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Iraq federal reserves near $58bn

Wednesday, September 7th, 2011

By REUTERS

Published: Sep 5, 2011 22:20 Updated: Sep 5, 2011 22:20

BAGHDAD: Iraq’s foreign currency reserves have risen to close to $58 billion and are expected to increase further thanks to a rise in oil revenues, a central bank official said.

Mudher Kasim, a deputy central bank governor, said higher global oil prices had boosted Iraq’s federal revenue and could result in a budget surplus for 2011.

“(The amount of reserves) has gradually increased since the beginning of last year, when it was $40 billion. Now it is close to $58 billion,” Kasim said.

Last October, Kasim had put reserves at around $50 billion, with 45 percent held in dollars, 45 percent in euros and 10 percent mainly in gold and British pounds.

Iraqi federal revenue depends mainly on oil, and higher oil prices have helped the country earn billions of dollars this year.

Iraq earned $34.1 billion in oil revenue, an increase of $8.7 billion, or 34 percent, over budgeted revenue, in the first five months of this year, Deputy Prime Minister Hussain Al-Shahristani said in June.

Iraq’s parliament approved an $82.6 billion budget for 2011 in February, based on an average oil price of $76.50 per barrel and 2.2 million barrels per day in crude exports.

If international oil prices remain at over $100 this year, Iraq would see a 2011 budget surplus of 15 percent, Kasim said.

While the country’s current year deficit had been projected at $13.4 billion, officials have said the shortfall will be eliminated if world oil prices remain at current high levels.

The deputy governor said inflation – which quickened to 7.1 percent in July from 6.4 percent in June – was under control but being monitored carefully.

Iraq, battered by years of war and economic sanctions, depends mainly on imports for most goods, including food and building materials.

“If prices continue to increase and the inflation rate approaches two digits, monetary policy tools will be strongly activated to fight inflation,” he said.

Kasim said a plan to take off three zeroes from Iraq’s currency to simplify financial transactions was awaiting parliamentary approval and said the government should approve the project sooner rather than later.

Iraqis’ per capita income to shoot to $9000 in 2014

Thursday, August 4th, 2011

Azzaman – [7/31/2011]

Per capita income in Iraq will surge to $9000 from the current $4000 in 2014, the Central Bank says.

The new per capita income forecast means that Iraqis’ living standards are expected to more than double in less than four years.

The promising economic prediction for the war-torn country is a rare good piece of news.

“The per capita income will more than double by the end of the investment plan in 2014″ said Mudher Saleh, a Central Bank consultant.

Saleh put the country’s growth rate at a little more than 9 per cent and said his figure was based “on the aggregate growth forecast for 2014-2014.”

If Iraq achieves the growth rate predicted for the investment plan, the country will see an explosion in income, he said.

There will be enough income to finance infrastructure projects in various fields, he said.

Saleh said the country’s bloated civil service sector was currently among the most prosperous in the country.

He said while average per capita income was $4000, civil servants earned an average of $6000 a year.

Oil revenues, he said, would still make the lion’s share of the country’s income.

“The importance of oil royalties in financing investment projects is of vital importance,” he said. “Maximizing oil earnings is the philosophy the oil sector is pursuing to provide steady access to resources to finance the national development plant.”

Iraq Said To Be Planning Currency Overhaul, Redenomination

Saturday, June 25th, 2011

BAGHDAD — A senior Iraqi Central Bank adviser says the government has adopted a two-pronged plan to restructure the national currency in order to facilitate large transactions and make government accounts more efficient, RFE/RL’s Radio Free Iraq (RFI) reports.

Mudhhir Muhammad Salih, a member of the bank’s advisory panel, told RFI on June 23 that in the short term, larger banknote denominations of the dinar will be issued to simplify major transactions.

He said that because so many Iraqis still deal mainly in cash, it is cumbersome to carry bags full of money to pay for expensive items like cars. The inconvenience leads people making such purchases — as well as many entrepreneurs — to use dollars for those kinds of transactions instead of dinars, something the government wants to end.

