Financial Advisor: Iraq Is Committed To Fulfilling Its Financial Obligations And Obtaining Creditworthiness !

[DinarThug]

CNN. Broadcasting From An Iraqi Payday Loan Center !
 

 

Financial Advisor: Iraq is committed to fulfilling its financial obligations and obtaining creditworthiness

20:12 Wed 08 Apr 2020

Baghdad - people

 

The financial advisor to the Prime Minister, Mazhar Mohammed Saleh, confirmed on Wednesday, Iraq’s commitment to fulfill the financial pledges in its specific timetable, which made it gain creditworthiness.

Saleh said in a statement to the official agency, followed by "NAS", today (April 8, 2020), that "Iraq has gained the confidence of the capital markets and global banks who currently undertake financial engagement services, whether in managing money and repayments for the interest of Iraq or managing payments of external debt service and paying it in favor of International creditors, which prepare the board to test Iraq’s creditworthiness and strength in adhering to its obligations and agreements.

He added that "despite the difficulties experienced by the country over the past years, Iraq is fully committed to paying off the financial loans regularly and that has led to the sustainability of stability when assessing its creditworthiness."

He explained that “since the implementation of the provisions of the Paris Club agreement to settle the Iraqi debt for the pre-1990 stage as well as the subsequent borrowings during the financial and security crisis against ISIS gangs in the year 2014, all of them have gone and are still on a consistent and straightforward approach to external financial dealings and with a solid regularity between the two departments of public debt in a ministry Finance and the Central Bank, as well as paying the dues of foreign oil companies, which undertake the development of oil fields within the payment dates. ”

He continued that "Iraq's commitment to pay the loans enabled it to obtain a stable credit rating since the start of the credit rating for Iraq in the year 2015," noting that "it is the first time in the financial history of Iraq that the credit rating is entered among the countries of the world, which was reflected positively mostly in the stability The yields levels on the Iraqi European bonds (the Tigris and Euphrates) as well as the European-Iraqi bond named Iraq / 2028 in the capital markets operating in the major metropolitan centers.

LINK

[DinarThug]

Overcoming the economic crisis

Tuesday 07 April 2020

Sabah Mohsen Kazem

 

Perhaps the far and near knows the Iraqi economic potential..the multiplicity of wealth, the potential for the availability of the national technical workforce, and the personal preparations for development. - A political formation of a reduced government for a year that manages the economy file with a high technology to overcome the deterioration in prices, controls spending and reduces waste of government money by reducing concessions and fixing the date of elections, preventing corona and the risks of its spreading with stone, closing borders and increasing awareness of Cleanliness and bypassing the plight of low oil prices, yes, the latter side has a realistic effect on financial returns and causes budget deficits.

Here, the matter must be rectified by reducing the budget according to requirements and priorities .. health, education and defense without wasting the Iraqi wealth, reducing the salaries of presidents, ministers and parliament, controlling border crossings, oil smuggling, organizing customs tariffs and transit traffic in all land, sea and air fields, as well as revitalizing national industries that Its raw materials are available in Iraq, supporting the Iraqi private sector by purchasing the product and marketing it to the neighborhood, and reviewing the economic agreements with the neighborhood, as well as regulating economic relations with the region in the oil and gas law, so the region must deposit funds Ministry of Finance. 

Of course, the economic cycles that pass by the world every 10 years between decline, rise, inflation and economic depression need Iraq and where dozens of experts in the economy develop alternative plans, meaning emergency plans and emergency budget according to international and local conditions, because we live in a region where crises erupt every time.

The occurrence of this significant drop in oil prices in conjunction with the serious illness Corona and pushing Saudi Arabia in large quantities with a discount of 5/0, and its oil supply in the world here OPEC must balance between supply and medicine to avoid price deterioration, if we know that the aggrieved party is Iraq and the group of exporting countries considering our economy is unilateral .

