Central_Bank_of_Iraq_LogoBaghdad (IraqiNews.com) The Central Bank of Iraq (CBI) currency auction on February 28 registered $184,067,625 in sales, a -3.08% volume decline from the US $189,921,893 sold by Iraqi Dinar, credit and transfer at the previous auction held on February 27.

The latest auction was attended by 45 banks and 9 remittance companies. The same institutions attended the auction held on February 28 compared to the previous auction.

Data for the February 28 auction was made public by CBI Announcement Number 3645.

Dollar sales in the in the period January 1, 2018 to February 28, 2018 saw an increase of -1% compared to the sales of US $6.1 billion in the same period in 2017. The total amount of US currency sold by CBI in the calendar year 2017 was US $15.7 billion.

An analysis of the monthly dollar sales by CBI since January 2016 reveals highly fluctuating volumes. During the period from January 2016 to February 2018, sales of US dollars averaged US $1.89 billion per month. Peak volumes were reached in May this year when sales touched US $2.3 billion.

Year Month US dollar sales in billions Increase/(decrease) compared to the previous month
2017 January 2.2
2017 February 2 -9%
2017 March 2.1 5%
2017 April 1.8 -14%
2017 May 2.3 28%
2017 June 0.6 -74%
2017 July 2.2 267%
2017 August 2.1 -5%
2017 September 1 -52%
2017 October 2.2 120%
2017 November 1.9 -14%
2017 December 1.9 0%
2018 January 2.2 16%
2018 February 1.9 -14%

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Central_Bank_of_Iraq_LogoBaghdad (IraqiNews.com) The Central Bank of Iraq (CBI) currency auction on February 27 registered $189,921,893 in sales, a -1.34% volume decline from the US $192,498,405 sold by Iraqi Dinar, credit and transfer at the previous auction held on February 26.

The latest auction was attended by 45 banks and 9 remittance companies. The same institutions attended the auction held on February 27 compared to the previous auction.

Data for the February 27 auction was made public by CBI Announcement Number 3644.

Dollar sales in the in the period January 1, 2018 to February 27, 2018 saw an increase of -1% compared to the sales of US $5.97 billion in the same period in 2017. The total amount of US currency sold by CBI in the calendar year 2017 was US $15.7 billion.

An analysis of the monthly dollar sales by CBI since January 2016 reveals highly fluctuating volumes. During the period from January 2016 to February 2018, sales of US dollars averaged US $1.88 billion per month. Peak volumes were reached in May this year when sales touched US $2.3 billion.

Year Month US dollar sales in billions Increase/(decrease) compared to the previous month
2017 January 2.2
2017 February 2 -9%
2017 March 2.1 5%
2017 April 1.8 -14%
2017 May 2.3 28%
2017 June 0.6 -74%
2017 July 2.2 267%
2017 August 2.1 -5%
2017 September 1 -52%
2017 October 2.2 120%
2017 November 1.9 -14%
2017 December 1.9 0%
2018 January 2.2 16%
2018 February 1.8 -18%

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Central_Bank_of_Iraq_LogoBaghdad (IraqiNews.com) The Central Bank of Iraq (CBI) currency auction on February 26 registered $192,498,405 in sales, a -0.90% volume decline from the US $194,248,986 sold by Iraqi Dinar, credit and transfer at the previous auction held on February 25.

The latest auction was attended by 45 banks and 9 remittance companies. The same institutions attended the auction held on February 26 compared to the previous auction.

Data for the February 26 auction was made public by CBI Announcement Number 3643.

Dollar sales in the in the period January 1, 2018 to February 26, 2018 saw an increase of -1% compared to the sales of US $5.83 billion in the same period in 2017. The total amount of US currency sold by CBI in the calendar year 2017 was US $15.7 billion.

An analysis of the monthly dollar sales by CBI since January 2016 reveals highly fluctuating volumes. During the period from January 2016 to February 2018, sales of US dollars averaged US $1.87 billion per month. Peak volumes were reached in May this year when sales touched US $2.3 billion.

