By Mustafa Saadoun for Al Monitor. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Significant challenges face Kadhimi’s economic reform project

Iran’s central bank governor, Abdolnaser Hemmati (pictured), recently paid a surprise visit to Baghdad, three days after the United States slapped sanctions on 18 Iranian banks.

Iran sees in Iraq an economic lifeline and the only solution to circumvent the US sanctions ordeal, through formal and informal means.

Click here to read the full article.

(Picture credit: Tasnim, under Creative Commons licence)

The post Iran “Desperate to Maintain Iraqi Financial Lifeline” first appeared on Iraq Business News.


Source: Iraq News

Tagged with:
 

By Farhad Alaaldin, for Rudaw. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Kurdistan Region rice farmers harvest bumper crop

Finance Minister Ali Allawi said in a press conference following the adoption of the White Paper for Economic Reform by the Council of Ministers on October 13:

“… we have a solid and strong relationship with the Central Bank for the purpose of unifying monetary and financial policies, and this will provide us with the possibility to cover all the requirements and entitlements of the salaries of employees and retirees.”

This statement went unnoticed by all journalists, pundits and analysts. Nobody noticed the attempt of the Iraqi government to undermine the independence of the Central Bank of Iraq (CBI) to implement the financial policies approved by the government.

Click here to read the full article.

The post Iraq’s Central Bank “at Risk of Losing its Independence” first appeared on Iraq Business News.


Source: Iraq News

Tagged with:
 

By John Lee.

An Iraqi government white paper has warned of a possible collapse in the value of the Iraqi dinar.

According to Farhad Alaaldin, writing for Rudaw, the recently-approved white paper refers on page 37 to the danger of using the Central Bank of Iraq (CBI) as a source of financing, saying that the authors believe it “will lead to severe pressure on the CBI’s reserves and the resulting unsustainable future consequences.

He adds that this view was further confirmed by the group of experts writing the White Paper on page 42, who state that:

Indirect monetary financing by the CBI is the only remaining source… The need for this reserve to finance imports of goods and services means its will drop dangerously to low levels within nine months, which will ultimately lead to a real crisis in value of the Iraqi dinar, accompanied by the possibility of a collapse in its value.

More here.

(Source: Rudaw)

The post Report warns of Possible Collapse in value of Iraqi Dinar first appeared on Iraq Business News.


Source: Iraq News

Tagged with:
 

Breaking Out of Fragility: A Country Economic Memorandum for Diversification and Growth in Iraq

Iraq is at a crossroads. Almost two decades after the 2003 war, the country remains caught in a fragility trap, facing increasing political instability, growing social unrest, and a deepening state-citizen divide.

Amid a multitude of crises (including an oil price shock, the COVID-19 pandemic, and recent protests) as well as a culmination of poor economic policies, a lack of reforms, and an inability to tackle corruption, Iraq is having its worst annual gross domestic product (GDP) growth performance in 2020 since the fall of the Saddam regime.

Instability, a lack of jobs, corruption, and poor service delivery remain among the most important risks to the country’s long-term growth.

With every crisis comes an opportunity to reform. However, Iraq’s path to reform will be challenging and uncertain. Given current oil prices and the persistent drop in global demand for oil because of the COVID-19 pandemic, the country will have a tough time addressing the needs of its people in the short term.

It can, however, embark on a long but much-needed path toward structural transformation and reform, one that could leave its economy less dependent on oil and more driven by private sector activity.

The widespread protests since October 2019, which have called into the question the country’s current political economy, illustrate that such path for reform can no longer be avoided. Nevertheless, as this report shows, this path will demand persistence, and Iraq will face much uncertainty as it tries to address its long-lasting challenges and change the status quo.

This report highlights what Iraq can do to sustain future growth, but it also shows why the country has not yet managed to achieve high levels of diversified growth alongside peace, stability, and a better standard of living for its people.

The report also suggests strategic pathways by which Iraq can break free from this fragility trap, in which peace and stability can create the conditions for people to fulfill their aspirations, find private sector jobs, and thrive.

In this context, the report’s four chapters provide:

  1. an understanding of Iraq’s underlying fragility and political economy challenges and their implications for a diversified growth model;
  2. an analysis of Iraq’s growth characteristics and the country’s potential for and benefits from eco¬nomic diversification;
  3. a trade diagnostic and assessment of Iraq’s potential for trade and regional integration to create growth and stability; and,
  4. a review of Iraq’s agriculture sector, from primary agriculture to agrifood systems, and its potential to support economic diversification, growth, and stability.

Breaking Out of Fragility: A Country Economic Memorandum for Diversification and Growth in Iraq (Full Report in a PDF Format)

(Source: World Bank)

The post Breaking Out of Fragility: Diversification and Growth in Iraq first appeared on Iraq Business News.


Source: Iraq News

Tagged with:
 

Iraq to Release Frozen Iranian Funds

The Governor of the Central Bank of Iran has said his negotiations with Iraqi officials have yielded “positive” results, as the Arab country has given its approval to the release of Iran’s frozen assets for the purchase of basic commodities.

In remarks on Monday, Abdolnasser Hemmati said he held a trilateral meeting with Governor of the Central Bank of Iraq (CBI) Mustafa Ghalib Mukheef and Chairman of Trade Bank of Iraq (TBI) Salem Jawad Abdul Hadi Al-Jalabi during his visit to Baghdad.

The Iraqi authorities have agreed to release Iran’s frozen funds for the purchase of basic commodities after extensive talks on trade exchanges, Hemmati said, noting that the Islamic Republic of Iran holds remarkable financial sources in Iraqi banks earned by the export of electricity and gas.

