Iraq: SoL, Al-Iraqiya Leaders To Discuss New Government

June 29, 2010

The leader of Iraqi political coalition State of Law, Nouri al-Maliki, and al-Iraqiya list leader Ayad Allawi met June 29 and agreed to pursue talks in the next few days to break the political stalemate, KUNA reported. An al-Iraqiya list member who attended the meeting said there will be another meeting either June 30 or July 1, which shows that both parties “share the desire to form a new government as early as possible.”

Shabibi: International banks eye Iraqi market

International banks eye Iraqi market, says Sinan

Iraq is in talks with six or seven foreign banks interested in entering the Iraqi market, despite insurgent attacks against financial institutions such as the central bank, the bank’s governor said on Wednesday.

Central Bank Governor Sinan Al Shibibi told Reuters that the central bank’s policy interest rate, now at 6 per cent, was appropriate for the time being and in line with core inflation, which was holding steady at 3 per cent in June.

“There are some foreign banks who have interest to join forces with domestic banks and we are actually negotiating with a lot of them … There are applications for licences,” he said in an interview conducted in English.

“There are banks from the Gulf and I think two to three from Europe; I think six to seven (banks) is quite a good number.” He did not name them.

Among those lenders who submitted applications to operate in Iraq are Iranian and Lebanese lenders, Waleed Eedi, acting director-general of banking supervision, said in a news conference later on Wednesday.

Suicide bombers and gunmen stormed the central bank earlier this month, killing 18 people, and fought a 1-1/2 hour gunbattle with security forces. A second suicide attack took place last Sunday against the Trade Bank of Iraq.

But Shibibi shrugged off concerns that a fragile security situation and a delay in forming a new government after March elections would deter foreign investment.

“These are very long-term objectives; I think it is not going to affect investment decisions,” he said.

The central bank cut its key policy rate by 100 basis points to 6 per cent in April in reaction to subdued inflation.

Shibibi declined to say if the central bank is likely to adjust interest rates further this year.

“(The interest rate) tallies with inflation very well now … I think the level of inflation is quite good, and we don’t actually anticipate any changes of monetary policy in (coming) months,” he said.

Iraq’s official interest rate is more of a guide to bank rates than a direct monetary mechanism, as the banking sector is small and capital markets are underdeveloped.

Iraq’s formal economy, as it pulls out of years of sectarian carnage that followed the 2003 US-led invasion, is dominated by the oil sector.

The governor did not expect the country’s budget deficit to widen in 2010 as oil prices, which traded around $ 76 a barrel on Wednesday, were not that far from Iraq’s budget estimate, adding the Iraqi budget outlook was “more or less” stable on the back of the recent rise in oil prices.

“But I think there will be more demand for development projects … because of the fact that you had some kind of political instability and election, so a lot of the implementation did not go through,” he said. “Probably there will be a drive for implementation of projects, and this will exert some pressure on the budget,” he said.

Iraq’s cabinet approved a 2010 budget of 78.73 trillion Iraqi dinars based on an oil price of $ 62 per barrel, entailing a budget deficit of 17.95 trillion dinars.

The central bank governor also said he did not expect any major disruption to the country’s economy from the current political wrangling and delay in forming a government.

The Iraqi economy, driven mainly by oil production, is expected to grow by 7 per cent this year, he added.

Khaleej Times          June-26-2010

New law to boost Iraq stock market

MEED – [6/18/2010]

The legislation will help encourage foreign investment and increase trading volumes on the bourse.  The Iraq Stock Exchange is set to receive a considerable boost to its trading volumes with the implementation of new securities legislation by the end of this year.

The legislation proposes a minimum capital requirement of ID250bn ($214m) for Iraqi banks, which would result in billions of new shares as they comprise about 75 per cent of the exchange by both market capitalisation and trading volume. Current volumes average only $1m to $1.5m a day.

The new law will also allow firms to list at market value – the current law only permits listings at the value of the company’s capitalisation. The regulation would not only boost trading volumes, but also attract much-needed foreign investment. Although the bourse allowed foreign investment in August 2008, non-Iraqi money comprises only 3 per cent of trade.

The Iraq investment story is becoming increasingly attractive as macro indicators show the economy is staging a recovery. Interest rates have come down from 20 per cent to 6-7 per cent, inflation has fallen from 80 per cent five years ago to about 5 per cent today. The country’s exports, namely oil, are growing.

For a foreign investor, the stock exchange provides the quickest and easiest way to invest in Iraq. The only problem is the lack of liquidity. The exchange’s market capitalisation currently stands at just $3bn.

However, the bourse has seen a gradual increase in trading volumes, mainly due to the successful move over to the OMX platform and increasing the trading days to five days a week.

In April 2009, the exchange began automated trading with five companies. Today, there are 85 listed companies.

The mechanisms are in place – the key challenge now is ensuring the appropriate legislation is brought in. The approval of the securities legislation is crucial for the exchange’s future growth.

Iraq court approves election result

Iyad Allawi’s Iraqiya had a two-seat lead
over al-Maliki’s bloc [AFP]

Iraq’s supreme court has approved the final results of March 7 parliamentary elections, an important step towards the formation of a new government.  Tuesday’s approval from the high court allows electoral blocs to begin negotiations on forming a government, after elections produced no clear winner.

“Based on the articles of the constitution we have decided to approve the election results,” Midhat al-Mahmoud, the court’s chief judge, said.  The final certification of the results have come nearly three months after an election many Iraqis hoped would lead to stability and an end to sectarian conflict.

A cross-sectarian coalition led by Iyad Allawi, a former prime minister, won two more seats than a mainly Shia bloc headed by Nouri al-Maliki, the incumbent premier.

Close contest
Al-Maliki’s State of Law bloc won 89 seats in Iraq’s 325 seat parliament compared with Allawi-led Iraqiya’s 91 seats.

Al-Maliki has a announced a union between his party and the Iraqi National Alliance, which finished third. Together, this two party bloc will control 159 seats, just short of a parliamentary majority.  Allawi has warned that an alliance excluding his Iraqiya party, which has strong support from the minority Sunni community, could trigger renewed sectarian violence.

One candidate from the Iraqi National Alliance was not approved, as the court awaited information from the electoral commission surrounding his candidacy.  With the court’s approval of election results, the president now has 15 days to call the new parliament to convene.


Source – AlJazeera.net