DINAR REVALUATION REPORT: The Fragile State of the Iraqi Economy in 2024 and Proposed Solutions, 11 SEPT

 The Fragile State of the Iraqi Economy in 2024 and Proposed Solutions

As of September 10, 2024, the Iraqi economy is facing significant challenges that have raised concerns among economists and policymakers alike. 1 The economy has been heavily reliant on oil revenues, which account for over 99% of exports, 85% of the government budget, and 42% of gross domestic product. 1 This over-dependence on oil has left the country vulnerable to macroeconomic volatility and restricted fiscal space for countercyclical policy measures.

The Current State of the Iraqi Economy

The most recent data from January 2021 showed that Iraq's unemployment rate was more than 10 percentage points higher than its pre-COVID-19 level of 12.7 percentage points. 1 The economy has been gradually recovering from the oil and COVID-19 shocks of 2020, with real GDP estimated to have increased by 1.3% in 2021, following a sharp contraction of 11.3% in 2020. 1 The non-oil economy grew by over 6% in the first nine months of 2021, driven by a robust performance in the services sector as COVID-19 restrictions were eased.  1

The Risk of Economic Collapse

Economic researcher Manar Al-Obaidi has identified eight hidden weaknesses in the Iraqi economy, which he believes could lead to its collapse. 2 Al-Obaidi argues that the collapse is not a future event but rather a process that has been ongoing for a long time, exacerbated by fluctuations in oil prices. 2 The sustainability of the Iraqi economy is primarily threatened by its lack of diversity in revenue sources and the mismanagement of expenditures. 2

Proposed Solutions

To address the challenges and prevent a full-scale economic collapse, several solutions have been proposed by experts and policymakers. These include:

1. Diversification of the Economy: Reducing dependence on oil by developing other sectors such as agriculture, tourism, and manufacturing. 1
2. Fiscal Reforms: Implementing measures to control government spending, improve tax collection, and mobilize non-oil revenues. 1
3. Private Sector Engagement: Encouraging the growth of the private sector by creating a business-friendly environment, reducing bureaucratic red tape, and attracting foreign investment. 2
4. Job Creation: Focusing on creating productive job opportunities, particularly for the youth and women, to reduce unemployment. 1
5. Anti-Corruption Measures: Strengthening transparency and accountability to reduce corruption and improve the overall business climate. 2

Conclusion

The Iraqi economy has been facing significant challenges, exacerbated by its heavy reliance on oil revenues and the impact of the COVID-19 pandemic. To prevent a potential collapse and achieve long-term stability, the country must implement comprehensive reforms aimed at diversifying its economy, improving fiscal management, and fostering a more vibrant private sector.

An Economist Warns Of The Collapse Of The Iraqi Economy And Provides Solutions, 11 SEPT

 Economy |  09/09/2024  Mawazine News – Baghdad  An economic researcher considered the existence of 8 hidden weaknesses in the Iraqi economy, in a comment on fears of the collapse of the economy,  

describing that the collapse essentially occurred a long time ago, and fluctuations in oil prices prolong or accelerate the final collapse.
 
Economic researcher Manar Al-Obaidi said in a statement that  with the decline in oil prices and the unprecedented rise in operating expenses to reach a growth rate in current expenditures exceeding 30% and a decline in revenues by 16%, the most important question arises:

Is the Iraqi economy facing a crisis or collapse?

The sustainability of any economy depends primarily on the  diversity of its sources and the   control and planning of its expenditures.”

He continued,  “We cannot expect the sustainability of an economy in which more than 500,000 researchers enter the labor market annually and is unable to create productive job opportunities with more than 20 to 30 thousand opportunities as a maximum, and an economy based on sales of one commodity and whose prices are not controlled through One port and only two countries.”
 