Under the new agreement, the main obstacle to the release of Iran’s assets in the executive sphere has been removed, as the Central Bank of Iraq and the TBI face no more restrictions, he added.

Hemmati also pointed to his meeting with Iraqi Prime Minister Mustafa al-Kadhimi following the tripartite negotiations with the bank authorities, saying the Iraqi premier has hailed the agreement on the release of Iranian assets and promised to pursue the implementation of the deal on a weekly basis.

The top Iranian banker expressed hope that the new deal with Iraq would result in positive steps in the promotion of economic and banking interaction between the two “friendly and brotherly” neighbors.

The assets held in Iraq belong to the Central Bank of Iran, which is the main supplier of the basic demands in various sectors such as industry, agriculture and healthcare, he explained, saying Tehran would begin to withdraw money from those funds according to its needs, the government’s official website reported.

The commodities that are categorized as basic needs are exempted from the cruel and unilateral sanctions imposed by the US, the Iranian official noted.

(Source: Tasnim, under Creative Commons licence)

The post Iraq to Release Frozen Iranian Funds first appeared on Iraq Business News.


Source: Iraq News

Tagged with:
 

Iraq has taken the first step to become a member of the European Bank for Reconstruction and Development (EBRD).

The 71 existing shareholders of the multilateral financial institution approved a request by the country during the Bank’s Annual Meeting on Wednesday.

The EBRD promotes private sector development and sustainable and inclusive growth through a combination of investments, policy engagement and technical assistance. Last year, the EBRD financed 452 individual projects in Europe, Asia and Africa and financing exceeded €10 billion for the first time in the Bank’s history, rising to €10.1 billion from €9.5 billion in 2018.

Iraq submitted a request for membership in April 2018. The Bank’s Board of Governors has now agreed to the first stage in this process. Iraq will have to meet some pre-membership requirements before the membership process concludes with the acquisition of shares.

Jürgen Rigterink (pictured), the EBRD’s Acting President, welcomed the decision:

“We are very proud and happy that we will soon be able to welcome Iraq as our latest member. Today we have taken the first step on what we hope will be a long and successful joint journey. We are looking forward to building closer ties with Iraq.”

Mohammad Jaafar Al-Sadr, the Ambassor of Iraq to the United Kindom, said:

“We welcome the outcome of the EBRD’s Annual Meeting and the support EBRD’s Governors for Iraq’s request to become a member of the Bank. We appreciate the Bank’s shareholders attention to our application and the work of the EBRD Secretary General and his team dedicated to processing this request specifically during this challenging time of Covid-19 pandemic.”

As a shareholder, Iraq could subsequently make an application to change its status to recipient country, benefiting from the EBRD’s finance and policy support. This request would be addressed by shareholders in a separate process.

The current geographical remit of the EBRD’s southern and eastern Mediterranean region does not include Iraq. The resolution adopted by the Bank’s Board of Governors today “confirms the EBRD’s interest in a limited and incremental expansion to sub-Saharan Africa and Iraq during the next strategy period 2021-2025.” Governors will consider an update in 2022, reflecting guidance to be provided at the 2021 Annual Meeting.

(Source: EBRD)

The post Iraq to join European Bank for Reconstruction and Development first appeared on Iraq Business News.


Source: Iraq News

Tagged with:
 

Five One Labs, a start-up incubator for Iraqi and Syrian entrepreneurs based in the Kurdistan Region of Iraq (KRI), has launched Five One Invest, an investment initiative that creates more efficient deal-making and matchmaking opportunities for local investors and increases access to capital for entrepreneurs as they scale.

Five One Labs co-founder Alice Bosley said:

We are thrilled to launch Five One Invest as a way to strengthen the investment environment in Iraq today.

“On one hand, early-stage investors are facing a fragmented, inefficient market as they attempt to source deals, and on the other entrepreneurs are finding it difficult to access investment capital as they look to scale.

“By matching the best of our entrepreneur and investor communities, we will be able to facilitate more deals, all while providing additional resources and networking opportunities to the community.

Through Five One Labs’ ongoing work supporting startups, the incubator has developed an extensive network of entrepreneurs and investors, along with deep expertise in the investment landscape of Iraq.

This makes Five One Labs uniquely positioned to launch this initiative, where they will provide resources to both sides of its community, including investment readiness programs and advisory services for start-ups to ensure each is armed with pitch decks and robust investment strategies ahead of connecting with investors.

For investors who become members, Five One Invest will offer curated matchmaking to source, evaluate, and facilitate investment in early-stage companies throughout the country. Members will also be offered unique Master Class workshops and networking opportunities.

Non-members will have access to opportunities such as their Fundamentals of Angel Investing Course and a monthly Speaker Series. As Five One Invest continues to expand its network, select investors can experience the growing value of joining the community, including an enhanced pipeline and syndicate partners.

For entrepreneurs seeking access to finance, Five One Invest provides a number of useful resources, including advisory and valuation services, investment readiness workshops and opportunities to showcase their startups through monthly Entrepreneur Spotlights.

Five One Invest will launch its programs on October 14 with its inaugural online panel discussion, “Investment in Iraq: Now and Five Years Forward,” which is open to the public and will feature a conversation among local and international investors and Iraqi startups.

This launch of Five One Invest comes during a time of growth for the broader entrepreneurial landscape of the KRI and Iraq, which has seen a massive increase in the number of early-stage ventures launched in the past five years.

Five One Labs has been intensively supporting the ecosystem through startup incubation programs, annual investor trips to Iraq for regional and international investors, coworking spaces in Erbil and Sulaimani, and investment readiness workshops since its founding in 2017.

(Source: Five One Labs)

The post Five One Labs Launches Iraqi Investment Initiative first appeared on Iraq Business News.


Source: Iraq News

Tagged with: