Central Bank opens daily auction of treasury transfers

The source pointed out that the selling price landed with "1279" iraqi dinar to the dollar while the purchase price in cash was, "1277"; he stressed that quantity sold by the Bank amounted to 35 million and "555" thousand dollars, while the quantity purchased by the Bank was $ 4 million.

He added that the quantity sold in cash to banks and their customers amounted to 11 million and "040" thousand dollars while the quantity for making remittances outside Iraq hit 24 million and "515" thousand dollars; he ponted out that the sale price of remittances amounted to "1278" dinar while the cash sale price hit "12900".

It is noteworthy that the daily auction opened by the Central Bank is part of its policy which it followed three years ago to maintain stability of the Iraqi dinar exchange rate and to prevent its uneven prices compared to other currencies, as well as reducing the phenomenon of inflation.(Source)AlSabah

The application of new Iraq Investment Law

A high-ranking source in the Iraqi Ministry of Finance said that the purpose of the Institution is to be responsible for all investment projects of federal nature exclusively, as there will be regional and provincial bodies, which will also be responsible for investment planning and the granting of invest licenses in their regions. The National Institution is run by a council consists of nine members with expertise and competence, and the chairman of the council is nominated by the Cabinet for a period of five years; The Parliament has the right to depose the chairman and his deputy directly at the request of the Prime Minister.

The source said that the law aims to achieve a number of objectives; the most important of which are: encourage investment and transfer modern technologies to contribute in developing the Iraqi economy, also encourage the Iraqi and foreign private sector to investment in Iraq through securing the necessary facilities for the establishment of enterprises and enhance competitiveness, as well as develop the human resources according to the market requirements and provide job opportunities for the unemployed. In addition to this, the law contained some articles concerning the protection of the rights and properties of investors and the expansion of exports, balance of payments and Iraqi trade balance.

As for what facilities Iraq will grant to foreign and Arab investors, he emphasized that the law grants all the projects presented by Arabs and foreigners concessions and guarantees that ensure their continuation and development, as well as exempting them from taxes and duties, while the Institution will be responsible for identifying the most important sectors and preparing a map for projects in the light of the information provided by the provincial and regional bodies, then organizing them in lists which the investor can obtain.

As for the possibility of the regions projects contradicting the laws of the federal Institution, he emphasized that the law dealt with this matter; regional bodies have rights, including the right to form departments within their districts and they should coordinate with the Federal Center regarding the investment plans and facilities, on condition that regional investment instructions, plans and policies do not contradict with the policies of the Center.

The law also tackled the limits of these projects’ capitals, and the Institution has been given the power to accept applications of licenses to projects with a capital not less than the minimum one determined by the Cabinet or the regional Council of Ministers. Also the approval of these bodies should be obtained when starting a project with a capital of more than $ 250 million and the project exempted from taxes and duties for a period of ten years from the date of starting the commercial operation.

The Cabinet has the right to propose bills to extend or grant exemptions in addition to the exemptions listed and also provide incentives and guarantees or other concessions to any project, sector or region and in accordance with the nature of the activity, its geographical location and the extent of its contribution to the operation of manpower requirements and considerations of national interest; the law also permitted increasing the years of exemption from taxes and duties of up to fifteen years.

As for the machinery and equipment imported for the investment project, the source explained that those equipments are exempted from taxes and duties on condition they are admitted within three years of granting the license; those same articles are exempted in case of expansion or increasing the designing power. The imported spare parts are also exempted from taxes on condition they do not exceed 20% of the purchase value of those equipments. (Source)AlSabah

Iraq Central Bank is planning to reduce inflation

Within last year's budget, the government anticipated the inflation would not exceed 20-25%; however, the consumer price index rose to 70% due to the rise in the prices of oil products and electricity rose it to 80%. If energy is excluded, the index would range between 30 and 35% only.

Stopping the government subsidy was one of the recommendations of the IMF which requests the application of an economic reforms program by 2008 before approving to write off 80% of Iraq's debt to the creditor nations that are not members of the Paris Club.