Year Month US dollar sales in billions Increase/(decrease) compared to the previous month
2017 January 2.2
2017 February 2 -9%
2017 March 2.1 5%
2017 April 1.8 -14%
2017 May 2.3 28%
2017 June 0.6 -74%
2017 July 2.2 267%
2017 August 2.1 -5%
2017 September 1 -52%
2017 October 2.2 120%
2017 November 1.9 -14%
2017 December 1.9 0%
2018 January 2.2 16%
2018 February 1.7 -23%

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Central_Bank_of_Iraq_LogoBaghdad (IraqiNews.com) The Central Bank of Iraq (CBI) currency auction on February 25 registered $194,248,986 in sales, a -0.33% volume decline from the US $194,883,291 sold by Iraqi Dinar, credit and transfer at the previous auction held on February 22.

The latest auction was attended by 45 banks and 9 remittance companies. The same institutions attended the auction held on February 25 compared to the previous auction.

Data for the February 25 auction was made public by CBI Announcement Number 3642.

Dollar sales in the in the period January 1, 2018 to February 25, 2018 saw an increase of -1% compared to the sales of US $5.7 billion in the same period in 2017. The total amount of US currency sold by CBI in the calendar year 2017 was US $15.7 billion.

An analysis of the monthly dollar sales by CBI since January 2016 reveals highly fluctuating volumes. During the period from January 2016 to February 2018, sales of US dollars averaged US $1.86 billion per month. Peak volumes were reached in May this year when sales touched US $2.3 billion.

Year Month US dollar sales in billions Increase/(decrease) compared to the previous month
2017 January 2.2
2017 February 2 -9%
2017 March 2.1 5%
2017 April 1.8 -14%
2017 May 2.3 28%
2017 June 0.6 -74%
2017 July 2.2 267%
2017 August 2.1 -5%
2017 September 1 -52%
2017 October 2.2 120%
2017 November 1.9 -14%
2017 December 1.9 0%
2018 January 2.2 16%
2018 February 1.6 -27%

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IFC and Central Bank of Iraq to Strengthen Corporate Governance in the Banking Sector

The International Finance Corporation (IFC), a member of the World Bank Group, and the Central Bank of Iraq (CBI) are launching a series of specialized workshops, starting today, to raise corporate governance standards in Iraqi banks and strengthen the country’s banking sector.

IFC’s advisory services team will support the Central Bank in implementing its new mandatory corporate governance banking guidelines. IFC will initially train all key managers in the Central Bank and then roll out workshops to board members from all the country’s banks.

Topics include understanding the unique nature of governance in the sector, the right composition of boards, and risk management best practice.

Aly Al Alaq (pictured), Governor of the Central bank said:

“Helping banks implement sound corporate governance practices will increase the sector’s resilience and sustainability and make them more investment-friendly, enabling banks to not only boost efficiency, but also increase profit.”

The initiatives are part of IFC’s strategy to spur private sector growth in Iraq and scale up support for fragile and conflict-affected states, where private sector investment is key. For companies operating in conflict-affected environments, strong corporate governance can be vital for sustainability.

Ziad Badr, IFC Principal Country Officer in Iraq, said:

“Our aim is to foster a positive corporate governance culture within which banks in Iraq can operate, to strengthen the sector and drive growth … Improved practices help attract direct investments and ultimately stimulate social welfare and economic growth.”

IFC has been working to improve corporate governance in Iraq since 2014. As well as working with local institutions, in May 2017, IFC launched the country’s first independent institute of directors—the Kurdistani Institute of Directors (KIoD)—alongside the Erbil Chamber of Commerce and Trade, which advises on best practice and strengthening the role of independent directors and boards.

IFC’s advisory work in Iraq focuses on building the capacity of financial institutions, supporting governments, helping private firms improve their environmental, social, and governance standards, and mobilizing private investments through public-private partnerships.

