Saturday, August 24, 2024
DINAR REVALUATION UPDATE: ANALYSIS OF THE IRAQI DINAR'S PURCHASING POWER IN 2024, 24 AUGUST
Analysis of the Iraqi Dinar's Purchasing Power in 2024
In 2024, the purchasing power of the Iraqi dinar (IQD) is subject to a complex interplay of economic policies, global market dynamics, and domestic fiscal management. As of the current year, Iraq has embarked on a significant shift towards de-dollarization, aiming to strengthen the dinar and reduce its vulnerability to external economic shocks.
De-Dollarization Efforts and Their Impact
On January 1, 2024, Iraq implemented a ban on all transactions involving the US dollar, marking a strategic move to stabilize the fluctuating black market exchange rate and bolster the use of the Iraqi dinar.
Fiscal Policies and Their Effect on the Dinar
Iraq's fiscal policies, particularly the large-scale budget expansions enacted in 2023 and 2024, have significantly impacted the dinar's purchasing power. The 2023 budget, passed in June 2023, was Iraq's largest to date, totaling 198.9 trillion Iraqi dinars or approximately $153 billion. Despite the potential for positive economic effects, such as funding for local investment projects and public sector employment, these expansive budgets have also contributed to imbalances, jeopardizing fiscal and external stability.
Challenges and Opportunities
The de-dollarization strategy presents both challenges and opportunities for the dinar's purchasing power. While diversifying currency reserves helps mitigate risks associated with the US dollar's volatility, the large fiscal expansions and lower oil prices could result in fiscal and external imbalances. Inflation declined to 4% by the end of 2023, largely due to lower international food prices, the dinar's revaluation in February 2023, and the normalization of trade finance. However, without policy adjustments, the risk of medium-term sovereign debt stress remains high.
Outlook and Recommendations
The International Monetary Fund (IMF) has emphasized the need for sound macroeconomic policies and structural reforms to secure fiscal and debt sustainability, advance economic diversification, and achieve sustainable, inclusive, and private sector-led growth. The IMF's assessment underscores the importance of addressing the downside risks posed by regional conflicts and Iraq's heavy dependence on volatile oil prices.
Conclusion
The purchasing power of the Iraqi dinar in 2024 is influenced by a confluence of factors, including de-dollarization efforts, fiscal policies, and global market dynamics. While the Iraqi government's strategic moves aim to strengthen the dinar and enhance economic stability, challenges persist, necessitating careful policy adjustments and reforms to secure long-term fiscal health and economic diversification.
IRAQ BOOTS ON THE GROUND REPORT: "WE ARE GOING TO GET MASSIVE PURCHASE POWER" , 24 AUGUST
Frank26
[Iraq boots-on-the-ground report]
FIREFLY:Mr Sammy [his Iraqi bank friend] said we're going to get massive purchasing power. But others outside of Iraq, they will make millions.
Frank26
[Iraq boots-on-the-ground report]
FIREFLY:Sammy [Iraq bank manager] says we will continue to trade the three zero notes after the deletion project for 10 years. It's not a lop. This will be a powerful move.
FRANK: I like it because this is the guy that works at the bank and he knows darn well what's about to happen...Once the 3 zeros are lifted your purchasing power will be at least equal to $1.00. It may even be up to $1.30. Then your country will be able to rebuild itself even faster...I'm excited for your future. I'm equally excited for my future.
----
Frank26
[Iraq boots-on-the-ground report]
FIREFLY: Mr Sammy [his Iraqi bank friend] was explaining how our three zero notes will coexist for 10 years after they drop the three zeros...This is not a LOP...We don't have inflation like other neighboring countries around us that have to lop. We can delete zeros and introduce...the lower notes because of the value that is being added. That's purchasing power.
FRANK: That's always been the plan...I can't believe they're going to vie you these 10 years that Dr. Shabibi wanted. That's incredible...Wow!
FIREFLY: Saleh was talking about the floats and he was also talking to us about fixed rates. He's saying no decisions have been made. They talked about the pros and the cons of each one of these options. Then the CBI came out and said in the coming days we will make actions to lower the dollar exchange rate.
FRANK: Can the CBI lower the dollar exchange rate? No. Yes! How?
FIREFLY: ...The CBI's job is not to control the dollar...They can't touch a dollar but...the CBI can touch the dinar...If they lifted the value of our currency wouldn't that bring down the value of the dollar in our country?...Let's see if that is the only thing the CBI could do to bring the dollar down is raise the dinar. They say in coming days.https://dinarevaluation.blogspot.com/2024/08/latest-from-firelfy-22-august.html
DINAR REVALUATION UPDATE: ABOUT THE Economic Achievements of Prime Minister Mohammed Al-Sudani: An Analysis of Non-Oil Revenue Growth in Iraq (2022-2024), 24 AUGUST
Economic Achievements of Prime Minister Mohammed Al-Sudani: An Analysis of Non-Oil Revenue Growth in Iraq (2022-2024)
Prime Minister Mohammed Shia Al-Sudani, who took office in October 2022, has embarked on a critical mission to diversify Iraq's economy and reduce its heavy reliance on oil revenues. Despite the country's wealth in oil, overreliance on this single resource has long threatened Iraq's economic and political stability.