Due to this escalation in prices, the Central Bank was compelled to increase the interest rate to 20 % after being 8% at the beginning of 2006, and the last intervention by the Central Bank was recorded in December of that year.(Source)AlSabah

Stable exchange iraqi dinar rate propels dollar sales high in Iraqi auction

Sixteen banks participated in Tuesday’s auction and offered to sell two million dollars, which the bank bought all at 1286 iraqi dinars per dollar.

Economist Abdul-Razzaq Sadeq al-Abaiji told the independent news agency Voices of Iraq (VOI) "the exchange rate was stable for more than a week now leading traders to offer selling dollars in today's auction."

Abaiji added "the offers to sell dollar encouraged the Central Bank to covers all bids for dollar in Tuesday's session."

On Monday, the Central Bank failed to cover bids made in its daily auction for dollar resulting in a decline in the demand ceiling to less than $34 million.(Source)Azaman

12 Trillion Iraqi dinar, Iraq's Budget This Year

In a press statement Baban said that the mentioned amounts delivered as 3 trillion iraqi dinar for oil ministry projects to rehabilitation oil sector, while electric ministry specifics amounted 1 trillion and 745 billion dollars for proving electric energy in the state.

He added that they specified 430 billion iraqi dinar for health ministry and 425 billion iraqi dinar for municipality ministry besides 422 billion iraqi dinar for housing ministry and other 336 billion iraqi dinar for education sector.

On the other hand, he mentioned that there were many situations forced such conditions which couldn't pass over like the high expenses for security and defense sector estimated 10 trillion iraqi dinar besides the high salaries after the falling of the ex-regime.(Source)AlSabah

The International Bank is financing a program to benefit from the Iraqi frozen loans

Stressing that one of the most significant obstacles to reconstruct Iraq are the delay in implementing the projects funded by international grants and loans and the investment budget of the State as well as Iraq's lack of a unified and developed law to meet the basic needs of the beneficiaries and executers alike.

The expert, who asked for anonymity, said that the reasons for delaying the projects financed by donor countries and organizations due to the fact that most of these bodies would prefer to apply their own rules and guidance, particularly projects funded by the Iraqi credit fund administered by the International Bank, and the projects funded by the Japanese Bank for International Cooperation; the same situation applies to projects being implemented by donor countries directly.

He added that the refusal of those international bodies to apply Iraqi rules and insist on the application of their own rules is due to the lack of transparency in the Iraqi law in application and the documents adopted in bidding to the public.

The expert pointed out that the security aspect reflects another negative manifestation in the prices of submissions from companies operating in Iraq, as the company operating at the same level in the neighboring countries is calculated by higher costs for the mere action in Iraq, regardless of the security costs.

He pointed out that in view of the fact that some of the donor countries to directly implemented the reconstruction projects in direct coordination with the beneficiaries in the provinces and territories, especially in relation to the American grant, which forms 55% of the total financial commitments amounting to $ 33 billion. This reality has led to a loss of focus in the coordination of these programs that may operate in the same field sometimes.

He says that the causes leading to the delay of implementation were diagnosed, and they require good decision. The first signs of this trend have emerged in the project, which is being implemented for the time being, financed by the International Bank and through the ministerial committee charged with preparing a draft bill for government contracts with the consult of international experts that have a prominent place in this field.(Source)AlSabah

Al-Sunaid expects rise in the Iraqi dinar price during the middle of 2007

The deputy on the United Iraqi Alliance list, Hassan Al-Sunaid, expected during a meeting of the Iraqi Parliament that the Iraqi dinar exchange rate will reach 1200 dinar to the dollar at mid-year, while the price of one dollar hit 1480 IQD last November.

Al-Sunaid's statement came during a session of the Parliament to discuss the general budget in Iraq during the year 2007, and it was attended by the Minister of Finance Bayan Baqir al-Zubaidi and a number of his advisers.