He added that large denominations equivalent to around $100 will be issued to simplify major purchases, and new coins and lower denominations will be introduced for smaller transactions.

In the longer term, Saleh said a redenomination is needed wherein three zeros will be dropped so that the 25,000 Iraqi-dinar banknote — currently the largest denomination — becomes a 25-dinar note.

He said the change is inevitable, considering the economy is expecting high growth in the coming years with a planned increase in oil production to finance reconstruction projects.

Saleh said there are currently some 29 trillion dinars in circulation in Iraq, represented by some 6 trillion banknotes of various denominations, most of them quite small. He said this also causes complications for the central bank and government, as well as commercial accounting departments.

Saleh said the monetary-restructuring plan was drawn up with the help of foreign experts and financial institutions, including the International Monetary Fund (IMF), of which Iraq has been a member since 1945.

The plan will soon be presented to the cabinet, which is expected to subsequently send a bill to parliament.

Saleh noted that until 1980 the Iraqi dinar exchange rate was 1 dinar/$3.3 compared to $1/1,168 dinars now due to hyperinflation that occurred during the latter part of the late ousted leader Saddam Hussein’s reign.

Source :- Radio Free Europe Radio Free Liberty

Iraq’s Central Bank to delete zeros from Iraqi currency.

Saturday, June 25th, 2011

Saturday, June 25, 2011 11:23 GMT

Iraq’s Central Bank announced on Thursday that it is planning to delete the zeros from the Iraqi currency.

This step is one of the bank’s strategic missions; the Central Bank said adding that the new currency will include the Kurdish language in addition to the Arabic language.

“The zeros that were added to the Iraqi currency previously constituted a large money supply up to 28.500 trillion Iraqi Dinar and 5 trillion banknotes”, the adviser of Iraqi Central Bank governor Mothahhar Mohammed Saleh told Alsumarianews.

“The Central Bank has prepared all requirements needed to delete the zeros from the Iraqi Currency”, Saleh said.

“This step is one of the Iraqi central bank’s strategic missions. The monetary policy of the bank aims to structure and reduce the currency in a country moving towards an economic phase”, he added.

“The project of deleting zeroes is complete. It will be submitted to the central bank’s administration in the next session. Then, it will be passed to the ministerial council before presenting it to the Parliament for vote. The mechanisms of changing the currency will be gradual. It will be preceded by awareness campaigns for citizens”, the adviser of Iraqi Central Bank governor said.

“The new currency will be printed after deleting the zeros and will include the Kurdish language in addition to the Arabic language. It will bear as well photos of Iraq’s civilizations and patrimony in addition to symbols of Iraqi intellectuals and figures”, Saleh noted.

On June 19, Iraq’s Central Bank Governor Sanan Al Shebeibi affirmed during the meeting of independent commissions with Prime Minister Nuri Al Maliki that the bank is preparing all requirements needed to replace the Iraqi Currency.

Iraq’s Central Bank has four branches including Basra, Sulaimaniah, Arbil and Mosul. It was founded as an Iraqi independent bank by virtue of Iraq’s Central Bank Law issued on March 6, 2004.

The bank is responsible for the prices stability and the implementation of monetary policy including exchange rates, the management of foreign reserves, the issuance of currencies and the organization of the banking sector.

Source : Alsumari TV Network

Iraq: 3 Vice Presidents Named

Thursday, May 19th, 2011

May 12, 2011

Three vice presidents for Iraq have been approved by parliament, Xinhua reported May 12, citing an unnamed source. They are Adel Abdul Mahdi, Iraqi Supreme Islamic Council; Tariq al-Hashimi, al-Iraqiya List; and Khazir al Kharajai, State of Law coalition, Al Sumaria reported.

Source : STRATFOR

Iraq Central Bank to remove three zeroes from Iraqi Dinar

Thursday, April 14th, 2011

Iraq Central Bank to remove three zeroes from Iraqi Dinar

Wednesday, April 13, 2011 09:58 GMT
Iraq’s Central Bank announced on Tuesday that the project of Iraqi Dinar re-denomination consisting of removing three zeroes is close to completion.
The re-denomination project is believed to be a strategic plan that will be passed to the ministerial council and Parliament once complete.