She appealed to previous articles in "Al-Sabah" to develop agricultural investment, religious and archeological tourism, and the development of marshes to find alternatives to total dependence and fluctuations in the oil market .. There are many experiences in the world in which economies have evolved without the presence of oil, such as Singapore, in which the citizen is globally valued at more than 9 thousand dollars as a return to the citizen, It has relied on developing the capabilities of its people..Iraq is more qualified with its topographical diversity from the north and its agricultural diversity among all our Iraqi cities..Iraq has gone through an intertwined crisis which is the entry of ISIS and the drop in oil prices in 2014 and exceeded that ordeal, with a loan from the World Bank to pay salaries, Pal Those treatments and other enough to go beyond Iraq some economic crisis ..waltos as new economic reality.

LINK

[boosterbglee]

Thanks Thugs.....now if they could just put action to all those words they spew out daily!

[DinarThug]

The dollar remains the master of the world's currencies, despite the worsening repercussions of the outbreak of corona in America

- One Day Has Passed

 

The US economy is reeling strongly from the impact of the accelerating outbreak of the Corona virus, which has pushed millions of Americans to unemployment, but these worrying statistics have not yet turned negative on the dollar, which is still in a strong position.
At the beginning of last month, the dollar index, which measures the value of the green paper against a basket of other currencies, has witnessed an increase of more than 6% compared to the lowest level for this year. The dollar exchange rate has increased against the euro by 3.5% since the beginning of the year.

the most wanted

The rise in the value of the US currency is due, first of all, to its being the most wanted in the world. In times of crisis during which investors seek safe havens, this site appears to be strengthening.
Kate Jocks, the global official in charge of currency market strategy at the French "Societe Generale" bank, talks about what he calls "an excessive concession to the dollar."
He points out that there are "many people who constantly want to earn a lot of dollars." And as long as the situation is like this, it will be possible to continue to issue banknotes without weakening the currency. ”
That is why the repeated interventions of the US Federal Reserve (central bank) in the past weeks, to ensure that there is sufficient liquidity in the market, did not lead to a real appreciation in the value of the dollar.
"The measures taken by the Federal Reserve to facilitate the availability and access to the dollar in the world have at best slowed the pace of the appreciation of the currency," says Jo Manimbo of the "Western Union" group to transfer money. federal".
Another reason for the attractiveness of the US currency lies in the companies ’urgent need for cash in light of declining revenues in the current crisis environment.
The dollar also remains in a strong position as it is the most heavily traded currency in daily operations in the world currency market.
Therefore, the Federal Reserve announced mid-last month to facilitate currency exchanges with several other central banks, to enable them to increase their reserves of the green paper.
And Jux notes that this demand for the dollar is recorded, especially in developing countries that hold debts in dollars on most of their debt. "Not all of these countries will be able to get out easily," he says.
And attributed the Daniel Katzev of the French bank "BNP Paribas" the rise in the price of the dollar against the euro to "the lack of a coordinated tax response in the euro area," which reflected negatively on the single European currency.
It indicates that the US currency has also benefited from the significant decline since the beginning of the year in oil prices set in dollars, which strengthened its position against other currencies closely related to black gold such as the Russian ruble, the Norwegian krone and the Canadian dollar.
Before the Corona epidemic, the dollar’s exchange rate was high as the US currency benefited from the excellent performance of the world's largest economy, which all economists ’estimates were positive.
US President Donald Trump was not comfortable with this situation, as he considered that the surge in the value of the dollar could significantly increase the price of U.S. exports, limiting its competitive strength at the height of the trade war with China. However, some observers believe that the changes resulting from the outbreak of the virus may re-confuse the papers, although this has not yet been translated on the ground.

Is the dominance of the green paper ends?

