DINAR REVALUATION

Thursday, June 5, 2025

MILITIAMAN: Is Iraq Ready for Dinar Revaluation? @DINARREVALUATION #iraqidinar #iraq

The Liquidity Problem: Between the Central Bank's Response and the Effects of the Rent Model

The Liquidity Problem: Between the Central Bank's Response and the Effects of the Rent Model

Dr. Haitham Hamid Mutlaq Al-Mansour

Macroeconomic policy faces a liquidity and financing problem that directly impacts various aspects of economic and living life. The roots of this problem lie in accumulated structural imbalances that make it difficult to achieve sustainable financial stability. The declining capacity of the productive base has limited the accumulation of fixed capital and the contribution of real non-oil sector output, favoring near-total reliance on oil revenues, which constitute more than 90% of state revenues, to pay for imports.

Because Iraq's traditional economic equilibrium cycle is virtually non-existent, liquidity management will be constrained by oil revenues. This situation makes the general budget's performance vulnerable to the shocks of fluctuating global oil prices, causing immediate financial crises manifested in the difficulty of financing projects and delayed payments for operational expenditures.

In the face of this challenge, the Central Bank's efforts to address it stand out through steps to reform the banking system and enhance banks' ability to manage liquidity by promoting financial inclusion, increasing banking sector productivity, creating a healthy competitive environment, and strengthening the banking system's ability to address risks.

To sustainably address the liquidity and financing shortages at the strategic level, real technical reforms and an investment-attractive climate are required. The future of liquidity, therefore, depends on the ability of macroeconomic policy to unshackle rents, implement radical reforms in financial management, stimulate productive sectors, and direct spending.

Therefore, the liquidity shortage represents a complex phenomenon that goes beyond a temporary shortage of liquidity. It reflects deep structural imbalances in the financial and monetary structure, which requires an analysis that explores its structural roots, as follows:

The expansion of government spending in multiple directions, the most dangerous of which is the continued and clearly flabby employment within government institutions, and the failure to control, rationalize, and discipline spending within the constraints of basic budget items. This requires a genuine boost to private sector growth and freeing it from the "crowding-out effect."

The rentier nature of the economy, its overwhelming reliance on rentier revenues in the general budget, and the limited diversification of revenue sources outside this sector have reinforced the budget's dependence on fluctuating revenues from this sector, leading to a persistent government deficit.

The banking system's reduced flexibility in stimulating savings and deposits, which in turn reduces the ability of Iraqi banks to absorb liquidity from individuals in the form of deposits and savings.

The limited stability of the investment environment due to bureaucracy and legal gaps discourages investors from investing in important sectors, particularly infrastructure projects, which can generate external savings for investment activity, increase real GDP growth rates, and raise the level of fixed capital formation.

Implications of the growth of the informal economy: The informal economy is estimated to represent approximately 34% of GDP in the parallel currency market, controlling approximately 40% of dollar transactions. This increases the leakage of liquidity outside the formal economy's income cycle, which is targeted by budget allocations.

Iraq's 2023 budget amounted to approximately 198.9 trillion dinars, with a deficit of 65 trillion dinars, while the 2024 budget reached 211.8 trillion dinars, with a deficit of 84 trillion dinars. The 2025 budget was allocated due to the decline in global oil prices. Iraq exports approximately 100 million barrels of oil per month, and its price fluctuates, ranging between $68 and $72 last year. During the first 11 months of 2024, oil revenues amounted to 119 trillion dinars, at a monthly rate of approximately 10 trillion dinars, which was used to cover operating expenses. This exacerbated the growing government deficit, which is reflected in limited liquidity to cover budget expenditures, leading to an increase in government debt as the deficit grows.

It can be concluded from the above that technical measures, despite their importance and rapid response in the monetary and financial sectors to address the liquidity problem, remain limited as a long-term strategy for sustainable financing unless they are accompanied by deep, gradual reforms in the financial and real sectors that address the roots of the structural crisis and create a new formulation for the development financing approach. This approach works to develop a path for generating added value for the non-oil GDP and planning policies to develop this sector, increasing its productivity and exports while reducing imports by the same percentage.