The plan to remove three zeroes from the Iraqi Dinar is a strategic plan that the central bank is currently finalizing, Central Bank’s advisor Mothahhar Mohammed Saleh said in a statement to Alsumaria News.

This plan aims to alleviate transactions cost and help people carry less money, Saleh said noting that Iraq seeks to produce 6 to 12 oil barrels which is expected to increase the value of Iraqi dinar and boost development, he said.

Iraq’s central Bank has managed during the past five years to reduce inflation rates from 34% to 3 or 4% and stabilize Iraqi Dinar exchange, the Central Bank’s advisor told Alsumaria News.

In an earlier statement to Alsumaria News, Iraq’s central Bank adviser Mothahhar Mohammed Saleh affirmed that the bank plans to remove three zeroes from the Iraqi Dinar noting that the zeroes which were added to the Iraqi currency previously constituted a large money supply estimated at 27 trillion Iraqi Dinar.

Saleh revealed on the other hand that Iraq engages for the first time in banks payment system as it moved from manual to electronic clearance. The system includes six banks in addition to electronic deeds exchange, he said adding that the smart and credit cards will be bound to the central bank system.

The Central Bank will form after three years what is known to be as the payments council which sets forth Iraq’s banking protocols and infrastructure, the central bank’s adviser said.

Iraqi economists believe the re-denomination of Iraqi Dinar will not have a major influence on the purchasing power of the Iraqi Dinar which the government has hopes high on it.

Iraq February Oil Exports Hit Post-2003 High – SOMO

Wednesday, March 16th, 2011

By Hassan Hafidh

Published March 01, 2011

| Dow Jones Newswires

AMMAN -(Dow Jones)- Iraq’s oil exports rose to 2.202 million barrels a day in February, the highest rate reached since the U.S.-led invasion in 2003, the head of the state oil marketing company SOMO said Tuesday, and the country’s top oil officials said output should hit 3 million barrels a day by the end of the year.

Falah Alamri also said Iraq sold its crude oil at an average $97-$98 a barrel in February, compared with an average $90.78 a barrel in the previous month. That means Iraq would earn some $6 billion-$6.042 billion, he said. In January Iraq earned some $6.082 billion, the highest in a year.

Alamri said there was an increase in February’s oil movements from fields in northern Iraq due to the resumption of exports from the semi-autonomous Kurdish region. Some 494,000 barrels a day were exported from Kirkuk and Kurdish oil fields in February, compared with 419,000 barrels a day in January.

The Kurdistan region resumed oil exports in February after a one-and-a-half year suspension at just shy of 10,000 barrels a day and the flow is now between 60,000 and 70,000 barrels a day, Iraqi oil officials said. Kurdish officials had said they could lift output from their fields to up to 200,000 barrels a day by the end of this year.

Alamri said some 1.708 million barrels a day were exported in February from southern terminals in the Basra ports, compared with 1.742 million barrels a day in the previous month, with the slight fall attributed to a shorter month.

The total export increase has come in-line with swift work at the southern Rumaila, Zubair and West Qurna Phase 1 fields, where some 300,000 barrels a day have been already been added. A further 200,000 barrels a day from southern oil fields are expected by the end of this year to bring Iraq’s total output to 3 million barrels a day, according to Iraqi Oil Minister Abdul Kareem Luaiby and Deputy Prime Minister for Energy Affairs Hussein al-Shahristani.

Copyright © 2011 Dow Jones Newswires

How Iraq can build a robust economy

Monday, March 7th, 2011

THE WASHINGTON POST

How Iraq can build a robust economy
Sunday, March 6, 2011

The big idea: The unmet challenge of economic development lies at the heart of our world’s most pressing social issues.

The scenario: Thinking about growth may seem a luxury in Iraq, a nation beset by war and deep in the throes of political change, but the path to rising living standards runs directly through how firms, large and small, domestic and foreign, play a constructive role in rebuilding the Iraqi economy.

