The Central Bank of Iraq is implementing banking reforms and enhancing currency stability, aiming for economic growth and cooperation with the Kurdistan region.
Highlights
π¦ Central Bank announces comprehensive banking reforms.
π΅ Electronic platforms for foreign transfers are in progress.
π Focus on unifying financial practices between Baghdad and Kurdistan.
π Emphasis on reducing inflation and strengthening the Iraqi dinar.
π€ Cooperation with the US Treasury and international banks is ongoing.
π️ Major investments planned in oil and gas sectors.
π️ Political stability is crucial for economic goals.
Key Insights
π³ The Central Bank’s reforms indicate a shift towards a more modern banking system, reducing reliance on dollar auctions and enhancing local currency use.
π The move to electronic transfers aligns with global banking standards, potentially attracting foreign investments and improving trade efficiency.
π Unifying financial practices between Baghdad and Kurdistan may lead to greater economic stability and development for both regions, benefiting all Iraqis.
π The focus on inflation control and currency stability is vital for public confidence and economic growth, suggesting positive future prospects for the Iraqi dinar.
π Collaborations with international financial institutions highlight Iraq’s commitment to meeting global standards, which could enhance its economic reputation.
π’️ Investments in the oil and gas sectors by major companies like Baker Hughes signify confidence in Iraq’s economic potential and its strategic importance in energy markets.
π️ Political and administrative stability remains essential; ongoing efforts to address political challenges indicate a commitment to achieving a unified and prosperous Iraq.
Preliminary Agreement on US Troop Withdrawal from Iraq by 2026
On September 7, 2024, Reuters reported that the United States and Iraq have reached a preliminary agreement on the withdrawal of US-led coalition forces from Iraq, with the majority of troops expected to depart by the end of 2026. The plan, which has been broadly agreed upon but awaits final approval and a formal announcement, would see several hundred troops depart by September 2025, with the remaining forces set to leave by the end of 2026.
Agreement Details and Timeline
According to sources familiar with ongoing negotiations, an agreement has been reached, and it is now a matter of when to announce it. Discussions are underway to establish a new advisory role that could see a smaller number of US troops remain in Iraq following the drawdown.
An official announcement was initially expected weeks ago but was delayed due to regional tensions stemming from Israel's war in Gaza and remaining logistical details.
Technical negotiations between Baghdad and Washington, initiated by Iraqi Prime Minister Mohammed Shia al-Sudani in January 2023, have concluded.
Bilateral Cooperation and Shift in Relationship
Farhad Alaaldin, the prime minister's foreign affairs adviser, said the talks marked a shift in the US-Iraq relationship, emphasizing future bilateral cooperation in military, security, economic, and cultural sectors. Alaaldin did not comment on the specifics of the plan.
The agreement follows months of rising tensions, including attacks by Iran-backed Iraqi militias on US forces, which have killed three American troops and injured dozens more.
US forces have retaliated with airstrikes, complicating efforts to stabilize Iraq after years of conflict.
Current US Presence in Iraq
The US currently has 2,500 troops in Iraq and 900 in neighboring Syria, part of a coalition formed in 2014 to combat the Islamic State. Although Islamic State has been territorially defeated in Iraq since 2017, US officials argue that their presence helps counter Iranian influence in the region.
Under the new plan, coalition forces would vacate the Ain al-Asad airbase in Anbar province and scale back their presence in Baghdad by September 2025. Troops are expected to remain in Erbil, in northern Iraq's semi-autonomous Kurdistan region, until the end of 2026 to assist with operations.
Impact on Regional Tensions
The withdrawal of US troops could potentially impact the regional power dynamics, given that the US military presence in Iraq has been instrumental in keeping Iran and Iran-backed militants in check. Some observers believe that their departure could have significant implications for the security situation in the region.
π’Part 2/2 - Wonderful help from Helicopter Lady, Liberty Lounger Extraordinaire.
Topic: IRAQ and Troop withdrawal - 9.8.24
π’ Helicopter Lady: Hello dear Ginger: The good news is that Reuters has announced that Iraq and the US have come to a preliminary troop withdrawal agreement starting November 2025.
It means that we are finally close to an official announcement.
The date of November 2025 deadline solves 3 problems:
1. Iraq can make an "official announcement"
2. It gives them 15 months to pay the US for all the infrastructure projects that the Americans completed during the oversight period and military occupation
3. It allows the WTO now to proceed with the next step in accrediting Iraq's membership.
There is another reason why this is very good news! Trump wants to make a point that even while our US troops are leaving in a friendly way, it still takes a year to get them (and our equipment) home safely. I think he is building the story so that he can use it as a contrast with how (carelessly) Biden withdrew the troops from Afghanistan willy nilly: in just one week, causing all sorts of upheaval, including getting people killed during the process.
