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Iraq Says It Exported More Than 1 Billion Barrels of Oil in 2015 Khalid Al-Ansary and Kadhim Ajrash January 1, 2016 — 7:03 AM PST Share on FacebookShBy SocalDinar
Iraq Says It Exported More Than 1 Billion Barrels of Oil in 2015 Khalid Al-Ansary and Kadhim Ajrash January 1, 2016 — 7:03 AM PSTIraq said it exported 1.097 billion barrels of oil in 2015, generating $49.079 billion from sales, according to the oil ministry.
It sold 99.7 million barrels of oil in December, generating $2.973 billion, after selling a record 100.9 million barrels in November, said oil ministry spokesman Asim Jihad. The country sold at an average price of $44.74 a barrel in 2015, Jihad said.
Iraq, with the world’s fifth-biggest oil reserves, needs to keep increasing crude output because lower oil prices have curbed government revenue. Oil prices have slumped in the past year as the Organization of Petroleum Exporting Countries defended market share against production in the U.S.
OPEC’s second-largest crude producer is facing a slowdown in investment due to lower oil prices while fighting a costly war on Islamist militants who seized a swath of the country’s northwest. The nation’s output will start to decline in 2018, Morgan Stanley said in a Sept. 2 report, reversing its forecast for higher production every year to 2020.
Iraq may get bond guarantees for $2b sale to trim cost
The government cancelled a bond sale this year after potential investors demanded higher interest rates
Published: 16:26 November 12, 2015Bloomberg Dubai: Iraq, reeling under the slump in oil prices and the war with Islamist militants, may receive bond guarantees from international institutions to reduce borrowing costs as Opec’s second-biggest producer plans a $2 billion (Dh7.3 billion) sale next year, the central bank chief said.
The government plans to raise the money in the first or second quarter of 2016, Ali Mohsen Esmail said in an interview in Kuwait on Wednesday. Authorities are working on arrangements with the International Monetary Fund and other organisations to make it easier to cut borrowing costs, he said. The government cancelled a bond sale this year after potential investors demanded higher interest rates.
“We could get international guarantees, we have promises,” Esmail said.
Iraq’s oil revenue dropped as crude prices plummeted last year. Compounding the crisis is the war with Islamic State militants, who have taken control of major Iraqi cities in the west and north. The IMF estimates the government’s budget deficit will widen to 23 per cent of economic output this year from about 5 per cent in 2014.
The Washington-based lender said in a statement Tuesday it had reached a staff-monitored agreement with Iraq that will “allow the Iraqi authorities to build a track record for a possible Fund financing arrangement”.
Iraq’s reserves will also start to rise in 2017 and will reach $91 billion in 2020, Ismail said, citing IMF estimates. He said in a statement on Tuesday that reserves would total about $60 billion by the end of 2015. Gross foreign assets with the central bank stood at $58 billion at the end of September, according to official data.
“Any engagement with the IMF will help raise investor confidence in Iraq’s fiscal sustainability,” said Raza Agha, chief economist for the Middle East and Africa at VTB Capital in London. “However, the size of their external financing needs suggests that they cannot rely exclusively on private creditors and capital markets,” he said, adding that he estimates that Iraq needs $20 billion annually in external financing.
The yield on Iraq’s $2.7 billion Eurobonds due 2028 surged to the highest since 2009 last month. It was little changed on Wednesday at 9.533 per cent, according to data compiled by Bloomberg.
Ismail said Wednesday that 2016 will be “a difficult year” for Iraq’s finances, and predicted a gradual recovery in 2017. The IMF expects the budget deficit to fall to 17.7 per cent of GDP in 2016, from 23.1 per cent this year.
Iraq is also in talks for a $2 billion loan from the World Bank, though the government will not list the facility as part of the package to finance the deficit until an agreement is certain, Esmail said.
Oil Resumes Slide as Global Crude Oversupply Seen Persisting
Oil declined for the first time in three days, trimming a weekly advance, amid speculation a global surplus of crude will be prolonged.
