... there are not any of the newer lower denominations out in circulation in Iraq...if the newer lower denominations were already in circulation...Without the revaluation of the dinar at least inside Iraq, the economy would crash because the money would be totally worthless
...How could anyone...buy anything with the newer lower denominations dinar notes without first a revaluation? It would take truck loads of money just to buy groceries...the CBI would have formally announced the Project to Delete the Zeros as this is the ONLY way the lower denominations can come out...There will be NO SECRET when they come out...The project to delete the zeros has NOT yet begun.
EXCERPTS FROM MNT GOAT : A CONVERSATION WITH MU CBI CONTACT
I first want to tell you about my conversation with my CBI contact yesterday, Thursday.
I know, I know I am late in posting my Newsletter but I am working two jobs now and it is hard to even keep my eyes open some days at night while I compose this news for YOUR viewing, not mine, since I already know the information.
My contact told me that the committee has been put on notice that the Project to Delete the Zeros may go forward this fall but not until the US elections are over.
There will have to be a downfall of the current administration in power to make this happen. She told me that they listen to the propaganda from these RV intel sites and its all just lies. Its all just over speculating and nothing will ever come of it.
The Project to Delete the Zeros will initiate the process that will lead to the reinstatement. She also said that the WTO is waiting for the necessary changes in the Investment Law as it is held up in the GOP to discuss kickback comments from the parliament. So there is still work to be done on this bill too.
Next I asked again about the Oil and Gas Law. I was told that the US will absolutely NOT agree to release the reinstatement until this law is passes and protects the oil revenues. The good news is that Iraq recently told us that the non-oil revenues are right on track where they need to be at this time and the economy is progressing accordingly. I was told the safeguards against inflation and downturns are in place. So, I have to tell you that reading some of these articles we get mixed messages. But she told me that these are lies again from the far left in Iraq who still want to portray Iraq in a backwards state the not the real Iraqi economy. Keeping Iraq suppressed gives them enormous power, a power base that is slipping away. Even now with all the success of Al-Sudani,
they are discouraging against early elections and I believe they are going to give Al-Sudani a full four year term. This is all wonderful news.
Winds of Change in Iraq's Economy: The Role of Electronic Payment Systems in 2024
The winds of economic change are indeed blowing in Iraq, and electronic payment systems are at the forefront of this transformation. The adoption of digital payment methods is seen as a catalyst for modernizing the country's financial system and stimulating economic growth [1].
The Digital Leap: A Shift from Cash to Cards
Iraq has witnessed a significant leap in promoting the use of electronic payment cards, moving away from a cash-based economy [2]. This shift is attributed to official projects and digital policies that aim to protect public funds from corruption and enhance payment system efficiency by transitioning to digital payments [2]. The government's efforts to promote e-payments and point-of-sale (POS) systems are part of a broader strategy to limit cash transactions and improve financial transparency [3].
IMF's Perspective on Iraq's Economic Recovery
The International Monetary Fund (IMF) noted Iraq's strong economic rebound and declining inflation, which resulted from improved domestic conditions and the implementation of the first-ever three-year budget [1]. However, the IMF also highlighted the risks associated with Iraq's large fiscal expansion and its vulnerability to oil price fluctuations [1].
The Rise of Digital Banking
The Central Bank of Iraq (CBI) Governor, Ali Al-Allaq, predicted a rise in the number of digital banks in the country, forecasting Iraq to become a leader in digital banking compared to its neighbors [2]. This prediction underscores the potential for electronic payment systems to drive economic diversification and foster a private sector-led growth [1].
Legal Framework for Electronic Payments
Iraq has taken legal steps to regulate electronic payment services, mandating that entities offering such services must be licensed by the Central Bank and comply with its standards [3]. This regulatory update, published in April 2024, aims to enhance the efficiency, security, and transparency of the financial sector [3].
UNDP's Role in Electronic Payments
The United Nations Development Program (UNDP) approved the electronic payment services system in Iraq, marking a pivotal step in the country's financial sector and digital transformation [6].
Conclusion
Iraq's adoption of electronic payment systems is a pivotal development in its quest for economic modernization and stability. The country's digital leap, endorsed by international organizations and supported by legal and regulatory frameworks, sets the stage for a more diversified and resilient economy.
Are the winds of “economic” change blowing after electronic payment?
Will electronic payment end the fluctuations of the Iraqi economy, and what if it has a negative impact on it? And how can it be controlled without supervision?
These are big questions that the “Iraq Observer” agency puts in the hands of those in charge, while the activities of the “Electronic Payment towards Financial Stability in Iraq” conference were launched today, Saturday, in the capital, Baghdad, under the auspices of Prime Minister Mohammed Shia Al-Sudani, and jointly organized by the Prime Minister’s Office, the Association of Private Banks, and the Central Bank of Iraq, at the Rashid Hotel, with the attendance of Arab and international banking figures.
Absolute rentierism
In turn, the economic expert Abdul Karim Al-Issawi said, “All the economic reforms and legal legislation undertaken by the Iraqi governments in the field of advancing and developing the performance of the economy to reduce the contribution of the extractive sector in the formation of commodity sectors, the contribution of other economic commodity sectors; foremost of which are agriculture and industry.”
Al-Issawi told the Iraq Observer Agency, “The stereotype of absolute rentierism from a single funding source represented by oil export revenues remains as it is.”
The economic expert explained that “one of the reasons for this, most notably the absence of correct and scientific visions to restore life to the manufacturing industries after they were exposed to sabotage and the loss of their qualified cadres, and the industries were exposed to the phenomenon of commercial dumping practiced by neighboring Arab and non-Arab countries, the result of which was their exclusion from competition, in addition to the lack of control over official and unofficial border crossings.”
He continued: “On the other hand, the process of employing workers has doubled as a policy followed by successive Iraqi governments after 2003 for reasons and motives, most of which are political and without well-studied scientific planning. The problem was reinforced by the weak contribution of the private sector to economic development, which did not receive appropriate support.”
He pointed out that there is a point that must be noted and reminded of: the transitional phase laws have increased public expenditures from the federal budget, and as a result, made the allocations for operating expenses account for more than 80% of Iraq's annual budget.
He added, "It is unfortunate that this large amount of spending is not on Iraqi products, but rather on imports of foreign goods and services, and thus is reflected in the economic multiplier of the countries exporting to Iraq."
He said that the reality of the Iraqi economy puts the government of Prime Minister Mohammed Shia al-Sudani before difficult choices that must be made to reduce spending, rationalize government expenditures for the three presidencies, and reduce budget allocations for some ministries that receive taxes from providing services to beneficiaries.
He said: “It is certainly necessary for Iraqi governments to always keep in mind that the issue of diversifying the Iraqi economy is extremely important, given the nature of crude oil in global markets as a commodity that is exposed from time to time to shocks whose effects Iraq cannot avoid due to the lack of economic and financial buffers such as sovereign funds or a stock market, which can be resorted to to provide financial resources to meet the requirements of operational and investment expenses.
He added: “What reinforces these fears are the geopolitical tensions in the Middle East and the military threats between the occupying entity and Iran and other areas in southern Lebanon and Yemen and from parties in Iraq. There is no doubt that a direct military clash will quickly affect Iraq’s oil exports if Iraq’s ports are targeted and the Strait of Hormuz is closed.”
Official reassurance
In turn, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, reassured citizens after the global decline in oil prices.
“Despite the noise surrounding the global energy markets and the conflicting possibilities about their impact on the national economy, it is necessary to know the strengths of the Iraqi economy,” Saleh said in a statement followed by the “Iraq Observer” agency. “The decline in Iraq’s external debt to its lowest level in the last forty years, not exceeding $10 billion, came from the government’s determination to follow a precise program to settle the external debt, which today constitutes less than 9% of the country’s total foreign exchange reserves, which are approximately $108 billion, and are the highest reserves in the country’s monetary and financial history.”