For most MBAs, the phrase ‘global business opportunity’ conjures China or India, but most of the tough challenges faced by firms occur in places more like Iraq than in the BRIC economies. In nations like Iraq, one can readily appreciate the foundations of economic growth and productive commercial activity, largely by their absence. So, how can firms and their managers best create jobs and incomes for Iraqi people in the long run?

One irony of development is what economists call the ‘resource curse.’ Countries with abundant, extractable, nonrenewable resources such as oil and gas too often are dependent on that single economic sector. They lack competitiveness in other sectors. Power is entrenched in controlling the vital sector. And that power is wielded in ways that strangle internal investment and productive risk taking. Consequently, the incentives to build human capital and to create new firms to challenge incumbents or serve new markets are weak. Such are the conditions in Iraq.

The resolution: While efforts are underway to create a more diversified economy, the nation must channel its natural resource abundance into economically and socially valuable institutional change. The heart of the Iraqi economy is oil, which represents more than 90 percent of all exports from Iraq and generates 70 percent of GDP. Iraq has the fourth-largest proven oil reserves in the world -115 billion barrels – though this estimate is decades old. Many believe that Iraq may have at least another 100 billion barrels of reserve. Yet, Iraq’s volume of oil exports rank only 14th or so worldwide. Sagging infrastructure, inadequate electricity supplies and lack of investment constrain field development and the generation of revenue and jobs that could spark more rapid growth. Iraq exported just over 1.9 million barrels of crude oil a day in 2010, or 23 barrels annually per person – well under its target of 25 to 30 barrels.

The lesson: The financial capital needed to increase export capacity is critical to fund what is most needed in Iraq: infrastructure services, schools, hospitals and better housing. But what can lead Iraq’s economy toward robust and sustainable growth? Macroeconomic stability, a precondition of growth, is emerging. Inflation is in single digits, and the Iraqi dinar’s crawling peg to the U.S. dollar has delivered steadiness to the banking and price systems.

Still, challenges persist. More than 40 percent of the population is under age 14. Male life expectancy is over 60. High jobless rates and a limited role for women in the labor force mean that big production increases are unlikely. Security concerns and an inchoate democracy make the risk of investments high. But the economy has improved and, at times, grown rapidly in recent years.

The future of Iraq’s economy can be bettered through greater commitments to economically productive institutions and by firms willing to invest wisely while the future remains highly uncertain.

- Peter L. Rodriguez

Rodriguez is associate professor of business administration, associate dean for international affairs, and director of the Center for Global Initiatives at the Darden School of Business at the University of Virginia.

As War Ebbs, Baghdad Blast Walls Start Coming Down

Saturday, February 26th, 2011

As war ebbs, Baghdad blast walls start coming down

By REBECCA SANTANA
ASSOCIATED PRESS

BAGHDAD — At a time when other parts of the Arab world are in turmoil, Iraq is feeling stable enough to begin removing some of the tall concrete blast walls that went up as protection against bombings and insurgents during the height of the war.

Iraqis have seen it before. In 2009 Prime Minister Nouri al-Maliki started taking down walls, only to restore them when a series of government buildings were bombed.

But in the past couple of weeks they’ve been coming down again, starting in Baghdad, and if this time it’s for good, traffic jams will ease, trade will pick up and Baghdadis will be rid of an ugly symbol of everything Iraq has gone through since the 2003 U.S.-led invasion.

“We’re delighted with this. At least it will give us a feeling that the security crisis we have lived through is finished,” said Qassim Karim, a 50-year-old flour trader, as Iraqi workers loaded uprooted barriers onto flatbed trucks with cranes.

Iraqis have been creative in dealing with the thousands of gray walls that both protect and blight Baghdad. They’ve painted them with pretty murals, chipped passageways through them, used them as advertising space.

Standing about as tall as basketball hoops, the walls were put up here and in other cities by American and Iraqi forces to shield markets and buildings from bomb blasts, disrupt insurgents’ communications and hinder the movement of car bombs and weapons.

