DINAR REVALUATION REPORT: Parliamentary Finance Committee's Visit to Erbil: A Focus on Non-Oil Revenues, 19 SEPT

 Parliamentary Finance Committee's Visit to Erbil: A Focus on Non-Oil Revenues

In September 2024, the Iraqi Parliamentary Finance Committee is scheduled to visit Erbil, the capital of the Kurdistan Region, to discuss non-oil revenues and other financial matters. 1  3  5

Background on Iraq's Fiscal Landscape

Iraq, heavily reliant on oil for its revenue, has been grappling with fiscal challenges and a need for economic diversification. 1 The country's ongoing efforts to modernize its financial and banking sectors and reduce dependence on oil have been hindered by political dynamics. 1 As of September 19, 2024, the Iraqi government faces a potential crisis due to plummeting oil prices, which could jeopardize its ambitious plans. 4

Recent Developments in Baghdad-Erbil Relations

The relationship between the federal government of Iraq and the Kurdistan Regional Government (KRG) has been tense, particularly over revenue-sharing disputes. 2The KRG has been accused of not meeting its obligations to hand over 400,000 barrels per day of crude production to the state marketer SOMO. 2 The dispute has been further complicated by Turkey's refusal to reopen its port of Ceyhan to Iraqi crude exports. 2

Non-Oil Revenues: A Strategic Focus

In light of the ongoing fiscal challenges and the need for economic diversification, the upcoming discussions between the Parliamentary Finance Committee and the KRG will likely focus on non-oil revenues.  3 These revenues are crucial for the sustainability of the Iraqi economy, especially given the volatility of oil prices. 4

The Role of Non-Oil Revenues in the Budget

Non-oil revenues, which include taxes, fees, and income from various sectors such as agriculture and tourism, play a vital role in the federal budget. 1 The 2024 budget, which was approved by the Iraqi government in March and sent to the legislature for voting, includes a record $152 billion in spending.  3 The budget originally allocated 12.6% of the spending to the Kurdistan Region. 3 However, the final numbers may have been adjusted during the voting process. 3

Challenges and Opportunities

The discussions between the Parliamentary Finance Committee and the KRG will address the challenges and opportunities associated with non-oil revenues. 3Economic experts have suggested that Iraq must implement serious plans to reduce imports, encourage the private sector, cut unnecessary expenditures, and increase non-oil revenues. 4

Parliamentary moves to increase state financial revenues, 20 SEPT

 Parliamentary moves to increase state financial revenues

The Parliamentary Finance Committee revealed that it held a meeting with the Ministry of Planning to present proposals to maximize the state's non-oil revenues.

The committee's vice-chair, Ikhlas Al-Dulaimi, said in an interview with "Al-Sabah", followed by "Al-Eqtisad News", that "the committee met with the Ministry of Planning and had some proposals regarding maximizing the state's non-oil financial resources, indicating that these proposals need support from the Finance Committee, which will meet with a delegation from the Ministry of Planning to exchange views and proposals that would maximize the state's non-oil revenues."

Al-Dulaimi added that "the tax rate set by the government is very small and does not match the volume of imports, which amounts to approximately 20 trillion dinars. Therefore, this volume of imports should be accompanied by taxes commensurate with its size, but due to the old legislation that is not consistent with the state's vision and does not match the work of other bodies, the need calls for us to review and study the laws."

The MP pointed out that "the Finance Committee is adopting this issue, by submitting a comprehensive study aimed at maximizing non-oil revenues, especially taxes and customs."
It is noteworthy that the Finance Committee held a meeting the day before yesterday, Monday, which discussed the activation of non-oil revenues.

The head of the committee, Atwan Al-Atwani, stressed during the meeting the need for a representative from the committee to attend all meetings of the other parliamentary committees, to express an opinion on the joint laws, while the committee decided to conduct a field visit to the Kurdistan Region and the ports to follow up on the related control procedures.

The committee also discussed the possibility of legislating a special law on collection and taxation for all economic sectors, or including them in the economic reform law, in addition to discussing the proposal to establish a sovereign fund for the country, and forming a team to review government procedures related to revenues and estimate financial returns according to spending units. link

MILITIAMAN CC NOTES HIGHLIGHTS: ANALYSIS OF ART. 140 & non oil growth , 20 SEPT

Summary

Iraq is focusing on boosting non-oil revenues and digital transformation, with significant government and financial developments underway.

