Iraqi Cabinet Approves Measures to Enhance Electricity Supply
In its most recent meeting, the Iraqi Bureau has endorsed a few measures to address the power needs during top summer periods and to foster the nation’s power framework.
The most important choices are:
Agreement with Mass Holdings Corporation:
Contracting with Mass Holding Company to supply electricity specifically to the northern region and the national grid has been granted to the Ministry of Electricity. Due to the need for a steady supply of electricity and the peak summer demand, this contract is crucial. Depending on financial viability, the contract will last for three months.
Contract with Kar Gathering:
Additionally, approval has been granted for the Ministry of Electricity to enter into a contract with Kar Company for the supply of Turkish electricity. This agreement is three months long and adheres to a reduced price formula that has been approved by the Ministry of Electricity. It also addresses the ministry’s financial capabilities and the peak summer demand.
Developmental and Financial Approvals:
Authority for the Loan Contract: The Minister of Finance or an authorized delegate has been given permission by the Cabinet to sign the loan agreement that will fund the project to supply and install five 132 KV substations. The Ministry of Electricity will gain from these substations, which will be situated in South Khalidiya, Al-Suwaira, Al-Rumaitha, North Kirkuk, and Al-Rifai. The Federal Budget Law for the fiscal years 2023-2025 is in line with this approval.
Endorsement of Supporting Terms: The financing conditions outlined in the Ministry of Finance’s letter dated June 23, 2024 have received Cabinet approval.
These measures, as stated in a press release issued by the Prime Minister’s office, are a part of the overall strategy implemented by the government to advance the country’s electrical infrastructure and guarantee a consistent supply of power, particularly during times of high demand.
Article: "Establishment of the Commercial Arbitration Center in Iraq" Article quote: "the importance of commercial communication with various countries around the world and organizing relations in a way that achieves mutual benefit for all parties, especially as Iraq is on the verge of rejoining the World Trade Organization (WTO). He explained
that this project comes as one of the achievements within the file of Iraq's accession to the International Chamber of Commerce (ICC)." WTO requirement. Establishment of the Commercial Arbitration Center in Iraq
---
Article quote: "new pipeline project at an amount estimated at approximately 6.5 billion Iraqi dinars ($4.9 billion)" Community Comment "The mathematical 'mistake' basically equals 1.32. This seems very very coincidental to the deletion of the zeros."Referencing the exchange rate in billions rather than trillions is an easy mistake to make. It happens all the time and everyone thinks there's something to it. Wrong.
Question: "What happens now that the auctions are soon to be over?
What does this mean for the Dinar holders out there Kap?" It means monetary policy is changing after 20 years to reflect the economic changes in Iraq. We'll have to wait and see what happens.
---
Floating the currency is the best option but only once they have created a diverse economy that is not dependent solely on oil.
...New currencies coming out in Iraq. Not true, the Iraqi dinar is the currency of Iraq. As far as any new smaller denominations, they will be introduced only as needed if and when the value increases and warrants so. There is no significant RV!
--
...The dinar to float at well over a dollar. Unlikely, the dinar when it floats will be whatever the current exchange rate is and could rise gradually accordingly.
Community comment: "Today the cbi says there are no new printing of bills"
That is correct. The Central Bank does not randomly print currency unless it's to replace damaged or worn out notes. There is no need for a new currency unless it is warranted. Moving to digital will eventually reduce physical notes.
Question: ----"They have a very largebudget ,without an increase in rate how do they meet the projects that is lined up?"
External expenses are paid in dollars since their primary revenue is dollars. Dinar is used to pay salaries, etc. in country.
CCommunity Comment: "Hopefully in the next 5 yrs we will see an appreciation of the currency price, based on the last year of progress."I agree! Iraq has an excellent opportunity now to diversify their economy and develop the banking system.
Much of the float articles that we have seen have concerns about speculators that is because they are referencing dealers speculating within the country. That will not happen.
All of these changes that they're talking about pertain to monetary policy. They have nothing to do with the exchange rate. Whether or not the exchange rate goes up or not is directly related to the economic success thereafter.
By the end of the year when the Central Bank of Iraq ends the currency auction, only transfers amongst established Iraqi banks and regional or International banks will occur. In other words, the float of the dinar and transfer of funds will be institutional.
What this means for us is the future of the dinar exchange rate is directly tied to the capital flowing through the CBI, economic growth, and success of Iraq. As Iraq prospers, so will the dinar! Though we may not see the dinar exchange rate improve initially. This is a significant change in monetary policy for the Central Bank of Iraq. Some 20 years in the waiting.
Shafaq News/ On Wednesday, Basrah crude oil increased alongside a surge in global oil prices.
Basrah Heavy crude edged higher by $0.84 to $82.24, while Basrah Medium also rose by $0.84 to $84.99.
Oil prices rose despite an unexpected jump in US inventories, driven by geopolitical risks stemming from the Middle East conflict and expectations of eventual inventory drawdowns during the peak demand season in the third quarter.
Brent crude oil futures rose 40 cents, or 0.5%, to $85.41 a barrel by 0406 GMT. US West Texas Intermediate crude futures gained 43 cents, or 0.5%, to $81.26 per barrel.
ARIEL
My Views
Compliance Dates:
July 13, 2023: Effective date for new rules.
July 12, 2024: Deadline for DCOs to comply with these regulations.
Cross-Border Applications of Swaps Provisions
Capital and Financial Reporting: Non-U.S. swap dealers and major swap participants (MSPs) from Japan, Mexico, the European Union (specifically France and Germany), and the United Kingdom can use their home country’s regulatory standards for capital and financial reporting instead of the CFTC’s standards.
Significance: It appears this harmonization allows for smoother international operations and reduces the regulatory burden on foreign entities, facilitating more robust cross-border trading and financial stability.
By completing these reforms, Iraq has now positioned itself to engage more fully in international trade. This is crucial because it means Iraq’s financial and economic systems are now recognized as stable and reliable enough to participate in global markets.Global Financial Integration:
The CFTC's decisions about capital and financial reporting standards for non-U.S. swap dealers, and the registration of new entities like ForecastEx LLC, are part of broader efforts to harmonize global financial regulations. This harmonization facilitates smoother and more secure cross-border transactions.
Market Access: With the completion of phase one reforms, Iraq can now access global financial markets more efficiently. The standardized reporting and compliance frameworks make it easier for Iraqi financial institutions to interact with their counterparts in other countries.
Foreign Investment: The reforms signal to international investors that Iraq is a stable and viable market. This can attract foreign direct investment, which is crucial for rebuilding and expanding Iraq's economy.
Alignment with Global Standards:
The July 2024 deadline is significant because it marks the point by which global financial entities, including those in Iraq, must comply with new international standards. Iraq’s reforms are designed to bring its financial practices in line with these global standards, facilitating smoother integration into the international market.
Economic Reforms: Iraq has been implementing economic reforms to stabilize its economy and align with international standards. A new exchange rate could reflect these reforms and make Iraq more competitive in global markets.
Global Integration: Adjusting the exchange rate could facilitate Iraq’s integration into the global financial system, making it easier for international trade and investment.