Futures slid as much as 1 percent in New York. Output from Iraq, the second-biggest OPEC producer, exceeds 4 million barrels a day, Oil Minister Adel Abdul Mahdi said, according to Almada news website. U.S. crude stockpiles rose for a fifth week through Oct. 23, keeping supplies more than 100 million barrels above the five-year seasonal average, government data showed Wednesday.
Oil failed to sustain a gain above $50 a barrel earlier this month amid speculation a global glut will persist. The Organization of Petroleum Exporting Countries continues to pump above its quota and the International Energy Agency estimates the surplus will remain until at least the middle of 2016.
West Texas Intermediate for December delivery fell as much as 44 cents to $45.62 a barrel on the New York Mercantile Exchange and was at $45.64 at 10:07 a.m. Sydney time. The contract gained 12 cents to $46.06 on Thursday. The volume of all futures traded was about 63 percent below the 100-day average. Prices are up 2.4 percent this week and 1.3 percent higher for the month.
Brent for December settlement dropped 25 cents, or 0.5 percent, to $48.80 a barrel on the London-based ICE Futures Europe exchange on Thursday. The European benchmark crude ended the session at a premium of $2.74 to WTI.
Iraq Plans Unprecedented Pay Cuts as Financial Crisis Deepens Zaid Sabah ZaidSabah Caroline Alexander October 28, 2015 — 9:16 AM PDT
Share on FacebookShare on Twitter Share on LinkedInShare on RedditShare on Google+E-mail Iraq is planning unprecedented salary cuts for senior civil servants, as a more than year-long war against Islamic State and the plunge in oil prices deepen the nation’s financial crisis.
Iraqis increasingly sought security in state employment amid the turmoil that followed the 2003 U.S. invasion, and the government now provides jobs for 3 million people, or 20 percent of the workforce. The International Monetary Fund in 2009 advised Baghdad to revise salary laws but, fearing a backlash, officials put off a decision. This time, the government has to act, Prime Minister Haider al-Abadi said on Tuesday.
“The drop in oil prices and the country’s involvement in a war that’s exhausting large amounts of money from the budget have put the government in financial difficulty,” he said. “Reforms have hurt some but we’ll reach a dead end if we don’t take such measures.”
Widespread protest over the salary cuts would add to pressures on Abadi, who’s supported by the U.S. as the best hope of preventing Iraq’s permanent fracturing.
His administration is already facing mounting anger over corruption, and sectarian tensions sparked by the role of Iran-backed militias in the fight against Islamic State. The jihadist group controls about a third of Iraq, and in areas recaptured by the army, the slow pace at which services are restored is also stirring dissatisfaction.
Protesting Professors Iraq says the conflict is costing it about $10 million a day. Add to that the slump in oil prices and the result, the IMF says, is a likely budget deficit of about 23 percent of economic output this year. The government spends about $40 billion a year on the salaries of state employees, much of it for soldiers and police officers. Another $10 billion goes on the pensions of two million retirees.
“How can we spend on war, health, education, agriculture, services and the poor?” Abadi told a group of university professors, who have staged demonstrations against the planned pay cuts. He promised to look for ways to soften the impact, for example by reducing interest rates for those who have taken out loans.
“We have already seen several departments of public-sector employees protest against the new scales, and I think these will continue and expand if the plans are not revised,” said Sajad Jiyad, an analyst at the Baghdad-based Iraqi Institute for Economic Reform. “It’s a major challenge.”
The government estimates the changes will save at least $3 billion. Of that, $1 billion will be used to reduce the deficit, which it says currently stands at about $19 billion. The government says workers at the lower end of the civil-service pay scale will receive slight increases, making the salary structure fairer. That could also help limit unrest.
Parliament Approval? It isn’t yet clear if the salary changes require a vote in parliament, where Abadi could face opposition. Mudher Saleh, an economic adviser to the premier, said by phone that Abadi’s broader reform package has already been approved so a new vote might not be necessary. Still, the pay plan is up for discussion by lawmakers on Thursday.
“It’s the first time since 2003 that we will carry out such deep, sweeping cuts to salaries,” Saleh said, referring to changes made after the removal of Saddam Hussein.