They are the first thing arriving visitors see when they come out of Baghdad International Airport. They encircle almost every government building, military installation and mosque, channeling pedestrians through designated entrances and exits. During the height of the insurgency, whole neighborhoods were walled in.

The first wall being removed is at Sadr City, a slum of about 2 million people in eastern Baghdad.

From here the Mahdi Army, a Shiite militia, terrorized Sunnis, attacked American troops and posed a dire threat to al-Maliki’s authority.

In 2008, American troops put up what they called “Phase Line Gold” – a concrete wall on a main road that split Sadr City.

It was a deadly undertaking, laying down a few hundred meters (yards) of wall at a time, mostly at night, under almost constant attack.

“The fighting along the wall to put Gold up was brutal,” said Phillip J. Dermer, a retired U.S. Army colonel who at the time was the senior adviser to the head of the Baghdad Operations Command running military operations in the city. “You could tell the intensity of the fighting by the damage on either side of the line.”

The aim was to hem in the insurgents and push back the rocket teams firing into the Green Zone, the seat of the Iraqi and American government operations, Dermer said.

“You get a controlled environment in which to work in and to operate from,” he said. “Nobody could get in. Nobody could get resupplied. They can’t get out.”

But the walls exacted an economic and social price, and Iraqis now view them with a mixture of grudging gratitude and downright hostility.

Surrounded by well-ordered, dusty stacks of flour at his warehouse by the wall in Sadr City, Karim said he was selling between 200 and 300 tons a month before the wall went up. That number dropped to as low as 110 tons a month after Phase Line Gold went up, but is recovering as the barrier falls.

Buildings pockmarked with bullets testify to the intense fighting that once defined this neighborhood.

Abdulla Abdul Sahab, 65, who was watching the walls come down, said they served their security purpose but also cut off his neighborhood from the school and health clinic.

“You could see hills of garbage next to the walls,” he said.

Now the Baghdad Provincial Council says it wants the U.S. to pay $1 billion for traffic jams, paralyzed businesses and damage allegedly caused by the walls to the sewage system and sidewalks. In a statement, the council said the blast walls were “put up under the pretext of security.”

The populist move demonstrates the anger that many Iraqis feel toward the U.S. over the war.

Some of the walls will stay indefinitely, including those that protect the Green Zone. But another place where they are coming down is Samarra, 95 kilometers (60 miles) north of Baghdad, home to the al-Askari shrine revered by Shiites. The move is significant because the shrine was severely damaged in a 2006 al-Qaida bombing that provoked a Sunni-Shiite bloodbath.

The Baghdad military spokesman, Maj. Gen. Qassim al-Moussawi, told The Associated Press that the decision to remove the walls followed a meeting between al-Maliki and senior security officials.

Al-Moussawi said Phase Line Gold went first because security was good there. But Hadi Jalo, a Baghdad political analyst, said it was also a political move.

Sadr City is the stronghold of anti-American cleric Muqtada al-Sadr. In 2008 he and al-Maliki were enemies. Now they are partners in the ruling coalition. The next test, he said, would be how quickly walls are removed around Sunni communities, who are less closely bound to al-Maliki.

And if the walls are needed again, they won’t be far away. Al-Moussawi said they will be used to form a security cordon around Baghdad.

Associated Press writers Saad Abdul-Kadir, Hamid Ahmed and Sinan Salaheddin contributed to this report.

Iraq Expects $30bn Investment in 2011

Tuesday, February 8th, 2011

Iraq expects private investment in its economy to triple to $30 billion [36 trillion Iraqi dinars] this year, as energy, agriculture and housing projects accelerate now that the country has formed a new government, a senior government official said on Tuesday.

Investment exceeded $10 billion last year, Salar Mohammed Ameen, vice chairman of the National Investment Commission (NIC), told Reuters on the sidelines of an energy conference in Istanbul.

Some $4 billion of investment will be in Iraq’s electricity sector, Ameen said.