He described the Iraqi economy as “an
 
     economy based on a deteriorating business environment with no role for the private sector in turning the wheel of the economy, an
 
     economy that adopts the private sector and pastoral laws and legislation and gives preference to the public sector, a
 
     consumer economy based on an unprecedented consumption pattern without production having a role, an
 
     economy that employs more than 6 million employees with almost non-existent productivity, an  
 
     economy marred by corruption, lack of transparency and inequality of opportunities, an
 
     economy that does not have foreign investments and is unable to attract them.”  He concluded:
 
“The collapse occurred a long time ago, and the
 
fluctuations that are occurring in oil prices are merely prolonging or accelerating the collapse process, and the
 
manifestations of the collapse will be faster than the decline in oil prices.” https://www.mawazin.net/Details.aspx?jimare=254671   

Coffee with MarkZ. 09/10/2024

MarkZ  Update- Some highlights by PDK-Not verbatim

MarkZ Disclaimer: Please consider everything on this call as my opinion. People who take notes do not catch everything and its best to watch the video so that you get everything in context.  Be sure to consult a professional for any financial decisions

​​Member: Good Tuesday Morning Mark Z, Mods and RV’ers !

​​Member: Really could use some Hopium today. Hard to watch everything play out, but we still sit here and wait. I wish I were better at patience.

MZ: I think this is important and setting the stage for a fantastic move and possible clouding the reason why??? From the Wall Street Journal . “ Iraqi Banks used US-created system to funnel funds to Iran” Iran does have a tremendous amount of influence in Iraq. Now what are they going to do?  They feel they have to crack in on this….If they do this- dinar may drop by at least 10% and the US dollar will be more in demand. 

MZ: In a news article from Baghdad today- “ It will turn the parallel market upside down-Sources: Expected decisions from the Central Bank will confuse markets and raise exchange rates”  When they say raise exchange rates…they are talking “in the wrong direction” So if one US dollar now equels 1310 dinar ….it will go to one US dollar equels 1500 dinar or so. So what they are going to do is have an auction on US dollars. They are planning on injecting ore US dollars into the markets and buy dinar off of the streets. “To help support the exchange rate” is the claim. And to help clean up the sanctions and oney laundering….

MZ:  Think about this. It will hurt the value of the dinar temporarily…..but allows them to buy it at a discount through major auctions. Suck trillions more dinar off the streets …What a great prep going into a re-valuation. It will help them justify a higher value. This may be major for us. 

MZ: This is my theory and I think it makes sense. 

Member: Sounds like bad news to me….like they won’t RV for weeks now.

MZ: If auctions are immediate- they could be ready in a day or two. I believe they will move forward quickly on this. 

MZ: Also the Iranian President is coming to Iraq tomorrow for some talks….this comes on the heels of the articles about Iraq funneling funds to Iran. 

MZ: Remember Sudani said just last week that they plan to revalue this year during his administration….I think the timing is great and they are setting the stage. 

​​ Member: Remember- by the time we see Iraq news it was already done and we are getting it after the fact?

Member: Mark-any word from your banking, bond or group connections??

MZ: Bond people are still quiet this week. They are still waiting. 

Member: I feel sorry for all the bond people that are asked to travel only to be told SOON

Member: I think the Bond people  are like us …like the Boy who cried wolf….the PTB lie to them constantly…..and we/they no longer believe anything. 

MZ: “Illinois Trucking Company with 480 drivers abruptly ceased operations”  They are contracted with the US postal service to haul mail. They are ceasing operation as of Monday and now there will be many postal trailers sitting at docks as of next week. 

Member: What is all the chatter about National Guard Troops in every major city?????

MZ: We are seeing very unusual movement with the National Guard in major cities. We don’t know the reason why….but lots of theories out there.

Member: Maybe because tonight is supposed to be a presidential debate?

Member: Wish it was because we need security when we exchange …sigh

Member: Maybe they are finally starting to clean house……start arrests?

Member: Is it our military holding things up?   So it seems!!! Every other country is ready to go!!! What’s up with that?

Member: I really hope the RV goes with Nesara/Gesara so we can all be blessed at once

Member: Amen to that. 

Member: Mark can you go over your podcast schedule this week?

MZ: I will be off to the airport for a trip stateside right after this podcast. Going to see my children for their birthdays…I will continue to do mornings…..Zester will be filling in some evenings this week …. There will be no Whiskey and Wisdom this week 

Member: Zester is a chip off the old block and is quite knowledgeable.

Member: Safe travels Mark….and have a great trip. 

Member: Markz… may your trip be uneventful & your visit exciting & relaxing!

Member: Everyone stay positive…..and keep the faith 

Member: Faith consists in believing when it is beyond the power of reason to believe.

