenditures, while protecting capital investment and possibly expanding targeted social transfers). Interim yield estimates indicate that the following list of measures can provide sufficient savings:
A. The focus of any adjustment strategy should be to look for savings in the wage bill. Savings can begin by phasing out mandatory employment requirements, and this can be pursued with an attrition-based strategy to adjust the volume of government employment. Given the role of public sector employment in the Iraqi social contract and the large gaps that exist in gender employment, such measures must be gender-balanced and supported by reform in the labor market to expand employment opportunities in the private sector.
B- It must be the mobilization of additional non-oil revenues. By removing tax exemptions on profitable state institutions, reforming salary tax and reviewing customs duties in the near term. Material increases in revenues can be achieved by making salary taxes more progressive, and subjecting public sector allowances to tax, which can be as large as salaries where personal income tax is reserved from the source. A review of the tariff structure, along with the unification of customs regulations with the KRG, the imposition of new duties (e.g., on cigarettes) and sales taxes on luxury goods can also contribute to non-oil revenues. Targeted technical cooperation in tax policy can help enrich and develop the design of measures to mobilize these revenues.
Further improvements in revenue management and customs can also bring in additional revenue. Authorities should build on the remarkable progress made in the experience of the SYCUDA system by expanding its use at other border control points and controlling customs operations in line with the new system. In the medium term, a public sales tax or VAT could boost non-oil revenues. Third: Monetary policy The Central Bank of Iraq has resorted to using a strict monetary policy to improve the liquidity management framework, and more liquidity absorption may be needed to support the transition of monetary policy. In response to the sharp increase in excess liquidity, the central bank raised the policy interest rate from 4% to about 7.5% and reduced the funds of subsidized lending initiatives in mid-2023, however, the policy price outflow was weak due to excess liquidity and lack of market incentives in financial intermediaries, especially in government banks. Reserve requirements were also increased from 15% to 18% and the Central Bank of Iraq billing facility was submitted for 14 days.
After these measures by the monetary authority, the liquidity surplus initially decreased, but rose again in August 2023 as a result of the implementation of the general budget, which means that more measures are needed to absorb the liquidity surplus, including better coordination between fiscal and monetary policy towards achieving the goal of price stability. As fiscal policy is expansionary through the huge volume of expenditures offset by a deflationary monetary policy by raising interest to counter the excess liquidity in the economy. Increased reserve requirements on government deposits could therefore be considered, which will help absorb excess liquidity in government banks without damaging private banks.
Regulating and securing correspondent bank relations is also critical to ensuring an easy transition to the new trade finance system. The authorities must intensify efforts to modernize the banking sector to facilitate the establishment of correspondent banking relationships. Trade finance before 2023 was done in a financial reinforcement manner, but after the introduction of the compliance platform, trade finance changed and the Central Bank of Iraq previously financed dollar accounts abroad for local commercial banks that have correspondent banking relations with Bank Citi Trade Finance. This allowed an increase in the share of cross-border payments settled through commercial banks.
The Central Bank of Iraq plans at the beginning of 2025 to fully transition to a supervisory role in the settlement of cross-border payments (import financing) and to facilitate this transformation, the Central Bank of Iraq has helped private banks in securing correspondence-banking relationships, including providing guidance on the accreditation and evaluation of banks in line with international best practices. As of the writing, (6) banks have established correspondent relations with US banks, and many others have correspondent banking relations with non-US banks. Strengthening these efforts is essential to ensure a successful transition to the new trade finance system.
In addition, monetary policy has made an important breakthrough in expanding the scope of digital payments, as several measures have been taken to promote digital payments, including expanding the use of point-of-sale devices and requiring the use of electronic payment cards in certain transactions such as the purchase of fuel, lifting transaction ceilings at ATMs and bank cards and reducing bank fees. These efforts are welcome and will help reduce Iraq’s dependence on cash and improve financial inclusion, especially for women whose access to financial services may be restricted due to limited movement and other obstacles.
Monetary policy also integrated the banking sector, as the central bank made the decision to increase the minimum bank capital requirements from 250 billion to 400 billion Iraqi dinars. Banks (many of which are small in size) must either pump more capital or submit a merger and acquisition plan by the beginning of 2025, and careful planning and public communication will be critical to achieving the reform goal of improving the efficiency and competitiveness of the private banking sector without creating uncertainty about the viability of banks.
However, the implementation of basic banking systems, the issuance of previous financial statement certificates and the amendment of regulations to strengthen the governance of state banks remain weak, and the slowness in making progress in reforming those government banks is hampered by the effective allocation of credit and the transfer of monetary policy. Authorities should continue to strengthen the AML/CFTF and its effectiveness including in the banking sector
. These efforts should be guided by the priority actions emanating from the MENA Financial Action Task Force (MENAFATF) Mutual Assessment that will end in the third quarter of 2024, once key areas have been identified for further improvements, seeking further targeted technical assistance could help support these efforts.
Article "Adjourning the session to elect the Speaker of Parliament until further notice" Quote "It is noteworthy that a quarrel and fistfight occurred between representatives Muthanna Al-Samarrai and Haibat Al-Halbousi inside the House of Representatives hall during the third round of electing the president, creating massive chaos, which prompted the postponement of the decision-making session until further notice."
Article: "IMF Executive Board Concludes 2024 Article IV Consultation with Iraq"
Article: "Iraq increases its possession of gold by more than three tons, bringing the total to 145,661
" Quote "Iraq's gold reserves witnessed a noticeable increase during the month of February 2024,as International Monetary Fund data showed that Iraq has increased its possession of the precious metal by 3,079 tons, bringing the total to 145,661 tons."
Article Quote: "The Central Bank of Iraq's cancellation of the currency {auction} window at the end of 2024 "
WE KNOW THIS ... SUDANI & ALAQ HAVE ALREADY AGREED WITH DC ON THIS! IT IS TRUE... THEY (ARE) AND WILL BE ASSET BACKED...WILL FLOAT AND THERE WILL BE A MANAGED CAP...
On Saturday, UNDP approved the electronic payment services system in Iraq.
“We are pleased to announce the official approval of the electronic payment services system, which has been achieved through the joint efforts between the Central Bank of Iraq and the UNDP Economic Reform Support Project, and with the generous support of the United Nations Agency for International Development,” the United Nations Development Programme (UNDP), said in a statement, seen by Economy News.
He added, “This important achievement – which was officially approved and published in the Iraqi fact sheet on April 29, 2024 – confirms the pivotal progress in the financial sector in Iraq.”
He explained, “Approving the electronic payment services system is an essential step towards modernizing the country’s financial infrastructure, stimulating digital transformation and promoting economic development.”
