Defense Minister Thabet al-Abbassi revealed the details of the agreement of the withdrawal of the international coalition from Iraq.
“The Iraqi-American committees agreed to withdraw with the remaining of a security partnership,” Al-Abbasi said in a press statement, noting that “an Iraqi-American agreement to end the international coalition mission will be in two stages.”
“The first phase of the American withdrawal will begin this year and continue until 2025, and the other phase of the American withdrawal will end in 2026 in full,” he explained.
Al-Abbasi pointed out that “US Secretary of Defense {Lloyd Austin] submitted a proposal that two years of withdrawal are insufficient,” adding, “We rejected the US Secretary of Defense’s proposal to add another year for the withdrawal period.”
Reuters reported last Friday that the United States and Iraq agreed on the plan for the withdrawal of international coalition forces from the country, noting that “the understanding between America and Iraq will see the departure of hundreds of soldiers by September 2025.”
Reuters pointed out that “the understanding between America and Iraq provides for the withdrawal of all forces in 2026.”
Bobby King discusses a new timeline for the Iraqi dinar’s reinstatement, moving from late summer 2024 to January 2025 due to economic and administrative challenges.
Highlights
📅 Timeline Shift: The Iraqi dinar’s reinstatement is now targeted for January 2025.
🏦 CBI Engagement: Bobby’s conversation reveals insights from the Central Bank of Iraq about ongoing reforms.
🌍 US Treasury Role: The US Treasury’s involvement is critical in stabilizing Iraq’s financial reforms.
📈 Economic Stability: Ensuring economic stability is a key reason for the revised timeline.
🔄 Administrative Hurdles: Coordination and regulatory adjustments have delayed initial plans.
🌐 International Support: Ongoing support from international partners will be essential for success.
📊 Investor Insights: Investors should reassess strategies in light of the new timeline.
Key Insights
📅 Revised Timeline: The shift to January 2025 allows for better preparation and implementation of necessary reforms. This gives stakeholders more time to address issues that caused previous delays.
🏦 Central Bank’s Role: The Central Bank of Iraq’s proactive engagement reflects a commitment to transparency and strategic planning for the dinar’s reinstatement, which is crucial for investors’ confidence.
🌍 US Treasury Support: The US Treasury’s involvement not only stabilizes the situation but also introduces a level of oversight that can enhance the credibility of Iraq’s financial reforms.
📈 Focus on Stability: Economic stability is paramount; the CBI’s approach emphasizes addressing underlying economic challenges before making significant currency reforms.
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Administrative Challenges: The need for coordination between government agencies highlights the complexity of the reinstatement process, suggesting that effective governance is essential for success.
🌐 Continued International Collaboration: The reliance on international partners illustrates the interconnectedness of global financial systems and the importance of collective efforts for Iraq’s economic advancement.
📊 Investor Adaptation: Investors must remain agile and informed, as the new timeline offers both challenges and opportunities for strategic adjustments in investment approaches.
The global company (Baker Hughes), a giant specialized in the field of oil and gas, revealed on Sunday, September 8, 2024) that it is putting “the final touches” to sign a strategic agreement with the Iraqi Ministry of Oil.
The Media Office of the Prime Minister, received by Baghdad Today, said that Al-Sudani received today, “the Chairman of the Board of Directors of Baker Hughes, which specializes in oil and gas, and its CEO Lorenzo Simonelli and his accompanying delegation, and confirmed that the company is one of the four largest companies in the world specializing in energy and oil services.”
Al-Sudani pointed out that “the government is keen on the presence of the company in Iraq, which was invited to expand investment in it, through cooperation with the government or with the private sector in the field of oil and gas, noting that the Iraqi market has become a promising market, and that the government is planning major projects, especially integrated projects in the oil, gas and petrochemical sectors.”
He pointed to “the development road, which includes oil and gas transmission projects,” stressing “the importance of completing the projects in which the company operates in Iraq, especially the Nasiriyah oil field, in which the company invests to extract associated gas, with a capacity of 200 million standard cubic feet, which is hoped to be completed in 2026.”
For his part, the delegation of Baker Hughes confirmed their commitment to the government and their desire to invest in Iraq in the oil or gas sectors, and that they came to finalize the signing of a strategic framework agreement with the Ministry of Oil, as well as signing a memorandum of understanding in the field of gas, and investing in the gas platform to be established in the large port of FAO, expressing their desire to finance some projects in Iraq.