"The question of the continued dominance of the green paper will be raised in the coming weeks," says Cathy Lien of BK Asset Management Asset Management.
She added, "Investors bought the dollar with the bet that the rest of the world will post an economic downturn for a longer period than the United States, as the global economic recovery is impossible without this occurring in the United States."
"While this is partly true, the data recorded in several countries have been deteriorating for several weeks," she continues. In the United States, we are just beginning to see the impact of corona on national economic statistics, and in some cases these numbers still need to be updated. ”
The data released last Friday showed a strong increase in the unemployment rate last month to 4.4% compared to 3.5% in the previous month, and it only takes into account the first part of the month before starting home quarantine measures, closing stores and exchange waves throughout the country.
A prolonged economic downturn in the United States would weaken the value of the dollar in the long run.

Arab Jerusalem

LINK

[DinarThug]

LINK

The Ministry of Planning determines the category covered by the emergency grant ... for each individual 30 thousand dinars

 

8th April, 2020

The spokesman for the Ministry of Planning, Abdul-Zahra Al-Hindawi, revealed on Wednesday, April 8, 2020, the category covered by the emergency grant to be distributed to citizens, indicating that the grant may be 30 thousand dinars for each individual.

Al-Hindawi said in an interview with Al-Masalla that the Supreme Committee for Health and Safety approved, on Tuesday, the recommendation of the Economic Remedies Committee headed by the Minister of Planning to allocate and provide 600 billion Iraqi dinars, provided as emergency grants to families affected by the curfew.

He added, that the grant includes those who do not have any income from the state or who are covered by the social welfare network and they are the poor segment, indicating that this category may constitute 10 million Iraqis and will announce the mechanism for distributing grants and preparing the covered during the coming hours.

Al-Hindawi emphasized that determining the share of each individual is left to the included number. If we talk about 10 million people, the share of each individual is 30 thousand dinars, and the family of 5 members will have a share of 150 thousand.

[tigergorzow]

DT Thanks,  DV,  WTH is 30,000 IQD per individual....

Come on GOI & CBI give real purchasing power to your citizens asap.  RV & RI your darn currency...😁😁👍👍🙏🙏

[Half Crazy Runner]

6 minutes ago, tigergorzow said:

WTH is 30,000 IQD per individual....

$24. Pretty insulting if you ask me! 

[Half Crazy Runner]

56 minutes ago, DinarThug said:

regulating economic relations with the region in the oil and gas law,

geez. I forgot all about the oil & gas law. Haven’t heard a peep about it all year..

[tigergorzow]

2 minutes ago, Half Crazy Runner said:

$24. Pretty insulting if you ask me! 

HCR Exactly,  Darn right shameful indeed. 

[tigergorzow]

6 minutes ago, Half Crazy Runner said:

geez. I forgot all about the oil & gas law. Haven’t heard a peep about it all year..

HCR, DV,  It seems that the CBI totally forgot about "Project To Delete Zeros" as well.  Come on git er done boys & girls...👍👍🙏🙏.....Time is running out!!!!!

Edited April 8, 2020 by tigergorzow

[3n1]

4 minutes ago, Half Crazy Runner said:

$24. Pretty insulting if you ask me! 

 

now hold on HCR , its a whopping $ 25.20 today and i agree i just don't get it either , what r we missing unless $25.20 goes a lot farther in iraq 

[DinarThug]

LINK

The Supreme Committee extends the urban to the current April 18 .. and allocates 600 billion dinars for the next two months

 

 

8th April, 2020

The Supreme Committee for Health and National Safety decided to extend the curfew to Saturday, April 18, 2020, and to follow up on new health data during this week, allocating an amount of 600 billion dinars for the next two months, including about ten million citizens or two million heads of household, and to receive information from those who are entitled through the application of personal phones And in an easy way.

And resigned Prime Minister Adel Abdul-Mahdi, at the third committee meeting yesterday evening, put his monthly salary at the disposal of the Charitable Social Solidarity support Fund, calling on officials and the well-off to donate and support the national, health and social effort.

Abdul-Mahdi praised the efforts and health measures and the spirit of solidarity and solidarity between citizens, and said that the Iraqis stuck abroad have a right for us to return them and we assure them of our diligence and the seriousness of our procedures, and directed a review to accelerate the fulfillment of demands and put the best solutions and decide on them at a special meeting held today, Thursday, under his chairmanship.

