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Thursday Morning Iraq Economic News Highlights 6-22-23

The President Of The Republic Approves The Budget Law: The Country Faces Economic And Environmental Challenges

Money  and business  Economy News – Baghdad  Today, Wednesday, the President of the Republic, Abd al-Latif Jamal Rashid, approved the federal budget law.

Rasheed said in a statement, “The approval and ratification of the budget is a turning point for the government to implement its program, which includes securing the necessary needs of citizens, providing basic services such as health and education, rehabilitating the infrastructure and embarking on vital and strategic projects that will reflect positively on the reality of the daily life of citizens.”

He stressed the need to rationalize government spending, preserve public money, and develop and diversify the sources of the economy at a time when the country is facing economic and environmental challenges. limited and to achieve social justice.

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The Rise In The Price Of The Dollar Against The Dinar In Baghdad

Market   Economy News _ Baghdad  Today, Thursday, the exchange rates of the US dollar rose against the Iraqi dinar, on the main stock exchange in the capital, Baghdad.

The central Al-Kifah and Al-Harithiya stock exchanges in Baghdad recorded this morning an exchange rate of 146,850 Iraqi dinars against 100 US dollars, while the prices recorded yesterday morning, Wednesday, were 146,350 dinars.

As for the dollar prices in exchange shops in the local markets in Baghdad, they rose, as the selling price reached 148,000 dinars, while the purchase price reached 146,000 dinars for every 100 dollars.

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The Exchange Rates Of The Dollar In The Iraqi Stock Exchanges

2023-06-22 | 3,111 views  Al-Sumaria News – Local   Al-Sumaria News publishes the exchange rates of the dollar against the Iraqi dinar in the Iraqi local markets, for today, Thursday, June 22, 2023.

In Baghdad:  The purchase price of the dollar is 147,500 for every 100 dollars, an increase of 250 dinars from yesterday.   The selling price of the dollar is 145,500 per 100 dollars

in the north:  the buying price of the dollar is 147,500 per 100 dollars, an increase of 500 dinars from yesterday.   The selling price of the dollar is 145,500 per 100 dollars

in the south:  the buying price of the dollar is 147,750 per 100 dollars, an increase of 250 dinars from yesterday.  The selling price of the dollar is 145,750 per 100 dollars.

It is noteworthy that the exchange rates decreased gradually three days ago, after reaching the threshold of 149, but they change during the day several times.   LINK

The Rise In The Exchange Rates Of The Dollar Against The Iraqi Dinar In The Exchanges Of Baghdad

Economy  |  Baghdad today – Baghdad   Today, Thursday, the exchange rates of the dollar against the dinar recorded a slight increase in the exchange offices of Baghdad.

The (Baghdad Today) correspondent said, “The exchange rate on the stock exchange in Baghdad amounted to 146,850 dinars per 100 dollars.”

He added, “As for the selling price in the exchange offices in Baghdad, it amounted to 148,000 dinars per 100 dollars, and the purchase price amounted to 146,000 dinars per 100 dollars.”    LINK

Parliamentary Oil Reveals The Reasons For The Disruption Of Kurdistan’s Oil Exports And Ankara’s Conditions For Resuming Them

2023-06-22  257   A member of the Parliamentary Oil and Energy Committee, Kazem Al-Touki, revealed this evening, Wednesday, the reasons for the disruption of Kurdistan region’s oil exports through Jahan, and we ask Turkey to resume oil.

Al-Touki said, in a television interview followed by Al-Mutalaa, this evening, Wednesday, that: “Turkey claimed technically that there was an injury to the Ceyhan pipeline due to the earthquake; but the truth is that Turkey’s decision to stop oil exports has a political aspect, especially after the decision of the International Tribunal to stop exporting the oil of the Kurdistan region.” “.

And he added, “The government has asked more than once to send a Turkish delegation to discuss the issue, and Turkey was awaiting Iraq’s budget, especially with regard to exports through Ceyhan, and the federal government is the main affected, not Kurdistan, from stopping exports.”

