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Associated Press: Low oil prices puts Iraq in trouble


yota691
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 Arab and international


Economy News Baghdad

The recent deterioration in oil prices has dealt a heavy blow to Iraq's stagnant economy, threatening the new government's ability to postwar reconstruction to "dodge" and provide essential services to its recent protest areas.

Brent crude oil, which is used as a benchmark for calculating oil prices in the market, rose briefly in October to reach $ 85 a barrel, and its price has continued to decline since then to less than $ 55 a barrel, which is a nightmare for a country like Iraq's revenue from oil exports accounts for 95% of its national budget.

The draft budget bill is estimated at 111.9 billion dollars sent to parliament in October and was calculated in the calculation of the rate of crude oil exports of 3.8 million barrels per day at $ 56 a barrel. The bill, which includes a 23 percent increase in spending, would result in a deficit of $ 22.8 billion.

All this is happening and has not yet been discussed until the enormous challenge to reconstruction efforts after years of war. According to the United Nations, there are still 1.8 million people who have not been able to go back to their homes. Mosul, Iraq's second largest city, is under the rubble of destruction in buildings and infrastructure, as is the case with many other cities and villages that were once under an oppressive rule.

The Iraqi Ministry of Planning estimates the country needs about $ 88 billion to implement reconstruction projects. In February last year, donors at the Kuwait Reconstruction Conference pledged about $ 30 billion in loans and investments to meet some of the requirements for the reconstruction bill, but there was no progress on the implementation of the pledges.

Meanwhile, in the city of Basra, far from the devastation caused by the fighting, the protests have erupted in recent months against unemployment and a lack of public services. The ongoing power outages are a problem the country has experienced since the US invasion of the country in 2003, including Basra, as well as the lack of safe drinking water.

"We were surprised by the deterioration of oil prices and we have a big problem," MP Haneen al-Qaddu told the Associated Press in an interview with the Associated Press.

Iraqis elected a new parliament, which in turn opted for a new government earlier in 2018, dominated by the same rival political parties that ruled the country for 15 years.

Parliamentarians rejected the draft budget law and called for the preparation of a new bill based on lower estimates of oil prices and the allocation of more funds for public investments.

Al-Qaddu says they may not be able to approve a new budget until the first quarter of the new year. Until then, the government can only pay one part of 12 of the last year's budget for each month.

While international attention has focused on the devastation in northern and western Iraq and the protests in the south, the budget crisis has also had a significant impact on Iraqis living in more stable areas. Construction projects have been disrupted across the Baghdad governorate for years, with unfinished buildings being transformed into a waste dump in a Baghdad district.

Kazem Nemeh Khudair, the owner of an investment contracting company, signed contracts with the government in 2014 to build four schools worth $ 5 million. By next year, three schools have been completed by 80 percent, but public budget allocations have shrunk as the government waged a costly war against Da'ash. Emaar did not complete any of the four schools, and the investor signed huge debts that forced him to lay off more than 500 workers and sell family homes and cars.

"I do not want any interest now, I just want to get my capital back, I've been suffering for the last three years, people are knocking on my door to ask about their money," Khodair said.

Sami al-Araji, chairman of the National Investment Commission, said during an economic conference held in December that hundreds of projects estimated at 54 billion dollars have been postponed. He called for diversification of the country's economy to boost investment and reduce the country's dependence on oil. "We have to think about all the alternatives, the country has promising opportunities," Araji said.

Efforts to diversify the economy have been thwarted by political clashes and widespread corruption that has wreaked havoc on the country since 2003, creating swirls of war and instability that have hurt the country, Khodair said.