(Source: IFC)


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Islamic State buying up Businesses in Iraq

By John Lee.

The Islamic State group (IS, ISIS, ISIL, Daesh) has reportedly laundered its cash reserves by investing in legitimate businesses in Iraq and elsewhere.

According to a report from The Economist, in Iraq it has used middlemen to buy farms, car-dealerships, hotels and hospitals.

It adds that weak institutions and rampant corruption make it hard for Iraq to tackle the problem.

Read the full article from The Economist here.

(Source: The Economist)


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Sulaymaniyah Airport

Baghdad (IraqiNews.com) Iraq predicts 1200 foreign flights to pass through the country’s airspace during 2018, the government’s aviation authority announced.

The Transport Ministry’s Civil Aviation Authority said in a statement that it “predicts the number of foreign aeroplanes passing through Iraqi airspace to reach 1200 this year”.

The authority based its projection on requests submitted to to it by Arab and foreign companies.

In January, the aviation authority said that more than 10 million passengers moved among Iraqi airports during 2017, taking more than 100.000 flights.

It said Baghdad Airport came on top in terms of passengers and flights with 4.07 million passengers and 36.09 thousand flights.

 

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By Ahmed Tabaqchali (pictured), CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

‘It’s Not the Donations, Stupid’: Key Points from the Kuwait Conference

With a few exceptions, the coverage of the “Kuwait International Conference for the Reconstruction of Iraq”[1] has been confusing at best, ranging from those who thought it was a failure for raising far less than needed to those who thought that that it was a reasonable success for raising a third of what was needed[2].

These thoughts were not helped by an Iraqi delegation that was focused on presenting a shopping list of projects that would need $88bn[3] in financing. In the end, it was reported that Iraq received pledges of $30bn[4] in loans and guarantees, just over a third of the required total.

Lost in all of this is the significant document “Reconstruction & Development Framework[5] that the World Bank Group (WBG) prepared with the Iraqi Ministry of Planning (MoP), as well as the IMF’s work on Iraq and its presentation[6] at the conference.

The first is a comprehensive analysis of the reconstruction requirements across all sectors of the country and provides plans for short-, medium- and long-term reconstruction needs within the framework of a long-term recovery for the country. In combination with the second, they provide the structure for funding the reconstruction effort.

The key takeaway is that the Government of Iraq (GoI) is realistic in its expectations that external sources of financings will be small, and therefore it expects to utilize its own resources over the next five years for the required reconstruction.

However, given the high existing demands on its budget, it will augment its public investment budget with new financing approaches that are attractive enough to bring in syndicated bank loans, institutional investors and international stakeholders.

These financing approaches were developed with the WBG and thus are based on a thorough analysis of the country’s capabilities and challenges, as well as being in-line with the IMF guidelines set in the Standby Agreement (SBA) of June 2016. The IMF’s presentation argues that this is feasible and consistent with macroeconomic stability, which means that the reconstruction should contribute to sustainable economic growth.

The IMF argues that the GoI can contribute $77bn over the next five years from the required reconstruction bill of $88bn. This contribution would be made of $50bn from oil revenues and $27bn of debt from raising bonds in capital markets and borrowing from International Finance Institutions (IFI’s) and in investments. Crucially GoI’s contributions are bound by requirements that Iraq’s foreign currency reserves remain at the current $50bn level and that total debt as a percentage of GDP is about 50%.

Therefore, Iraq would need to be able to access debt capital markets or bank lending markets for $27bn and donations of $11bn, or a total raise of $38bn. Investments, depending on their type, would fit into either category. The $30bn pledged goes a long way towards filling the financing gap of $38bn and not towards the $88bn total. The amounts pledged are roughly spilt between investments and export credits/loans.

Sovereign loans and guarantees come with lower interest rates and easier terms than commercial loans or bonds and therefore result in a lower repayment burden on Iraq. While Investments by their very nature are made with expectations of attractive rates of return and thus, given Iraq’s needs, will most likely be in productive ventures that either fill a need or contribute to economic growth.