He also praised the efforts of the Ministry of Health, the related Diwaniyah Commission, social solidarity initiatives, business donations, and the responsible role of the Iraqi media.

The ministers presented the results of the work of the special committees to provide the necessary support to workers in the private sector, needy families and exchange mechanisms. The committee reviewed the decisions of the Council of Ministers at its meeting held yesterday, Wednesday, related to postponing the collection of private sector payments to banks, land wages, services and the ration for the next three months. The Supreme Committee will announce further details of its decisions on various health and economic issues.

[Gypsygirl11]

Well the average income over their monthly is $72 a month

[DinarThug]

LINK

Ministry of Oil: The lower prices did not affect production and export rates

 

 

8th April, 2020

 

The Oil Ministry confirmed on Wednesday that the decline in oil prices globally did not affect production and export rates

The spokesman for the ministry, Assem Jihad, said in an interview with the Iraqi News Agency and seen by "AlEqtisad News", "The decline in oil prices did not affect production and export rates, because the available energy for production is estimated at 5 million barrels per day

And that "Iraq production, according to the commitment of the (OPEC +) agreement, amounted to about 4 million and 500 thousand barrels per day. As for exports, it ranges between 3 million and 300 thousand barrels to 3 million and 500 thousand barrels per day

Jihad added that "Iraq agreed during the previous meeting to reduce OPEC production to a million and a half, provided that its production is not compromised," stressing that "it is not possible to reduce production rates as a result of the current situation and the exceptional circumstance that Iraq is going through

He pointed out that "Iraq has made extensive contacts with oil ministers of OPEC member states and alliances with them from outside the organization in the past days in order to bring the points of view closer to reaching an agreement to restore stability to the global oil market." She pointed out that "it was agreed to hold a ministerial meeting (OPEC + (Next Thursday), which is an important step to reach an agreement that will save the oil market from the big decline

Jihad stressed "the need for the main producing countries from outside (OPEC +), including the United States, Canada, Norway and others, to initiate a commitment to reduce production by them, which in turn is an important factor to control the oil surplus in global markets, and to restore the required stability and balance

[DinarThug]

LINK

India is taking advantage of the oil drop and buying millions of barrels from the Middle East

 

 

 

16:19 - 04/08/2020

 

 

"Bloomberg" stated that India, which is the third largest oil consumer in the world, is planning to buy millions of barrels from Middle East crude and store it in its strategic warehouses, in light of the drop in oil prices.

The agency quoted informed sources that the purchases are aimed at taking advantage of the low oil prices, but two sources said that this Indian measure also represents a sign of solidarity with a campaign aimed at stabilizing the markets.

Although India’s storage capacity is relatively small, purchases are an important sign that the major consuming countries are trying to play a role in rebalancing the oil market, which was destroyed by the Corona virus and the OPEC + alliance failing to agree to cut production. The New Delhi move appears to be part of a broad response earlier called by the G20 to stop the oil price crash.

The head of the International Energy Agency, Fatih Birol, encouraged oil importers, who have available storage capacity, to take advantage of lower prices and to absorb additional barrels from the market.  The Indian government may request payment facilities from Saudi Arabia and the United Arab Emirates, i.e. to pay the price of the oil, which will be purchased, at a later time.

According to "Bloomberg" agency, India has an additional storage capacity of about 15 million barrels. Officials say that India is seeking to buy about 5.5 million barrels from the UAE and 9.2 million barrels from Saudi Arabia, and some quantities from Iraq .

The OPEC + coalition, led by Saudi Arabia and Russia, will hold an emergency meeting tomorrow, Thursday, to draft a new agreement to support prices. According to some sources, the agreement will include cuts of 10 million barrels per day. 