THE CONTENT IN THIS PODCAST IS FOR GENERAL & EDUCATIONAL PURPOSES ONLY&NOT INTENDED TO PROVIDE ANY PROFESSIONAL, FINANCIAL OR LEGAL ADVICE. PLEASE CONSIDER EVERYTHING DISCUSSED IN MARKZ’S OPINION ONLY

IRAQ BOOTS OM THE GROUND REPORT BY FIREFLY, 10 SEPT

 Frank26  

[Iraq boots-on-the-ground report] 

FIREFLY: CBI is talking about a mechanism to terminate the electronic platforms. 

FRANK:  That's right.  They can't steal the money through  that method anymore.  This is fantastic...The American dollar and the dinar are now being protected from those that were stealing  it, from Iran.  Because that was the US Treasury's #1 requirement.  We called it security and stability and so did Dr. Shabibi...     ;

 FIREFLY:A big delegation including Alaq...He went to Erbil for the economic meeting.  There was a closed meeting after the main meeting.  We expect it was mainly about the oil and gas HCL they have been talking to us about.   

FRANK:  This is all monetary reform education. 

How Iraq's Central Bank Decisions Shape Inflation and Currency Strength

DINAR REVALUATION REPORT: THE REDUCTION IN INFLATION CONTRIBUTES TO STRENGTHENING THE VALUE OF THE IRAQI DINAR, 10 SEPT

Iraq's Economic Growth and Inflation Rates in 2024: The Role of Central Bank Decisions

In 2024, Iraq's economy continues to demonstrate resilience and growth, significantly influenced by the decisions of the Central Bank.

 A key figure in this context is Mazhar Mohammed Saleh, the financial advisor to the Prime Minister, who has explained that the Central Bank's decisions have played a pivotal role in reducing inflation rates in the country. 1

 This reduction in inflation not only benefits the general public by stabilizing prices but also contributes to strengthening the value of the local currency, offering a more stable economic environment.

Economic Growth and Fiscal Policies

According to the International Monetary Fund (IMF), economic growth in Iraq is projected to continue, supported by a fiscal expansion policy. 1 This expansion is critical in absorbing the rapidly growing labor force, boosting non-oil exports, and broadening the tax base. The authorities are advised to focus on enabling private sector development, including reforms in labor markets, modernization of the financial sector, and restructuring of state-owned banks, along with reforms in the pension and electricity sectors.

Inflation Rates and Central Bank's Role

Inflation rates in Iraq have been on the decline, dropping from 7.5% in January 2023 to more stable levels, as reported by the official spokesman for Iraq's Ministry of Planning, Abdul Zahra Al-Hindawi.  5 This decrease is credited to the effective decisions made by the Central Bank, which have contributed to stabilizing the economy. The Bank's strategies have not only reduced inflation but have also played a crucial role in strengthening the local currency, thereby enhancing the country's economic stability.

Outlook and Challenges

Despite the positive outlook, medium-term vulnerabilities associated with oil price volatility have increased significantly. 1 Reducing oil dependence and ensuring fiscal sustainability while protecting critical social and investment spending will require a significant fiscal adjustment. The focus should be on controlling the public wage bill and increasing non-oil tax revenues.

Conclusion

In summary, Iraq's economic growth and the stabilization of inflation rates in 2024 are attributed to the strategic decisions of the Central Bank. These decisions have not only reduced inflation but have also contributed to strengthening the local currency. However, challenges remain, particularly in diversifying the economy and ensuring fiscal sustainability.

LATEST FROM CLARE: " REDUCING THE INFLATION RATE CONTRIBUTES TO STRENGTHENING THE VALUE OF THE LOCAL CURRENCY" , 10 SEPT

 Clare 

  Article:  "Prime Minister's Advisor: Central Bank Decisions Contribute to Reducing Inflation Rates in the Country"   

Quote: "The financial advisor to the Prime Minister, Mazhar Mohammed Saleh, explained that the decisions of the Central Bank contribute to reducing inflation rates in the country, and pointed out that economic growth contributes to strengthening the value of the local currency"

 Article:  "Zaha Hadid Architects Unveils Construction Progress of Central Bank of Iraq Skyscraper in Baghdad"  

Quote: "The Central Bank of Iraq (CBI) headquarters...is a new landmark on the banks of the Tigris River in Baghdad. Now the tallest building in the city, the 170-meter-tall skyscraper aims to echo the values of the institution: solidity, stability, and sustainability."