Source: Range


Views 7   Date Added 02/01/2019

 
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 Arab and international


Economy News _ Baghdad

Have the GCC countries maintained their status as a haven for job seekers and investors, or are the difficulties keeping up with the low oil prices that would extinguish the glow of the six countries, which are no longer a coherent political and economic bloc as they were before? 
Before Saudi Arabia, Bahrain and the United Arab Emirates - along with Egypt - imposed a blockade on Qatar in mid-2017; the doors of the markets of GCC member states were open to the businessmen of the six countries. 
But the move, which surprised the world at the time, contributed to deepening the economic difficulties faced by the public and private sectors in these countries, even if it appeared unevenly. 
The Gulf states may face fiscal deficits this year if oil prices remain close to $ 50 a barrel, and may fail to address foreign investors and convince them to enter their financial and real estate markets. 
Government spending
The six countries have experienced a fall in oil prices by 19 percent over the past year, dwarfing the ability of most of them to meet their spending obligations on new projects and fuel economic growth appropriate for job creation. 
Bahrain, for example, is already suffering from economic difficulties. Saudi Arabia, the United Arab Emirates and Kuwait have recently paid 10 billion dollars to ensure that Manama achieves a financial balance by 2022. A 
step that came despite the challenges facing Riyadh, A few days ago of its budget for 2019 deficit of $ 52 billion, while Qatar expects to achieve a surplus of six hundred million dollars. 
Qatari optimism
Mohammed bin Tawar al-Kuwari, Qatar's first deputy chairman, said that his country's economy will continue to grow in the past few years, based on a new budget of $ 57 billion, which will ensure the implementation of major projects in Doha. 
"The State of Qatar has not been affected by the embargo imposed by its neighbors, but this step has contributed to strengthening the activity of the private sector of the local, and it has strengthened the role of emerging projects that initiated the provision of products replaced the counterparts that were imported by the embargoed countries" . 
Al-Kuwari's optimism is based on the latest IMF reports, which predicted Doha's GDP growth of 2.4 percent in 2018, rising the following year to 3.1 percent. 
Challenges
But the challenge facing the Gulf states is no longer confined to their political differences and repercussions. There are international factors and those outside their control that are responsible for shaping the future prospects of their economies. 
The slowdown in global economic growth along with the US-China trade war is not in the interest of Gulf oil producers. 
Economist Mohamed Yafie believes that the challenges faced by the Gulf countries with a new year are a confrontation between the world's two largest economies, which he sees as inhibiting growth on the one hand and curbing oil prices on the other. 
Qatar's budget was built on a default basis of $ 55 a barrel, while Al Rajhi Capital, based in Riyadh, was at $ 70 for Saudi Arabia's new year. 
Dubai in red
These challenges have cast a shadow over Gulf financial markets. While the Qatar Exchange increased by 20.8% in 2018, its counterpart in Dubai lost about 25% of its value during the same period, due to the recent openness of the latter to foreign money, fearful of high investment costs. 
This disparity in the performance of the stock exchanges; attributed to the political factors and other factors related to the investment climate. 
He said Al-Jazeera Net was affected by the embargo imposed on Qatar, where the withdrawal of Qataris from the financial markets and real estate of the UAE, on the one hand, and decreased confidence of businessmen in the emirate by its participation to its neighbor Abu Dhabi blockade imposed on Doha a year and a half on the other. 
In addition, Al-Yafei asserted, the UAE imposed a VAT on January 1, 2018, causing a drop in private sector investment returns. 
Problems for Saudi Arabia
Al-Yafie believes that the involvement of both Riyadh and Abu Dhabi in the war against Yemen has led to the depletion of the financial resources of the two largest Arab economies. 
Military intervention in Yemen by the Saudi-led coalition, backed by the UAE since March 2015, has caused the kingdom to spend billions of dollars on armament requirements, something that young people see as weakening the Gulf countries' reputation and their ability to attract foreign capital. 
"The continuation of the Saudi intervention in the Yemeni affairs will divert its financial spending from development projects that benefit the Kingdom's economy. Another path is the purchase of arms, which means weak opportunities to attract new investments to Riyadh and its inability to create more economy," Yafey said. Versatile ".
Saudi Crown Prince Mohammed bin Salman launched Vision 2030 in April 2016, but its implementation ran into a series of obstacles, including the inability to privatize the giant oil company, Aramco, and the entry into the tunnel of political problems resulting from the depletion of its capabilities in Yemen, , As well as accused of the assassination of journalist Jamal Khashoggi in his consulate in Istanbul months ago, on the other hand. 
Saudi Arabia will seek to borrow $ 32 billion this year to cover part of its budget deficit, Bloomberg reported recently. 
Al-Yafie also believes that Saudi Arabia and the UAE have lost the opportunity to supply the Qatari market with the products they need after the blockade, but in turn helped the Qatari private sector to provide alternative products by establishing local factories that have improved the indicators of the economy of the world's largest LNG exporter.
Qatar imported $ 5.3 billion from its Gulf neighbors in 2016, about 90 percent of which were from Saudi Arabia, the United Arab Emirates and Bahrain. However, the trade stalled completely after the blockade of Doha. 
Pessimism 
Khaled Dawayima Director General of Qatar Vision Projects Company Doha - based Al Yafei is no different than in his painting for phrase challenges facing the Gulf countries by international variables. 
Al-Dawaimeh told Al-Jazeera Net that Saudi Arabia is suffering from unprecedented political instability, which will cause the continued lack of investment in the kingdom, which will cast a shadow over the region as a whole.
Dawayima also expressed pessimism expected for the economies of the region scenario, said " the fear of President is the inability of the world 's major economies to sustain growth sponsor stimulate GCC counterparts based on the export of oil prices dragged down by sluggish demand and oversupply, especially with the US oil boom. 
May be Kuwait is better off than its neighbors, as it has adopted a conservative policy in building the New Year budget, assuming a reference price of $ 50 a barrel, while Oman is based on a price of $ 58. 
Kuwait is a prominent member of OPEC, unlike Oman, With 2.9 million barrels of crude per day compared to 1.1 million for the second, which saw no affiliation with the Organization 
With the sunset of the sun and another new look, the economic landscape of the Gulf countries vary, amid anticipation of what will be oil prices and international trade relations in 2019.