The future of long-term development financing in Iraq depends on the economic system's ability to recover from a "rentier model" to a "diversification model." link

EXCERPTS FROM MARKZ: We are trained and ready!!

EXCERPTS FROM MARKZ

MZ: I’m going to tell a bank story but won’t give details so I don’t get anyone in trouble. This is from a Credit Union. The source is someone I know in my personal life.

MZ: “Yesterday I got a call from a credit Union in Tennessee. They let me know they are a Redemption Center for all currencies except for Russian.

I asked her “when”? and she said “soon”

She said That is why we called you now to let you know we are trained and ready.

I specifically asked if the dinar and dong are included and she said “yes” .

At the end of the conversation I asked if all we were waiting for is 800 numbers to make an appointment? She said Yes- I know you are. Her excitement was amazing”

MZ: A couple of folks that work for Credit Unions have made the comment that they were recently trained

MNT GOAT:what has been preventing this revaluation to the TRUE rate of t...

The Central Bank signs a training agreement with the British Council.

The Central Bank signs a training agreement with the British Council.

The Central Bank of Iraq announced today, Wednesday, the signing of a training agreement with the British Council.

Al-Yenk said in a statement followed by Al-Masry, “Under the patronage of the Governor of the Central Bank of Iraq, Ali Mohsen Al-Alaq, the Central Bank of Iraq signed a training cooperation agreement between the bank and the British Council, in the presence of the British Ambassador to Iraq, Irfan Siddiq.

The agreement was signed on behalf of the Central Bank by the Director of the Human Resources Affairs Directorate, Falah Salim, and on the British side by the Director of the British Council, Ben Luton, and the Country Director of the British Council.”

He pointed out that "this agreement comes within the framework of enhancing joint cooperation between the two parties, aiming to develop the capabilities of Central Bank of Iraq employees in the field of the English language, through organizing specialized training courses in cooperation with the British Council, which contributes to raising linguistic proficiency and enhancing professional communication at the regional and international levels." link

Evening News with MarkZ. 06/04/2025

Evening News with MarkZ. 06/04/2025

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 Evening- Oh boy are the boards lit up with rumors!!!

Member: I am afraid to look away because I might miss something!

Member: TNT Tony said the new rate was announced from two sources in the Masques tonight $1.38 in country

MZ: Unfortunately none of my sources in the country agree with that. But, I hope he’s right.

Member: I had a local bank in Oklahoma City say they could exchange the money they send it out. It takes six weeks. Sounds funny to me.

MZ: I’m going to tell a bank story but won’t give details so I don’t get anyone in trouble. This is from a Credit Union. The source is someone I know in my personal life.

MZ: “Yesterday I got a call from a credit Union in Tennessee. They let me know they are a Redemption Center for all currencies except for Russian. I asked her “when”? and she said “soon” She said That is why we called you now to let you know we are trained and ready. I specifically asked if the dinar and dong are included and she said “yes” . At the end of the conversation I asked if all we were waiting for is 800 numbers to make an appointment? She said Yes- I know you are. Her excitement was amazing”

MZ: A couple of folks that work for Credit Unions have made the comment that they were recently trained.

Member: I love a good bank story

MZ: Seeing the tellers and staff in regional banks and CU’s being trained makes me excited.

Member: My Credit Union has a sign saying “We have blockchain”

Member: I wonder if all the little local credit union banks in small towns know about the QFS now ??????

Member: My credit union and my Chase Branch both said they are prepared for the new currency to roll out.

MZ: They have a bunch of different names for it. But I have yet to hear a bank specifically refer to it as a QFS. QFS is a term we came up with. Keep in mind banks may call it something different.

Member: If it happened this weekend like bond contacts think, when would groups get paid?

Member: I wonder if lower notes are coming out of the ATMs in Iraq yet?

Member: If they are- I would think we would know.

MZ: “ PM advisor: Iraq’s natural resources are worth more than $16 trillion” They are laying the ground work for a revaluation with the public.

Member: Could it be banks not being ISO20222 compliant is part of our hold up? I read that somewhere around 75% are struggling to get compliant.

Member: Why do you think we haven't heard anything from the Fort Knox audit?

Member: Maybe there is no gold in there?

Member: So excited for things to shift for us all. Could this be our week? I have the feeling it could..

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.