Lebanese Prime Minister Najib Mikati is scheduled to visit Iraq in the coming hours, responding to an invitation from Prime Minister Mohammed Shia al-Sudani.
The Lebanese newspaper "Al-Jumhuriya" quoted government sources in the country as saying that Mikati will be accompanied on his visit by a ministerial delegation that includes: Minister of Energy Walid Fayyad, Minister of Economy Amin Salam, Minister of Agriculture Abbas Hajj Hassan, and Minister of Industry George Bouchikian, in addition to a number of advisors.
The Iraqi government agreed in July to unload the fuel shipment despite Beirut not paying the financial dues it owes to Baghdad.
This comes after a call made by Lebanese Prime Minister Najib Mikati to his Iraqi counterpart, Mohammed Shia al-Sudani, and after Minister Fayyad had made several calls to his counterpart, Iraqi Oil Minister Hayan Abdul Ghani, the Iraqi Prime Minister’s Office, and the Iraqi Embassy in Lebanon, to address the fuel dues crisis and spare Lebanon total darkness.
The Lebanese Minister had previously announced that the Iraqi Oil Marketing Company (SOMO) had stopped unloading fuel oil tankers exported to Lebanon due to non-payment of the due funds for the second year in a row.
Fayyad said, "For the fifth consecutive month, the Central Bank of Lebanon has not transferred the price of fuel shipments to the Iraqi government's account, and thus Lebanon becomes financially exposed to Iraq, as the due funds have not been transferred for the second consecutive year," according to the Lebanese newspaper Al-Akhbar. LINK
Question: "How is Iraq going to do business in the international market with such a low currency rate?"
This is why Iraq will need to increase the value of its currency. Currency values... act as a silent force influencing a country's global competitiveness. When a country's currency value is low it can impact it's ability to compete...Iraq's top trading partners are China, India, South Korea and on the sidelines Iran. However things are about to change and fast. The development road project places Iraq right in the middle of the global financial markets. [We] have little doubt the Iraqi dinar will increase in value but we don't know when or how much.
A major financial change in Vietnam...Decree 52 regulates non-cash payment in Vietnam and will significantly alter Vietnam's financial landscape...Decree 52 marks a significant milestone in Vietnam's journey towards a cashless economy. If you have VND bank notes you will need to find out how you can comply with Decree 52 as a foreigner. [We] will research the topic and report back as soon as we understand the procedure. According to the news report the banks have 24 months to comply...
Removing zeros from a currency is a procedure undertaken by some countries in order to revalue the national currency and simplify financial transactions. This is done by removing a specific number of zeros from the nominal value of the currency, making it appear less inflationary and more stable.
For example, if the currency is the “dinar” and its value is equal to 1,000 dinars, after removing three zeros, its value will become one new dinar.
One of the possible reasons for deleting zeros is to combat inflation. When a currency suffers from high inflation, the nominal values can become very high and impractical to be offered in large quantities in daily transactions. Deleting zeros can contribute to enhancing confidence in the national currency, facilitating accounting operations and financial transactions; this may contribute to improving the country's image before investors and the international community.
Potential challenges of deleting zeros include printing new currency, modifying accounting systems, and training on how to use the new currency. It may initially cause some confusion among residents and consumers, and if the deletion process is not implemented well, it may lead to economic disruptions. As a result, deleting zeros is not a solution to all economic problems, but rather a procedure that requires good planning and careful implementation to ensure that the desired goals are achieved, according to experts.
Examples of countries that have taken this action include Turkey in 2005 when it removed six zeros from its currency, Brazil on several occasions in the 1980s and 1990s, Zimbabwe, which removed twelve zeros from its currency in 2009, and Venezuela, which removed five zeros in 2018. The number of cases in the world in which currency zeros were removed is estimated at 70 cases witnessed by the world since 1960.
In a renewed statement by the Governor of the Central Bank of Iraq, Ali Al-Alaq, he said that “the project to remove zeros from the currency is still ongoing,” meaning removing three zeros from the Iraqi dinar. For example, the value of the 1,000-dinar banknote will be replaced with a one-dinar note from the new currency, five thousand with five dinars, ten thousand with ten dinars, and so on.
According to experts, the actual value of the money people own does not change after deleting the zeros, but this step contributes to simplifying the buying and selling processes for individuals and companies, and makes the financial amounts simpler and more understandable. Instead of dealing with huge numbers such as a trillion or a million (1,000,000 Iraqi dinars), they can be converted to just one thousand 1,000 dinars after deleting three zeros.
Removing zeros helps in issuing small currencies such as coins, enables the re-pricing of small goods at lower prices, facilitates their circulation and their survival in the markets, and gives a positive psychological boost to the population with the fact that the Iraqi dinar can now buy more goods and services.
Therefore, countries aim to remove zeros to restore confidence in the local currency among residents and investors, to increase demand for it, and for the local currency to become more competitive with foreign currencies and to be less replaced by other currencies.
The policy of deleting zeros is often linked to broader economic reforms, such as raising interest rates on bank deposits, to encourage people to save in banks and benefit from high interest rates on their bank deposits, in an attempt to withdraw liquidity from the market, reduce consumption and lower prices.