Sovereign export guarantees, while beneficial to the sovereign’s own domestic companies, yet by lowering their risk exposure would encourage these very companies to expand in Iraq. Ultimately, investments and guarantees are far more important and sustainable than donations as they are beneficial to both parties: they benefit the home companies as they seek higher growth in Iraq than in slowing mature home markets, yet for Iraq their presence is needed, and they contribute to overall economic growth.

The assumptions made by the IMF are provided in the table below taken from its presentation.

The future price assumptions of Iraqi oil prices[7] are conservative and are derived from the futures markets. Based on prior IMF projections, they would assume that Iraq would not increase its current oil production or exports over the next five years. Moreover, they would assume that Iraq would still be bound by its OPEC production cut throughout 2018. Yet, Iraq has been exceeding these, leaving room for revenue upside in 2018.

Debt, current and new, at around 50% of GDP ensures that debt is below the threshold of 60% used in many debt targets. While debt service, on current and new debt, ensures that debt repayments are sustainable, and with the requirement of maintaining $50bn in reserves that no undue pressure will be exerted on the US $ peg of the Iraqi Dinar (ID). The IMF noted that to ensure that Iraq maintains $50bn in reserves that it, towards the end of the five-year period, would need to refinance some of the maturing debt and thus total financing need is $36bn.

It’s worth noting that $41bn out of Iraq’s $68bn in external debt at the end of 2017 is in the form of unresolved arrears to non-Paris Club creditors that were accumulated under the pre-2003 regime. This could be cut down by 90% if current negations with these creditors lead to the same debt relief terms accepted by the Paris Club creditors. Were this to happen, total debt as a percentage of GDP would be much lower than 50% giving Iraq greater flexibility to assume more debt while expanding its investment capital spending.

However, the crucial requirement is that Iraq must adhere to the prudent fiscal policy set by the IMF SBA agreement of June 2016 which is not only long overdue but essential to reduce the role of the state in the economy in order to diversify away from oil and for the development of private sector as the main driver of the economy.

The reconstruction needs and funding framework as articulated by the MoP, WBG and IMF fits with the thesis presented by the author in a recent study on Iraq’s Economy Post ISIS[8] which concluded that:

Guided by the IMF following the signing of the Stand-By Arrangement (SBA) in June 2016, the Iraqi government can embark on the long process of decentralizing the state by reducing its role in the economy, encouraging the development of the private sector in agricultural and industrial production, and stimulating private sector employment. The straight jacket of the low oil price environment, the absence of financial buffers and sovereign wealth funds, plus the need for reconstruction will ensure that the government continues on this path, builds upon it, and ultimately ensures its eventual success.”

In conclusion, the Kuwait conference was not about raising donations for Iraq but a strategic meeting on how to rebuild Iraq properly. Or as reported by one of the informed reports:

“… conference in Kuwait was different, in that it moved from being a pledging event to a strategic meeting on how to rebuild Iraq. Private sector representatives joined ministers from key countries with a stake in strengthening Iraq. And the requirement was mainly for investment and credit lines to encourage the private sector to develop commerce rather than continuing the cycle of handouts, both promised and actual.”[9]

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

REFERENCES:

[1] http://news.kuwaittimes.net/website/kuwait-international-conference-for-reconstruction-of-iraq-kicks-off-today/

[2] This thread on Twitter highlights the main thrust of the conference lost among the confusion.

https://twitter.com/dickinsonbeth/status/963728625207054336

[3] Part 3 “Investment Opportunities & Reforms”

https://view.publitas.com/1692ac51-faf7-464f-a9c2-1784ed1da647/iraq-reconstruction-and-investment-part-3-investment-opportunities-and-reforms/page/1