Al-Touki added, “There is an item in the budget that obliges the Kurdistan region to pay its oil money since 2003 to the federal government, and Turkey wants Baghdad to give up the case filed by international courts as a condition for resuming oil exports,” pointing out, “One of the alternative solutions to the Ceyhan line is the development of the Aqaba line.” “.

And he added, “Basra’s oil ports are operating at their full maximum export capacity, and Iraq cannot raise its production capacity due to the stoppage of the Ceyhan pipeline. Oil is now produced, but it is not exported, and Iraq pays the investing companies even with the stoppage of exports.”

Al-Touki pointed out that “the port of Faw will provide export flexibility to Iraq to double what it exports today,” adding, “The regions of Najaf, Anbar and Nineveh have the lion’s share in the sixth licensing round, as they include exploratory patches for free gas, and Iraq needs from 6 to 7 thousand cubic meters of gas.”

And he noted that “if it is referred to the licensing rounds for solid companies, according to the statement of the Prime Minister and the Minister of Oil, then Iraq needs two to three years to invest gas,” revealing “a defect in the contracts of previous licensing rounds that led to the non-investment of associated gas, and the four previous licensing contracts are tainted.” Lots of bugs.”

Regarding the social benefits in Dhi Qar, the representative of the province explained that: “Each oil company is supposed to allocate annually 5 million dollars that the company spends and recovers from the Ministry of Oil. She’s the sergeant.”

And he went on to say, “After 2015, these sums were transferred to local governments and until 2023 the affected areas are asking for this company to pay 28 million dollars that have not been spent yet and are arguing. For example, if the cost of one school according to Iraqi contracts is one billion dinars, the company raises the value to one billion and 800 dinars, noting that they are the same standards.” “.

“We have a water project that covers more than 40,000 people. It was submitted 3 years ago to this company, and its cost is one billion and 900 million dinars, and its capacity is 400 cubic meters, and it refuses to work on it. To get rid of these problems, we asked the Prime Minister to transfer the sums of social benefits to oil projects according to Iraqi contracts.” “.  LINK

The Tripartite Budget Deficit Will Exceed 300 Trillion Dinars

Evan Shaker Al Dobardani

The Central Bank of Iraq, due to the tripartite budget, will face a challenge and a very difficult task, which is to provide the monetary mass of the Iraqi dinar in order to meet the operational and investment expenses of the tripartite budget, which was recently approved, with a total value of 200 trillion dinars.

And where the dilemma of the budget that was approved for three years lies in its allocations, and where the lion’s share was allocated, as usual, to operating expenses at the expense of investment expenses, most of which were ink on paper two decades ago, and where operating expenses burdened the Iraqi economy and twisted its arm, specifically in the last ten years that passed.

Economic recession :

The other dilemma lies in the budget, which is pricing oil at $70 per barrel, and this is a very high and incorrect pricing, knowing that oil prices are difficult to predict for a period of three years because of its influence on many factors, most notably geopolitical factors, and it was assumed that oil would be priced at $50. per barrel in the budget,

because according to the current data, as the global economy is on the verge of an economic recession, led by the United States of America, China, members of the European Union, Britain, and the rest of the developed countries, some of which have officially entered into a spiral of economic recession, and where the recession will be more severe in the second half of this year,

due to the tightening monetary policy adopted by most central banks of developed countries, led by the United States of America, where the interest rate of the US Federal Reserve Bank reached 5.25%, in order to fight inflation and reduce it to the target levels of 2%, which is considered harmful to the US economy,

and at the last meeting of the US Federal Reserve temporarily stopped raising interest rates in order for the US economy not to enter into a severe recession, and also the European Central Bank continues to Its tightening monetary policy, as the interest rate of the European Central Bank reached 4%, and the repercussions of this tightening monetary policy are serious and painful for the global economy,

and the banking sector was one of the victims of this tightening monetary policy, as it led to the bankruptcy of several banks in the United States of America and in the European region as well.

