Friday, June 6, 2025
FRANK26: "FIX THE EXCHANGE RATE"
KTFA
FRANK26: "FIX THE EXCHANGE RATE"..........F26
Foreign reserves between inflation targeting and external rent shocks
5/29/2025
Monetary policy relies on a fixed exchange rate system to guide the real exchange rate towards the short-term target inflation rate. This system is appropriate for the Iraqi economy, as real output values are linked to global prices due to the unilateral structure of the economy and the sharp decline in the contribution of non-oil exports to fixed capital formation. Therefore, the fixed exchange rate system was a realistic option to avoid the erosion of the value of the dinar.
Due to the impact of external rent shocks, controlling foreign reserves (dollars, gold, and securities included on the asset side of the Central Bank's balance sheet as Iraq's external debt) has become an instrumental approach to managing the Central Bank's responses to the aforementioned shocks. This involves regulating exchange rate fluctuations, targeting inflation rates. Inflation can rise and fall due to external rent shocks, leading to fluctuations. Therefore, the Central Bank uses its reserves to sterilize the dinar's expansion through dollar purchases and sales, and cash transactions in the stock market, both buying and selling, to achieve the target exchange rate. The movement of foreign reserves is linked to public spending on oil revenues in dollars after the Central Bank exchanges them for dinars to meet demand from the private and public sectors, as well as government and household purchases. Depending on the surplus and deficit in the balance of payments, reserves grow or shrink. When oil revenues rise, the central bank refrains from financing the budget deficit, and the government reduces its spending, aiming to raise foreign reserves to be used to finance the budget deficit when oil revenues decline again.
Foreign reserves witnessed a significant increase due to the positive shock in the second half of 2021, reaching 3.244 million barrels per day at an average price of $110 per barrel. This increased Iraq's surplus in public finances and overall external balances, as reserves exceeded $90 billion, helping to stabilize the stabilization system and inflation targeting. However, with global oil prices heading towards a negative shock this year (2025) to less than $60 per barrel, and the Central Bank continuing its sterilization policies and measures towards international compliance, this led to a decline in reserves to less than $97 billion in March 2025, after having been around $105 billion in December 2024. Due to the recent shock, the Central Bank resorted to compensating by increasing its foreign exchange sales.
Therefore, in light of external rent shocks, we see the need for coordination between government policy and the Central Bank. From the government policy side, spending must be restricted to purely technical limits, thus deepening the reduction of the government deficit and strengthening the strategic role of reserves. Monetary policy must sustain its goal of achieving a stable inflation rate by managing the movement of the dollar exchange rate and demand for it in the interest of price stability and reducing costs in favor of rational spending policies. Achieving low and stable inflation is an important factor in enhancing the local and foreign investment climate, which is linked to related economic policies, including commercial, agricultural, and industrial policies.
In short, the dependence of foreign reserve volatility on external shocks will remain a limiting factor in the national economy's ability to combat inflation and support the investment climate. Therefore, two levels of optimal solutions can be identified. The first, at the strategic level, involves sustained coordination between fiscal and monetary policies. The second, at the macro and structural level of the Iraqi economy, lies in addressing the rentier nature of the economy by gradually increasing the contribution of non-oil GDP to meet aggregate domestic demand, while supporting export diversification policies.
BROTHERS TECHNOLOGY: Sounds like something was discussed without announcing a discussion.
BROTHERS TECHNOLOGY
Sounds like something was discussed without announcing a discussion.
The Presidency of the Iraqi House of Representatives expresses its deep regret at the decision of the Ministry of Finance in the Federal Government to cut the salaries of the employees of the Kurdistan Region of Iraq.
This measure will inevitably harm citizens in the region and create an economic crisis, which is contrary to the decisions of the Federal Court and the Constitution, which guaranteed the rights of all citizens in all governorates.
The Presidency of the Council calls on the federal government to reverse the decision, especially as we are on the verge of the blessed Eid al-Adha, and the strength and entitlements of the people must not be linked to political issues and technical issues,
and sitting at the table of dialogues and understandings is the best way to solve problems and files and address issues between Baghdad and Erbil.
Presidency of the Iraqi House of Representatives
Wednesday 2025/6/4
FRANK26: "IRAQ ENTERS THE MODERN ERA & THE SPACE AGE ERA"
KTFA
FRANK26: "IRAQ ENTERS THE MODERN ERA & THE SPACE AGE ERA"......F26
The Prime Minister directs the relevant authorities to study ways to facilitate the work of SpaceX (Starlink).
5/28/2025
- Baghdad
Prime Minister Mohammed Shia al-Sudani directed the relevant authorities on Wednesday to study ways to facilitate the work of the American company SpaceX (Starlink).
The Prime Minister's Media Office stated in a statement seen by Al-Eqtisad News that "Prime Minister Mohammed Shia al-Sudani received a delegation from SpaceX (Starlink), an American company specializing in networking, information and communications technology. During the meeting, aspects of cooperation in the field of communications and the services provided by the company, as well as its coverage areas, were reviewed."
During the meeting, Al-Sudani emphasized that "Iraq today boasts many promising investment opportunities, given the rapid growth and urban and service expansion it is witnessing," noting "the importance of the strategic relationship with the United States within the framework agreement and other bilateral memoranda of understanding, which extend to various economic, scientific, and developmental fields."
According to the statement, he directed "the relevant authorities to study ways to facilitate the work of SpaceX (Starlink) and expedite the necessary measures," expressing his "welcome to major technology companies, especially American ones, to operate in Iraq and the possibility of their cooperation with the Iraqi private sector, within the government's vision for digital transformation procedures."
For its part, the company's delegation affirmed its "readiness to operate in Iraq, provide services, and cooperate in the Iraqi market," noting that "Starlink's services will contribute to digital transformation and its applications for public and private sector institutions, develop communications, and achieve economic prosperity within the framework of bilateral cooperation between Iraq and the United States."
ABU SNWE: We will witness special forces arresting criminals inside Iraq
ABU SNWE
The most beautiful event in the coming days is: We will witness special forces arresting criminals inside Iraq. And even more beautiful than that, we will witness Israeli aircraft filling the sky, bombing and killing criminals, and destroying Iran and its filthy regime.
Did you forget something, my friend?
Is there anything more beautiful than these events?
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