President Trump wants the Americans to see the difference. Maybe it is timed like this to bring it up during the debate on Tuesday between President Trump and Kamala. I don't see how Kamala can last 1 1/2 hours under Trump's stare. π₯ππ₯
π’ Ginger adds: I feel really great about this USA Troop withdrawal announcement and even the timing of it. It's not discouraging to me in the least bit. I don't foresee at all that this will delay the financial reforms and "The Camper Event".
We heard news many months back, which I brought to you, explaining that the withdrawal of USA military was slated for next year. Plus Al Sudani used kinda forceful words insisting the military depart the region, but this is also kind of a way to "save face", like we don't need you anymore! We are sovereign now! But behind closed doors, at the same time, you can imagine him saying, "Hey, could we get a little help for just a little while longer?" - knowing Iraq is about to go through an incredible transformation - right?
I explained last Fall that the troops were going to begin a slow, scheduled, safe and intentional departure but they would leave about 1000 military members behind for ongoing safety needs. This is the crew which will help oversee security and stability and training for Iraq during and after their transition period.
We also told you about a retired Special F0rces Marine, from where we live, who was tasked to return to the sandbox as a contract worker to train other military, new and incoming to the sandbox, on security protocols and procedures for the region, because he was already well-experienced in that department. My gut tells me that he's equipping those final one thousand troops so that the others, those who've been there the longest, get to begin the rotation to come on home. This allows Iraq to "save face", maintain some extra security and safety standards for all those who will be traveling there and exchanging - plus the removal of any remaining bad actors who cause trouble before, during and after Iraq IQD rate change occurs.
I just want to be clear that Iraq isn't going to need to hold off their RI/RV until the last of the troops withdrawal in November 2025. ➡️ The USA can still get paid, the USA troops can begin a scheduled, calculated and planned departure; and the remaining skeleton crew - bare minimum needed for securing safety during the transition - can all happen before next Fall 2025.
Hope this helps and brings you as much encouragement as it does for me! This is when you know you "can see the light at the end of the tunnel" and be super thankful that it's not an on-coming train π! ππππ
~ Ginger of the Liberty Lounge, Ambassador for God's Abundance with the New Earth Alliance
Central Bank Decisions and Their Impact on Inflation and Currency Strength in Iraq
In the context of Iraq's oil-dependent economy, the Central Bank's decisions play a crucial role in managing inflation and stabilizing the currency. As of September 9, 2024, the Iraqi economy is recovering from the oil and COVID-19 shocks of 2020, with real GDP estimated to have grown by 1.3% in 2021 after a sharp contraction of 11.3% in 2020. Government revenues surged by 73% year-over-year in 2021, spurred by higher oil prices and devaluation measures that boosted non-oil domestic revenues. However, this fiscal recovery and the currency's stability are influenced by the Central Bank's policies.
Central Bank's Role in Managing Inflation
The Central Bank of Iraq faces challenges in controlling inflation, especially given its high oil dependency. Inflation shocks can impact the exchange rate, with the currency of a country experiencing higher-than-expected inflation expected to depreciate against another's currency to maintain purchasing power parity. However, in advanced economies, exchange rates may appreciate against major trade partners' currencies on days of higher-than-expected inflation surprises, a phenomenon that contrasts with the PPP theory's predictions. The Central Bank's policy reactions to inflation shocks significantly influence market behavior.
Central Bank's Influence on Currency Strength
The Central Bank's decisions, particularly regarding foreign currency transactions, have a direct impact on the strength of the Iraqi dinar. For instance, the decision to stop using the Chinese yuan after the US Federal Reserve accused Iraq of "inflating transfers" could raise the US dollar exchange rate and increase inflation, potentially harming Iraqi families. This move has been described as a "misstep" by economists, as it could negatively impact the local market by increasing demand for the dollar and subsequently the dollar exchange rate.
Fiscal Adjustments and Economic Reforms
The International Monetary Fund (IMF) has recommended significant fiscal adjustments for Iraq, emphasizing the need to reduce oil dependence and ensure fiscal sustainability. The authorities are advised to control the public wage bill and increase non-oil tax revenues while enabling private sector development through labor market reforms, financial sector modernization, and restructuring of state-owned banks.
Conclusion
The Central Bank's decisions are critical in managing inflation and stabilizing the currency in Iraq. However, the effectiveness of these decisions is influenced by the country's high oil dependency and external economic pressures. To ensure long-term economic stability, Iraq must implement fiscal adjustments and economic reforms recommended by the IMF, focusing on reducing oil dependence and fostering private sector development.
September 8, 2024 Last updated: September 8, 2024 Independent/- As part of the Iraqi government’s efforts to improve the economic situation and stabilize the local currency, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, revealed the role of the central bank’s decisions in reducing inflation rates and enhancing the value of the national currency.
While Saleh's statements reflect the government's commitment to achieving economic stability, many questions arise about the effectiveness of these policies in confronting real economic challenges.
The role of the central bank in stabilizing the currency: Saleh stressed that the monetary policies of the central bank, including decisions to raise or lower interest rates, play an important role in stabilizing the local currency.