He added, "In terms of stability and growth in economic activity, the growth indicators in the non-oil GDP have touched 6%, supported by construction and housing activities and infrastructure development, in addition to the development of grain sector production, accompanied by the renaissance of the transportation and communications sector and the growth of the digital economy."
Quarter of a billion
While the Central Bank of Iraq's dollar sales amounted to more than $257 million in the currency auction.
The bank sold in its auction the day before yesterday 257 million 345 thousand 110 dollars, covering it at a basic exchange rate of 1310 dinars per dollar for documentary credits and international settlements for electronic cards, at a rate of 1310 dinars per dollar for foreign transfers, and at a rate of 1305 dinars per dollar in cash.
Most of the dollar sales went to boost balances abroad in the form of transfers and credits, which amounted to $244,595,110, up 95% from cash sales of $12,750,000.
The number of banks that purchased cash dollars was one bank, while the number of banks that met requests to enhance balances abroad was 15 banks, and the total number of exchange companies participating in the auction was 22 companies. link
FIREFLY:Mr Sammy [Iraqi bank manager friend] says we are in charge of our own money. It's not being overseen by the US Treasury.
FRANK: This is the most powerful thing I can share with you tonight...IMO when Alaq came back he told everybody there's no more sanctions on the banks of Iraq...That means your program rate does not exist anymore
.
FIREFLY: Mr Sammy says they are running the new system...This new system will remain for the rest of the year...This monetary reform education phase we're in right now will last for this whole year...
FRANK: Mr. Sammy and I are on the same page. The only difference is he's turning the page a little slower than I am. I do not see this going into next year. Actually it's impossible. I see the monetary reform education...commercials...US Treasury revealing to you all sanctions have been release, which tells me we are extremely close...Mr Sammy...tells you it's coming at the end of the year or beginning, I tell you it's now...
Iraq's Integration into the International Financial System: Central Bank's Role in Maintaining a Stable Exchange Rate
Iraq's journey towards a stable exchange rate and integration into the international financial system has been marked by significant reforms and challenges.
In 2024, Iraq has taken notable steps to stabilize its exchange rate and participate more effectively in global financial markets.
The Dual Exchange Rate: An Unusual Phenomenon.
Iraq's dual exchange rate system is a result of several factors, including excessive demand for US dollars internationally and internal demand for dollars within Iraq. Countries like Iran and Syria, with devalued local currencies, have driven up demand for US dollars, impacting Iraq's currency system and contributing to the existence of dual exchange rates.
Central Bank's Strategies for Stabilization.
The Central Bank of Iraq (CBI) has been pivotal in implementing measures to stabilize the exchange rate and integrate Iraq into the international financial system. The CBI's strategies include:
Phasing Out the Dollar Auction
By the end of 2024, the CBI plans to close the currency sale window, marking the end of a two-decade-long operation. This move is part of a broader plan to integrate Iraq into the global economy by shifting to direct commercial banking transactions.
Increasing Regulated Dollar Transactions
Iraq has increased overseas dollar transactions through the official SWIFT system, which helps combat money laundering and ensures compliance with international sanctions.
New Restrictions on Dollar Use.
Starting in 2024, the CBI has banned cash withdrawals and transactions in US dollars, focusing on the Iraqi Dinar for internal trade. Foreign trade can be settled in other currencies like the Euro, Emirati Dirham, Turkish Lira, and Indian Rupee.
Conclusion
Iraq's efforts to stabilize its exchange rate and integrate into the international financial system are multifaceted, involving a range of measures from the CBI. By phasing out the dollar auction, increasing regulated dollar transactions, and implementing new restrictions on dollar use, Iraq is moving towards greater financial stability and global participation.