Highlights

• 🇮🇶 Iraq is prioritizing non-oil revenue growth.
• 💰 Central Bank governor asserts oil price decline doesn’t impact exchange rates.
• 📊 New electronic tax collection mechanisms are being implemented.
• 🌐 Strategic partnership with Apple aims to enhance Iraq’s digital economy.
• 📅 Article 140 discussions indicate progress in governance and justice.
• 🔍 Enhanced audit processes for transactions are being introduced.
• ⚖️ Commitment to financial transparency and accountability is increasing.

Key Insights

• 📈 Non-Oil Revenue Focus: Iraq’s shift towards a private sector economy is essential for reducing dependency on oil, which is crucial for sustainable growth.
• 🔄 Economic Model Development: The proposed economic model emphasizes automation and free trade principles, indicating a move towards modernizing Iraq’s economy.
• 💵 Central Bank Stability: The Central Bank’s ability to defend the dinar’s exchange rate is key to maintaining economic stability amid fluctuating oil prices.
• 🌍 Digital Transformation: Collaborations with global tech firms like Apple highlight Iraq’s commitment to digital advancements, which can significantly boost economic growth.
• 🏛️ Implementation of Article 140: Progress in addressing historical injustices reflects the government’s dedication to political and social stability.
• 📉 Enhanced Audit Mechanisms: The shift to real-time audits for remittances demonstrates a commitment to financial integrity and reduces corruption risks.
• 💳 Electronic Tax Collection: The move towards digital tax collection streamlines processes, enhances efficiency, and improves government revenue tracking.

IRAQI DINAR REVALUATION LATEST UPDATES OF IRAQ BOOTS ON THE GROUNDS REP...

Economist: The free mass is estimated at 70 trillion dinars and can be invested electronically, 20 SEPT

  Economist: The free mass is estimated at 70 trillion dinars and can be invested electronically

Economic expert Dr. Safwan Qusay confirmed today, Sunday, that there are about 70 trillion dinars of free money supply, pointing out the possibility of investing it through the transition to the electronic system in financial transactions.

Qusay told Al-Maalouma, “Focusing on investing in financial inclusion is accompanied by many benefits, the most prominent of which is withdrawing the free cash flow outside the banking system, which is estimated at about 70 trillion dinars, or an average of 2 million dinars for every Iraqi citizen.”

He added, "This amount could lead to an increase in liquidity in banks and increase their ability to grant through small and medium income-generating projects or by increasing the capacity for long-term strategic investment financing."

He pointed out that "Iraqi banks have the qualifications to switch to the electronic system, noting that "the transformation of the financial sector to the electronic system with credit cards will pave the way for attracting international investments and increasing confidence in the Iraqi economy."   link

SANDY INGRAM CC NOTES HIGHLIGHTS, 20 SEPT

 Summary

Iraq faces a 2025 budget crisis due to declining oil prices, while Israel intercepts a drone from Iraq, escalating regional tensions.

Highlights

• 📉 Iraq’s 2025 budget is threatened by falling oil prices, impacting economic stability.
• 🚨 IMF warns Iraq’s budget projections may be overly optimistic amid reliance on oil revenues.
• 🌾 Lawmakers discuss diversifying income streams to boost agriculture, tourism, and manufacturing.
• 💰 Current tax policies in Iraq are among the lowest in the region, hindering revenue collection.
• 🚧 Efforts to improve border control aim to reduce smuggling and increase customs revenue.
• 🛡️ Israel intercepts a drone from Iraq, highlighting regional security concerns and Iranian influence.
• 📱 New war strategies raise fears of personal electronic devices being weaponized.

Key Insights

• 📉 Economic Vulnerability: Iraq’s budget is heavily reliant on oil, making it susceptible to global price fluctuations. Without diversification, fiscal stability is at risk.
• ⚠️ IMF Concerns: The IMF’s warning emphasizes the need for realistic budgeting, reflecting the dangers of overestimating oil revenue. This could lead to significant deficits.
• 🌱 Diversification Efforts: Iraq’s push to develop non-oil sectors is crucial for economic resilience. Boosting agriculture, tourism, and manufacturing could reduce dependency on oil.
• 🏛️ Tax System Reform: Iraq’s low tax-to-GDP ratio indicates untapped potential for revenue. Reforming tax policies could significantly improve fiscal health.
• 🔍 Smuggling and Corruption: The government’s revenue collection is hampered by smuggling. Addressing these issues is vital for improving customs revenue and economic stability.
• 🛡️ Regional Security Risks: The interception of a drone signals heightened tensions and security threats in the region, driven by Iranian-backed militias.
• 💣 Weaponization of Technology: The emergence of personal devices as weapons signifies a new threat landscape, necessitating heightened security measures and awareness.

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