Views 1   Date Added 02/01/2019

 
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Not sure if THIS means ANYTHING related to low oil prices hurting Iraq BUT here is a screen shot from TODAY on crude oil futures that makes one wonder IF some "relief" is being given to the Bicraqi Iraqi in lieu of fulfillment of "performance" "agreements":

 

image.png.61039ec09499e09321b36cb0583624d9.png

 

http://quotes.ino.com/charting/?s=NYMEX_CL.G19

 

image.png.599580f9b6e2d8c968e9af63bbe8e8c7.png

 

http://quotes.ino.com/charting/index.html?s=NYMEX_CL.G19&t=&a=&w=&v=dmax

 

The step change in crude oil futures occurred about 10 am this morning and appears to be stabilizing at around $47.25/barrel.

 

Could be somethin'. Could be nothin'.

 

SOMETHIN' is out of the starting gates THIS YEAR!!! We'll see where it GOES!!!

 

In The Mean Time........................................................................................................

 

Go Moola Nova (YEAH AND YEE HAW, BABY, READY WHEN YOU ARE BROTHER (OR SISTER) - LET 'ER BUCK!!!)!!!

:rodeo:   :pirateship:

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so much corruption in the gulf states, I fear it will never stabilize. Pretty soon they will be fighting each other for oil profits. All the corrupt officials in Iraq stealing the country blind and nothings done because it is accepted in the elite class. Malaki alone probably took 100 billion or more but thats ok......?      😕

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IMHO ( he said jokingly : Iraq has been in trouble for a very, very, very long time and they’re still having trouble fighting their way out of the WET PAPER SACK. 

 

Everything is of Crisis proportions. It’s like watching someone with one sandal nailed to the floor running  around in circles. 

 

The level of Drama is truly awe inspiring.....a Soap Opera to rival any still in production in the USA today. 

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12 minutes ago, eburt said:

Does not matter if the price is up or down..These people still won't RV their currency.  I think this is just another excuse......:butt-kicking:

 

When the oil is high, they use the security issue excuse. When the oil is low, they use the muh oil price is too low.  They just like using excuses to cover their currency corruption going.

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13 hours ago, yota691 said:

gas is $1.84 here...an GM DV

$3.65 here my friend. 

Thanks for all you do. All the best for 2019.

 

just my opinion 

Low oil prices will put pressure on Iraq to give more value to their currency  

Low oil prices will affect the budget negatively 

Low oil prices will eat CBI foreign currency reserves

Low oil prices will put pressure on the GOI to ask for more loans 

 

Low oil prices are good for our pockets 

 

Go RV

Go asap

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Laid Back, Happy New year out to you brother. I agree with your analysis, but, have to say that we have been down this path is the past. I think what Iraq needs is a strong government that is willing to take the bull by the horns, eliminate as much as possible their corrupt ways, and really WANT to make a difference for its people, rather then keeping them below the poverty line and suppressed by the sorrows of war. Really, I thought that Abadi was going to be the one that was going to make a difference, and he did, up to a point, as Iraq has come a long way, and I have to acknowledge that, Rome wasn't built in a day. Its these bureaucrats that can't seem to put one foot in front of the other, and, collectively move things as they should. 

I am in this investment till the end, no matter what comes of it. Iraq has such riches its mind boggling, and, until these government officials begin to do their job, first by showing up to work, perhaps then we will begin to see a change in the rate of the IQD. 

Until corruption is dealt with, we will continue to see this back and forth bickering that goes on in their government. I wish, first and foremost that the Iraqis have a life, something they can wake up to everyday and enjoy, live in peace, jobs, a economy that functions etc...

Once their infrastructure is working, and, the world has confidence that they can do business there, perhaps we will see movement in the value of their currency.

Anyhow, these are just my personal thoughts, and, perhaps their reality is way more complicated then my simple mind. 

 

Lets see what happens, Im here, and sure do appreciate you and all the DV members who contribute to this amazing community. 

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1 hour ago, Wiljor said:

Laid Back, Happy New year out to you brother. I agree with your analysis, but, have to say that we have been down this path is the past. I think what Iraq needs is a strong government that is willing to take the bull by the horns, eliminate as much as possible their corrupt ways, and really WANT to make a difference for its people, rather then keeping them below the poverty line and suppressed by the sorrows of war. Really, I thought that Abadi was going to be the one that was going to make a difference, and he did, up to a point, as Iraq has come a long way, and I have to acknowledge that, Rome wasn't built in a day. Its these bureaucrats that can't seem to put one foot in front of the other, and, collectively move things as they should. 

I am in this investment till the end, no matter what comes of it. Iraq has such riches its mind boggling, and, until these government officials begin to do their job, first by showing up to work, perhaps then we will begin to see a change in the rate of the IQD. 

Until corruption is dealt with, we will continue to see this back and forth bickering that goes on in their government. I wish, first and foremost that the Iraqis have a life, something they can wake up to everyday and enjoy, live in peace, jobs, a economy that functions etc...

Once their infrastructure is working, and, the world has confidence that they can do business there, perhaps we will see movement in the value of their currency.

Anyhow, these are just my personal thoughts, and, perhaps their reality is way more complicated then my simple mind. 

 

Lets see what happens, Im here, and sure do appreciate you and all the DV members who contribute to this amazing community. 

Totally agree my brother,

Corruption and Iran interventionist are the 2 BIG issues that don’t let iraq

move forward.

Hoping the new PM can do something about it.

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