Civil servants at the top of Iraq’s 10-tier scale make about $5,000 a month, while junior employees earn as little as $400 to $500, said Jabbar al-Abadi, a member of parliament’s finance committee. The new law will add about $40 a month to the salaries of those at the lower end, while employees nearer the top will lose about $834 a month.
Grand Ayatollah Ali al-Sistani, who has endorsed Abadi’s reform program since it began in August, on Friday backed the salary changes as a way to achieve social justice. There’s been stinging criticism from politicians, including former Prime Minister Nuri al-Maliki, as well as from officials in the pro-reform movement.
Salim al-Jabouri, the parliamentary speaker, said the cuts could result in more skilled Iraqis leaving the country. Noura Salim, a lawmaker and member of parliament’s economic committee, described the legislation as a knee-jerk reaction to the financial crisis.
“The new law will directly impact the middle class and make them part of the poor class,” Salim said, adding that the government’s focus should be on tackling corruption.
Iraqi Central Banker Sees Limited Risk of Devaluation Amid War Ahmed Feteha Alaa Shahine September 14, 2015 — 2:16 AM PDTUpdated on September 14, 2015 — 4:40 AM PDT Central bank Governor Ali Mohsen Ismail said Iraq has enough foreign reserves to maintain its currency peg but didn’t rule out a minor devaluation to shore up government revenue hurt by the slump in oil prices and the war on Islamic State militants.
Reserves are enough to cover more than six months of imports, higher than what is typically needed to maintain the exchange-rate, Ismail said in an interview in Cairo on Sunday. This year’s budget deficit will likely be lower than the 25.4 trillion dinars ($20.9 billion) originally planned because the finance ministry is already cutting spending, he said.
“There is no fear for the dinar,” the governor said. However, if “the pressure remains, we could marginally change the exchange rate to increase revenues of the finance ministry,” he said. “This is just an option that needs to be carefully studied because we don’t want to give away what we have achieved in terms of the inflation rate, which is perfect now.”
Consumer prices rose 2.6 percent in July, according to official data.
Bond SaleIsmail’s comments come as OPEC’s second-biggest producer plans to raise $6 billion in bonds to fund the budget shortfall, which the International Monetary Fund expects to widen to 17.4 percent this year from 5 percent in 2014. The IMF, which extended $1.24 billion in emergency aid to Iraq in July, described the peg as a “key anchor to the economy” in a report last month.
The nation is engulfed in armed conflict with Islamic State militants who took control of major Iraqi cities, and a surge in inflation would increase discontent among Iraqis already complaining about chronic shortages in water and electricity. Military success against Islamic State militants has been piecemeal, as the government has struggled to enlist support from mainly Sunni communities in parts of the country ravaged by attacks.
“Iraq has suffered a tremendous dual shock from low oil prices and war on IS," said Jean-Michel Saliba, a London-based economist at Bank of America Merrill Lynch, using an abbreviation for Islamic State. Government efforts to cut spending have not resulted in a major drop in the deficit, he said.
Authorities “have few options, one of them is to get the central bank to devalue to boost revenues," Saliba said. "We don’t see an immediate devaluation but we see more pressure on the peg the longer the situation continues as buffers get eroded.”
Concerns that oil-dependent economies may abandon their pegs intensified after Kazakhstan allowed its currency to float following China’s surprise move to revalue the yuan. Saudi Arabia, the world’s biggest oil producer, said it was committed to maintaining the riyal’s peg to the dollar.
At RiskIn the Middle East, the Iraqi dinar is among the most at risk, though the current exchange-rate regime is likely to remain, according to Emirates NBD, the biggest bank in Dubai.
The war, as well as the 50 percent plunge in oil prices, has shaken investor confidence, with the yield on Iraq’s $2.7 billion Eurobonds due 2028 surging 1.7 percentage points this year to 9.588 percent, the highest since 2009.
The central bank, in an attempt to ease pressure on government finances, has allowed local banks to use as much as 50 percent of their reserves at the regulator to buy treasury bills.
“Most banks have used that advantage,” Ismail said.
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