It is noteworthy that the Iraqi dinar has been rising gradually and continuously, in its value of exchange against the dollar since the Iraqi Central Bank adopted a new monetary policy to deal with inflation in the 13 last November.

He attributed the "causes of inflation to the disproportionate rate of the nominal level of the Iraqi dinar with its real one" which prompted the bank to raise the value of the dinar since November last year to reach during the current January to about 1320 dinar per dollar.

The expectations of Al-Sunaid of the consistent rise of the dinar to 1200 dinar to the dollar come amid widespread demand of investors and persons dealing in Iraqi dinar instead of the dollar.(Source)AlSabah

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The Iraqi dinar and floating the dollar in the structure of the national economy

Thus the rolling Iraqi Monetary (nominal value) specified by the law has become a criterion for exchange transactions, withdrawal and the international circulation according to system Gold rule; although, it was related to the British pound before the revolution of July 14th, 1958, especially in terms of credit and foreign transfers, as it has a metal cover coupled with stability. After the liberation of Iraq from the ring of the (sterling Pound), the Iraqi dinar remained as a cash unit (with real value) standing on its own compared to international rates.

In spite of the many shocks that hit the developing country in conditions of political and economic changes led to the dangerous decline of many of those currencies, like what happened between Iraq and its neighbor Iran in 1980 until 1988 of a devastating war sapped the human energies and infrastructure of both countries, the Iraqi dinar was not affected much and managed to keep its true value and relative stability throughout the war period. But after the government took the wrong procedure of issuing millions of dinars of the 25 note, the Iraqi dinar had become no more than a (commercial paper) in its (nominal value) and this sinister phenomenon which was the result of the misconduct of the government, then, paved the way for the American dollar to monopolize the Iraqi market. Since then, the Iraqi dinar remained incurably ill because the performance evaluation of the Iraqi monetary, particularly in the year 1994 after the penetration of the dollar, revealed that the dinar had no real value as an Iraqi exchange measuring unit against the dollar, despite the fact that Iraq has enormous oil wealth more than any country in the world, especially European countries, in terms of trade credit and cash deal.

The American dollar monopolized the Iraqi economic policy and the dinar has not been able to stand up to it after the removal of the former regime and the loss of control by the State over its economic and commercial structures. How will the Iraqi currency be stabile when it is represented by the ill dinar which can not be cured as long as the floating dollar overwhelms the whole Iraqi market; the Iraqi seller and the buyer deal only by it. Who is responsible for this decline?

A question put before the Ministry of Finance, as the Minister stated previously on the need for (evaluating the Iraqi dinar) and called for its activation against the American dollar. Will the Iraqi parliament seek to lay the evaluation foundations of a new monetary unit all over again? Or will the dinar remain weak against the dollar? And to what level will the Iraqi economy deteriorate if its spinal column, represented by the dinar, can not withstand to be straight up any more?(Source)AlSabah

The dollar exchange rate against Iraqi dinar is stabile for the first time in two months

The demand for the dollar recorded a slight fallback, hitting six million and 665 thousand dollars against seven million and 300 thousand dollars last Wednesday.

The purchase orders distributed between five million and 925 thousand dollars in cash and 730 thousand dollars in the form of remittances to abroad; the bank fully covered them at an exchange rate amounted to 1325 iraqi dinar.

On their part, the six banks participating in the auction made offers to sell the dollar hit 730 thousand dollars bought by the bank in full at an exchange rate reached 1323 iraq dinar.

The economic and industrial expert, Abdul Razzaq Sadiq Al-Abayachi, described in a statement the stability of the exchange rate as a positive indication that will allow the market to restore its health and mend the damages caused by the daily and frequent drop of the exchange rates which caused transactions to lose credibility.

Al-Abayachi pointed out that the long holiday the auction will have for more than a week because of Eid Al-Adha, will allow much of the smooth circulation, without risks of the decline of the currency, and the settlement of a number of trade deals.(Source)AlSabah