This also entails exploiting this liquidity to expand productive projects, attract local and foreign investments within the country and create many job opportunities so that the local economy can ultimately recover.
But on the other hand, deleting zeros may cost Iraq money to print new banknotes. For example, after deleting 3 zeros from the Iraqi dinar, when we talk about a 200-dinar banknote, it is actually equivalent to 200,000 dinars. As a result, it may be necessary to print 4 more 50-dinar banknotes instead of the 50,000-dinar banknote.
However, according to the available results, this may not have a clear impact on improving the local economy if it is not part of a package of economic reforms that help reduce the amount of money circulating among people and stimulate the economy, especially since Iraq's economy is an oil economy that needs to stimulate other productive sectors to drive the local economy.
Could removing zeros from the Iraqi dinar be a real start to stimulating the Iraqi economy, after it became clear that all plans were unable to rescue the dinar from its declining value?
In a statement by the financial advisor to the Iraqi government, Mazhar Muhammad Salih, he said that “the phenomenon of multiplying zeros in the monetary unit or adding zeros usually comes as a result of economies being exposed to rampant waves of inflation or sharp increases in the price level that continue for years due to wars, blockades and conflicts that lead to financing the deficit of government budgets through the issuance of money,” noting that the continuous rise in prices without stopping leads to the erosion of the value of the monetary unit, which necessitates the issuance of larger denominations of money due to the lack of value of smaller denominations of money and the disappearance of their ability to cover high-value transactions and exchanges in the market, according to his description.
Former member of the Parliamentary Finance Committee, Ahmed Hama Rashid, believes that “Iraq is not prepared for the project of deleting zeros,” and explains, “We always hear the Central Bank’s statements about implementing a project, only to then back down from implementation for undisclosed reasons.”
Regarding the implementation of the project to remove zeros from the Iraqi currency, banking consultant Abdul Rahman Al-Shaikhli recalls that the printing of the Iraqi dinar in the nineties of the last century was done by poor printing presses and that “the first factor that stood in the way of the project was the discrepancy between the official exchange rate (now 1332 dinars per dollar) and the parallel market exchange rate (now rising above 1500 dinars) and it constituted an obstacle to the implementation of the project.”
He points out that "the project will be successful if an exchange rate of one thousand dinars for every one dollar is reached. At that time, deleting the three zeros will achieve its economic feasibility, as the exchange rate will be transformed into one dinar for every one dollar, and this is what the late former governor of the Central Bank, Sinan Al-Shabibi, aspired to," he said.
Al-Shaikhli added that the other factor that affected the project to remove zeros from the Iraqi currency was the call made by the government of former Prime Minister Nouri al-Maliki for the years 2006-2014, to legislate the infrastructure law, which was opposed by a number of political blocs in parliament at the time, as it leads to an increase in investments in Iraq through deferred payment, which limits the value of the monetary project, he said. LINK
Question: ...do you think the RV will happen in waves? First Dinar, then a few months later, VND? MarkZ: No, I think they will still...go at the same time.
“Iraq continues to add to their Maritime Fleet” They have 2 used ships with 5 under construction…this will cost a large amount of money.
Iraq has some long term goals. They have not paid for them yet- I believe Iraq is waiting for a change of value for the dinar.
I continue to hear that the most likely street rate will be $3.86 …I hope it's accurate. We won’t know until we get there.
That is not impossible [emails could start today]…but with the crazy conflicting stories floating around…I still think the timing will be a surprise. We need discernment and patience right now.
Minister of Trade Athir Dawood Al-Ghariri confirmed today, Friday, that negotiations for Iraq's accession to the World Trade Organization are proceeding at a rapid pace, while indicating that all countries are keen on Iraq's return as a global economic player.
Al-Ghariri told the Iraqi News Agency (INA): "The resumption of negotiations for Iraq's accession to the World Trade Organization is a qualitative event and a testament to what the government promised through its program to reform the economic situation, considering the private sector as an essential part and the backbone of the Iraqi economy."
He expressed his "aspiration for the fourth round of negotiations to be held during the first quarter of next year," stressing that "this acceleration means that the negotiations are proceeding very quickly towards Iraq's accession to the World Trade Organization, considering Iraq an important economic bloc and all countries are keen for Iraq to return as an economic player in a multilateral system."
For his part, the Saudi Ambassador to the World Trade Organization, Saqr Abdullah Al-Muqbil, told the Iraqi News Agency (INA): "There is a positive view that we will find Iraq joining a multilateral trade system as it is one of the largest economies outside this organization."
Al-Muqbil stressed that "the Kingdom of Saudi Arabia has a priority to achieve Iraq's desire to join the organization."
In turn, the official responsible for Iraq's accession to the World Trade Organization said: "The member states were happy with the Iraqi delegation, and we hope that the Iraqi delegation has completed this long journey."
She added: "We seek to see Iraq become a member of the World Trade Organization." The Minister of Trade and head of the Iraqi team concerned with joining the World Trade Organization, Athir Dawood Al-Ghariri, announced last Monday the resumption of negotiations to join the World Trade Organization, after a hiatus that lasted more than 16 years.LINK