Challenges and Opportunities
Iraq's economic landscape is dominated by its vast oil reserves, which have historically provided the lion's share of the nation's revenue. However, this dependence has exposed the country to the volatility of global oil prices and the geopolitical tensions that often accompany such a resource.
Prime Minister Al-Sudani's Economic Agenda
In his tenure, Al-Sudani has prioritized the expansion of non-oil revenue sources, recognizing the necessity to build a more resilient and diversified economy. This strategy is not only essential for economic stability but also for the government's ability to provide basic services and employment opportunities to its growing population.
Non-Oil Revenue Growth
To foster non-oil revenue growth, Al-Sudani's administration has implemented several measures, including reforms aimed at attracting foreign direct investment (FDI) and encouraging private sector development. The government has also sought to improve the business environment and streamline bureaucratic processes to make Iraq more appealing to investors.
Private Sector Development
Recognizing the role of the private sector in driving economic diversification, Al-Sudani's cabinet has launched initiatives to support this sector, such as the Baghdad Alliance to Support the Private Sector. The alliance aims to strengthen the private sector's contribution to the economy, hoping to accelerate sustainable economic growth and create jobs.
Fiscal and Regulatory Reforms
To further non-oil revenue growth, the Al-Sudani government is continuing with fiscal and regulatory reforms that address institutional limitations, governance shortcomings, and endemic corruption. These reforms are crucial for fostering an environment conducive to private sector development and attracting foreign investment.
Conclusion
Prime Minister Mohammed Al-Sudani's focus on non-oil revenue growth is a critical step towards economic diversification and stability in Iraq.
By addressing the structural imbalances and fostering a more competitive private sector, Al-Sudani's administration is laying the groundwork for a more resilient economy that can withstand global oil market fluctuations. The ongoing reforms and initiatives, if effectively implemented, could significantly enhance Iraq's economic landscape and improve the livelihoods of its citizens.
Friday, August 23, 2024
LATEST FROM BGG, 24 AUGUST
BGG
Article Quote: "Economic Achievements of Prime Minister Mohammed Al-Sudani - An Analysis of Non-Oil Revenue Growth in Iraq - 2022-2024"
Quote: "...Under the leadership of Prime Minister Mohammed Al-Sudani, Iraq has achieved significant growth in its non-oil revenues, rising from seven trillion Iraqi dinars to twenty-seven trillion dinars in two years. This remarkable increase indicates a strategic shift towards diversifying the economy and enhancing its stability."
BGG
[Reply to Fnu Lnu Redemption Center/DeLaRue post on 5-8-2024]
While the first half of this post may well be true (likely as not), I beg to differ on the last half. It’s COMPLETELY INACCURATE...There is NO SUCH THING AS AN AUTOMATED AUTHENTICATION PROTOCOL FOR THE IQD (per the De La Rue engineers – PERIOD). They don’t own that division anymore. It’s a group well known in the US as Cash Systems...
Iraq is worth far more than 16 trillion dollars and there is far less than 80 trillion in circulation...To espouse such inciting commentary [against this]...negates everything Dr. Shabibi has stated and everything the CBI and GOI have stated. The Dinar was worth $3.22 pre-sanctions and at that time all they had was oil at $32 dollars a barrel...
Fnu Lnu
Article quote: "Al-Kadhimi indicated that increasing the budget’s overall amount, from 199 trillion Iraqi dinars (nearly $152 billion) to 228 trillion Iraqi dinars (approximately $174.04 billion), resulted in a rise in the deficit, revealing that the budget is still being discussed in the Council of Ministers and would likely be presented to the Iraqi Parliament next month." It would logically follow that a revaluation would be likely before next month's USA confab.
[Response to Pimpy's HCL non-revenue sharing post from 3-31-2024 below]
The notion of revenue-sharing is nothing new in the Middle East. Bruni and Kuwait both do it...Revenue Watch Middle East Director Yahia Said recently returned from several months in Iraq working on the International Compact with the UN...This USIPeace Briefing summarizes the discussion. Many Iraqi citizens look to the law for what it can contribute to reconciliation, security, and welfare. The three parts of the agreement will deal with the issues of 1) revenue sharing; 2) restructuring of the ministry of oil; and 3) establishing the Iraqi National Oil Company (INOC).
It is quite clear that the HCL has intentions to codify the issue of welfare (not for government) and the number 1 issue is REVENUE SHARING. To be more specific; Section 1314 of the FY2007 Supplemental Appropriations Act [P.L.110-28] specifically identified the enactment and implementation of legislation “to ensure the equitabledistribution of hydrocarbon resources of the people of Iraq without regard to the sect or ethnicity of recipients” and “to ensure that the energy resources of Iraq benefit Sunni Arabs, Shia Arabs, Kurds, and other Iraqi citizens in an equitable manner” as benchmarks .
https://dinarevaluation.blogspot.com/2024/04/rv-update-by-fnu-lnu-2-april.html
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