Iraq plans to delay redenomination of the dinar due to unfavorable economic conditions, focusing instead on stabilizing the economy.
Highlights
🏦 Executive meetings planned with the CBI for new currency updates next week.
💰 Iraq has over 3 trillion dinars in circulation, highlighting currency volume.
🚫 Redenomination paused to avoid confusion among the public regarding currency value.
📉 Economic conditions influenced the government’s decision against cutting zeros.
🔄 Public sentiment is crucial; instability can lead to lack of trust in the currency.
📈 Focus is now on economic stability, growth, and job creation instead of immediate currency changes.
🤔 Future redenomination could simplify transactions if economic conditions improve.
Key Insights
🏦 Importance of Executive Decisions: Upcoming meetings with bank executives could set the stage for future currency changes, emphasizing the significance of coordinated financial governance.
💰 Volume of Currency in Circulation: With over 3 trillion dinars in circulation, any change to currency value must consider the vast impact on daily transactions and public perception.
🚫 Public Confusion Risk: Redenomination can create confusion, particularly in a cash-dominated economy like Iraq’s, where citizens are deeply accustomed to current denominations.
📉 Economic Dynamics Matter: The decision to halt redenomination reflects a cautious approach, recognizing that economic fluctuations, particularly in oil prices, impact currency stability.
🔄 Public Trust is Key: Maintaining public confidence in the currency is essential; any changes must be made with careful consideration of how they will be perceived by citizens.
📈 Focus on Stabilization: By prioritizing economic stability and growth over immediate changes to currency, the government seeks to create a more controlled environment for potential future reforms.
🤔 Future Opportunities: If conditions stabilize, a future redenomination could enhance transaction efficiency, showing a commitment to reform and economic resilience.
Central Bank of Iraq Unveils Banking Reform Roadmap Post-US Negotiations
In a significant development, the Central Bank of Iraq (CBI) has announced an ambitious roadmap for comprehensive banking reform following a series of negotiations with the US Treasury and the US Federal Reserve.
Reform Initiatives: A New Era for Iraq's Financial Sector
Electronic Platform for Foreign Transfers
The initial phase of reform involves the enhancement of the electronic platform for foreign transfers. This platform, implemented as an initial measure, aims to reorganize financial transfers, ensuring proactive control over them instead of reactive monitoring.
Direct Relationships with Correspondent Banks
The CBI plans to shift towards building direct relationships between Iraqi banks and foreign correspondent banks. This shift, mediated by an international auditing company, will involve pre-audit of transfers before execution by correspondent banks, marking a significant step towards greater financial transparency and efficiency.
Strengthening Iraq's Financial System
The reform aims to strengthen the stability, transparency, and efficiency of Iraq's foreign trade financing, with expected positive impacts on the exchange rate and overall financial system stability.
Expanding Correspondent Banking Network
Discussions also centered on expanding Iraq's network of correspondent banks and preparing domestic banks to meet international standards for opening accounts with global financial institutions.
The Broader Context: Iraq's Banking Sector
Dependency on Oil and Macroeconomic Challenges
Iraq, one of the world's most oil-dependent countries, faces macroeconomic volatility due to its heavy reliance on oil revenues. The country's banking and financial sector reforms are part of efforts to diversify the economy and modernize its financial systems amid political and economic challenges.
Unemployment and Economic Recovery
Unemployment remains a significant issue in Iraq, exacerbated by the economic impacts of the COVID-19 pandemic. However, the economy is gradually recovering, with both oil and non-oil sectors showing signs of growth.
Financial Reforms and Private Sector Development
The CBI's reform strategy is framed within a broader context of promoting private sector growth by facilitating access to bank credit for small, medium, and large enterprises. The goal is to strengthen the role of these enterprises in the Iraqi economy and bridge the gap between private sector financing demand and supply.
Conclusion: A Path to Stability and Growth
The Central Bank of Iraq's banking reform roadmap, initiated post-US negotiations, represents a pivotal moment in the country's efforts to modernize its financial sector, promote economic stability, and foster a more robust private sector. These reforms are crucial for Iraq's economic recovery and its transition towards a more diversified and resilient economy.