[3n1]

33 minutes ago, Gypsygirl11 said:

Well the average income over their monthly is $72 a month

 

 if we can go by this cost of living chart in Iraq that 25.00 bucks or even 72 bucks not going very far .. cheers

https://www.expatistan.com/cost-of-living/country/iraq

[DinarThug]

LINK

Oil climbs and markets follow OPEC and Russia on production cuts

 

8th April, 2020

 

Oil rose again on Wednesday after a two-day drop, as it received support from hopes that a meeting between OPEC members and allied producers would launch production cuts aimed at supporting prices that had receded under the Corona virus pandemic

By 0639 GMT, Brent crude rose 21 cents, or 0.8 percent, to $ 32.08 a barrel, after falling 3.6 percent on Tuesday. US West Texas Intermediate crude rose 82 cents, or 3.8 percent, to $ 24.45 a barrel, after falling 9.4 percent in the previous session

It is widely expected that a meeting scheduled to be held over closed-circuit television on Thursday between members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, is more successful than a meeting in early March. The meeting resulted in a failure to extend cuts and a price war between Saudi Arabia and Russia amid falling demand

But concerns remain about the US role in any production cuts

"There is a close monitoring of whether the United States will join any production cuts as markets remain focused on the OPEC meeting ... oil prices are volatile as the market is in a position Wait and see

Saudi Arabia and the rest of OPEC and Russia, the group known as OPEC +, are likely to agree to cut production, but that agreement may depend on whether the United States joins the cuts. And the US Energy Department said on Tuesday that US production was actually falling without government interference

Iranian Oil Minister Begin Zanganeh said that Iran does not agree to hold any OPEC + meeting in the absence of a clear proposal and an expected result of such talks, according to a letter to OPEC seen by Reuters

"Saudi Arabia and Russia will continue to conclude an agreement ... the obvious is that the United States should participate," ANZ Research said in a note

The US Energy Information Administration said on Tuesday that US production of crude oil is expected to drop 470,000 bpd and that demand is set to drop by about 1.3 million bpd in 2020

[screwball]

2 hours ago, DinarThug said:

LINK

The Ministry of Planning determines the category covered by the emergency grant ... for each individual 30 thousand dinars

 

8th April, 2020

The spokesman for the Ministry of Planning, Abdul-Zahra Al-Hindawi, revealed on Wednesday, April 8, 2020, the category covered by the emergency grant to be distributed to citizens, indicating that the grant may be 30 thousand dinars for each individual.

Al-Hindawi said in an interview with Al-Masalla that the Supreme Committee for Health and Safety approved, on Tuesday, the recommendation of the Economic Remedies Committee headed by the Minister of Planning to allocate and provide 600 billion Iraqi dinars, provided as emergency grants to families affected by the curfew.

He added, that the grant includes those who do not have any income from the state or who are covered by the social welfare network and they are the poor segment, indicating that this category may constitute 10 million Iraqis and will announce the mechanism for distributing grants and preparing the covered during the coming hours.

Al-Hindawi emphasized that determining the share of each individual is left to the included number. If we talk about 10 million people, the share of each individual is 30 thousand dinars, and the family of 5 members will have a share of 150 thousand.

which demented SOB gives a red down arrow to a news article....

[screwball]

1 hour ago, Half Crazy Runner said:

$24. Pretty insulting if you ask me! 

yep makes sense? NOT!

[dinarin]

obtaining creditworthiness???  ...first RV 1 =1  and forget all that bs and stupid theories!   ....for years all of them have been a bunch of bastards good for nothing !..

[Half Crazy Runner]

2 hours ago, Gypsygirl11 said:

Well the average income over their monthly is $72 a month

That’s odd, because according to the cost of living chart that 3n1 shared, a single Iraqi needs well over $800 a month To live ..  

[Gypsygirl11]

2 hours ago, 3n1 said:

 

 if we can go by this cost of living chart in Iraq that 25.00 bucks or even 72 bucks not going very far .. cheers

https://www.expatistan.com/cost-of-living/country/iraq

 

28 minutes ago, Half Crazy Runner said:

That’s odd, because according to the cost of living chart that 3n1 shared, a single Iraqi needs well over $800 a month To live ..  