[4] https://uk.reuters.com/article/mideast-crisis-iraq-reconstruction/factbox-pledges-made-for-iraqs-reconstruction-in-kuwait-idUKL8N1Q55RY

[5] Part 1 “Reconstruction & Development Framework” of “Iraq Reconstruction & Investment”

http://www.cabinet.iq/uploads/Iraq Reconstruction/Iraq Recons & Inves.pdf

[6] Session 3 after clicking on pdf of presentation. Presentation starts at minute 8.20 on the youtube link.

https://view.publitas.com/1692ac51-faf7-464f-a9c2-1784ed1da647/iraq-reconstruction-and-investment-part-3-investment-opportunities-and-reforms/page/1

[7] Iraqi oil tends to sell at a blended discount of $5 to Brent crude.

[8] http://auis.edu.krd/iris/latest-iris/iraqs-economy-after-isis-investors-perspective

[9] https://www.thenational.ae/opinion/comment/reconstruction-isn-t-just-about-rebuilding-iraq-it-is-an-exercise-in-nation-building-too-1.705753

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS). He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.


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Central_Bank_of_Iraq_LogoBaghdad (IraqiNews.com) The Central Bank of Iraq (CBI) currency auction on February 22 registered $194,883,291 in sales, a 10.90% volume increase from the US $175,734,132 sold by Iraqi Dinar, credit and transfer at the previous auction held on February 21.

The latest auction was attended by 45 banks and 9 remittance companies. The same institutions attended the auction held on February 22 compared to the previous auction.

Data for the February 22 auction was made public by CBI Announcement Number 3641.

Dollar sales in the in the period January 1, 2018 to February 22, 2018 saw an increase of -1% compared to the sales of US $5.57 billion in the same period in 2017. The total amount of US currency sold by CBI in the calendar year 2017 was US $15.7 billion.

An analysis of the monthly dollar sales by CBI since January 2016 reveals highly fluctuating volumes. During the period from January 2016 to February 2018, sales of US dollars averaged US $1.86 billion per month. Peak volumes were reached in May this year when sales touched US $2.3 billion.

Year Month US dollar sales in billions Increase/(decrease) compared to the previous month
2017 January 2.2
2017 February 2 -9%
2017 March 2.1 5%
2017 April 1.8 -14%
2017 May 2.3 28%
2017 June 0.6 -74%
2017 July 2.2 267%
2017 August 2.1 -5%
2017 September 1 -52%
2017 October 2.2 120%
2017 November 1.9 -14%
2017 December 1.9 0%
2018 January 2.2 16%
2018 February 1.5 -32%

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Representational file photo.

Baghdad (IraqiNews.com) Iraq is close to resolving its disputes with Kurdistan Region regarding oil exports and revenue sharing, an Iraqi oil ministry official was quoted saying on Wednesday.

Kurdish-run BasNews quoted ministry spokesperson, Assem Jihad, saying that “talks between both sides have made a good progress regarding the oil file, especially after recent meetings between Iraqi Prime Minister Haider al-Abadi and Kurdistan’s Prime Minister Nechirvan Barzani.

“An agreement has become closer,” Jihad said.

Asked about the contract between the ministry and British Petroleum (BP) to boost production from oil fields in Kirkuk province, Jihad said the government was intent on exporting oil from the province. “Let it be through Turkey or Iran, it makes no difference to us,” he stated.

Sales of oil from Kirkuk stopped after Iraqi forces took over the province’s oil and government facilities in response to a referendum Kurdistan Region held in September for independence from Iraq, which the government in Baghdad deemed unconstitutional.

Kurdish Peshmerga forces took over Kirkuk in 2014 when Islamic State militants emerged to proclaim an Islamic “caliphate” in the country.

Last month, Iraq unveiled plans to export oil from the province through pipelines to Iran

Baghdad has been accusing Kurdistan’s Regional Government of corruption in relation to oil exports from Kirkuk.

Iraq says it sold more than 108 million barrels of oil in January, not including Kirkuk’s output.

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