As this tightening monetary policy of the US Federal Reserve led to a decrease in the growth levels of the US economy’s domestic product, and this indicates the beginning of the economic recession of the United States of America, and therefore it will have repercussions for the decline in oil demand in the second half of this year, and this will negatively affect the economy.

Oil prices, on the other hand, and similar to the United States of America, Chinese economic data recently came in a negative way, and this suggests to us that the Chinese economy is also suffering up to this moment, and also the industrial sector has not recovered as required, and China is the largest importer of oil in the world, and therefore it will be Its repercussions are negative on oil prices in the coming period, as well as the German economy, which is the strongest economy in Europe, as its economy officially entered a state of recession,

and if it is correct to say what is called a technical contraction after recording a decline in GDP for the second quarter in a row, under the shadow of the policy Monetary tightening by the European Central Bank, which reached an interest rate of 4%, and therefore, in light of these data, I expect that oil prices will decline in the second half of this year, unless there are geopolitical factors that may change the general direction of oil prices and the opposite of what is expected.

J.P. Morgan Bank report:

Recently, a report was issued by J.P. Morgan Bank that there will be a strong sale of global stocks in the coming period, and the majority of selling will be by sovereign wealth funds and pension funds, as it is expected that they will sell part of their stock assets and go to Bonds, and this will lead to a strong selling wave in the stock market, specifically on Wall Street,

and this will have negative repercussions on the economies of developed countries and will lead to an exacerbation of the economic recession crisis in the coming period, and this suggests to us that markets are dominated by a state of uncertainty and anxiety,

and this will force owners of large capital By escaping from stocks and heading towards bonds for fear of exacerbating the economic recession crisis, which will lead to weak demand for oil, which will negatively affect oil prices in the coming period.

OPEC Plus:

And because we are on the verge of an economic recession and there is weakness in the demand for oil, and fears of a drop in oil prices, the OPEC Plus coalition forced to take preventive measures in order to maintain oil prices, as the OPEC Plus alliance reduced its production twice within the past 3 months.

And had it not been for the precautionary moves of OPEC Plus, we would have seen oil prices approaching levels of 50 US dollars or less, as the first reduction raised the value of prices to levels above 86 US dollars, but it was unable to maintain this level, and oil prices fell back to levels above 70 US dollars due to fears The upcoming economic recession.

It is likely that the honeymoon will not last long among the members of OPEC Plus, and that we will witness disagreements in the coming period from within the OPEC Plus alliance, and if this happens, it will have a negative impact on oil prices, knowing that the history of OPEC is full of disputes between its members, the most prominent of which was the Russian-Saudi dispute in 2022

Even if the OPEC Plus coalition reduces production a third time or more, in order to maintain oil prices, this will be at the expense of reducing Iraq’s share of production, and in both cases, if oil prices decrease or the amount of exports decreases, it will generate a larger deficit in the budget because the amount approved in The budget is 3.5 million barrels of oil per day and is priced at $70 per barrel.

And in the event that oil prices fall, it will have serious repercussions on the Iraqi economy because it is a rentier economy par excellence, and at that time Iraq will enter into a financial crisis that has no negative consequences, because it depends on oil by 90%, and at that time the Iraqi government will be forced to repeat the borrowing scenario in order to cover operating expenses, as happened in In 2021

, but this time the Iraqi economy will slide into a very dangerous slope and will not be spared from this expected crisis, as it happened in the years 2020-2021

Also, the Iraqi government will resort to borrowing through the Central Bank of Iraq and issuing bonds, that is, issuing a monetary block, that is, the increase in the rate of inflation and the weakening of the value of the Iraqi dinar, that is, we will see the value of the Iraqi dinar falling coinciding with the high rate of inflation, and we will also see a jump in the high rate of borrowing, and also the failure to implement a large part From the budget, specifically in investment expenditures, and it can be ink on paper.

The real and severe deficit will be in the beginning of 2024 and it will be more severe than in 2023 because the signs of economic recession will appear more deeply in the global economy, and because Iraq sold oil in the first half of this year for more than $70 per barrel.

* Researcher in Iraqi and international economic affairs / Evan Shaker Al-Dobardani

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