I just Googled it and got 72 bucks,  who knows but those people live on a lot less than we do. But I agree, still not enough.

[3n1]

23 minutes ago, Half Crazy Runner said:

a single Iraqi needs well over $800 a month To live

 

yes idk , the ones doing well in iraq are working for the goi , like in most countries poverty abounds iraq has been ravaged by corruption , war , terrorism etc. imo , but the small stimulus amount of 30,000 per individual seems out of proportion like why even do a 25 dollar payment but i do live in america though  .. cheers be well dv'ers

[DinarThug]

LINK

Market Review: "Iraq, Oil Prices and the Coronavirus"

 

 

7th April, 2020

"The herd instinct among forecasters makes sheep look like independent thinkers" -- Edgar Fielder

 

The crash in oil prices, brought on by the oil price war between Russia and Saudi Arabia, and the collapse in consumption due to COVID-19, seems like the perfect storm to hit Iraq given its vulnerabilities to such external shocks.

Though, this is not the first perfect storm to hit it. The last one which was arguably more perfect than the current one took place in the summer of 2014 when ISIS took over a third of the country, threatening its imminent break-up, and for good measure oil prices crashed.

As in 2014, the fall in oil prices poses serious threats to Iraq's oil-dependent economy, but the current storm hits a very different Iraq from that of 2014 - especially changed this time is its equity market. Then, the equity market was at the end of a multi-year bull market that, as measured by the Rabee Securities RSISX USD Index (RSISUSD), had almost doubled by early 2014 from the levels of 2010.

Comparatively, now the equity market is at the end of a multi-year bear market that saw it decline 71% from the 2014 peak. Fuelling the 2014 bull market were foreign investor inflows and the government's multi-year investment spending program which boosted the economy and domestic liquidity. The opposite is true in the current bear market with most foreigners having withdrawn from the market and the government's investment spending having been practically non-existent for a number of years.

 

RSISUSD Index: Bull market 2010-2014 - Bear Market 2014-2020

(Source: Bloomberg)

 

The significant drop in oil revenues will force the government to sharply curtail expenditures in the same way that it did in 2014-2016, with negative consequences for the economy, yet unlike then the cuts will not be magnified by the need to shift resources to the sharply increasing cost of the ISIS conflict. The combination of the different profiles of investment spending and expenditures have vastly different implications for both the economy and equity market.

In 2014-2016 the dramatic cuts to investment spending and diversion of resources towards the war effort led to year-over-year contractions in non-oil gdp of 3.9% and 14.4% in 2014 and 2015 respectively. The severity of the drop was such that the small bounce of 1.3% in 2016 was followed by a 0.6% drop in 2017. The multiplier effect of these contractions negatively impacted corporate earnings and ultimately led to the equity market's multi-year decline.

Today's different circumstances mean that the non-oil economy will not face the same severe double whammy as then, and as such the contractions will be of a different magnitude. It will nevertheless be negatively impacted by the effects from the COVID-19 lockdown far more than any cuts to the government's investment spending. While every sector of the economy will feel the effects of the lockdown, the informal sector which is dominated by retail and hospitality and which accounts for the bulk of private sector economic activity will be particularly hard hit. Whereas, these effects on the equity market will be through a few sectors that dominate the market, consisting of banking, telecoms and consumers staples.

The banking sector was hurt the most between 2014-2016 as the cuts to the government's investment spending were disastrous for private sector businesses at the receiving end of the cuts, whose finances deteriorated. This in turn affected the quality of bank loans as these businesses accounted for the bulk of bank lending. Consequently, the banks' earnings suffered from the increasing non-performing loans (NPL's) coupled with negative loan growth, as well as losing funding sources due to negative deposit growth. The scale of the effects on private sector businesses from any future cuts by the government ought be smaller this time around and should not lead to the same negative effects for the banking sector. However, it would be reasonable to assume that the sector's tentative recovery will be on hold, while any reversal would be limited given the nascent recovery prior to the COVID-19 shock and the sector's limited exposure to the informal economy. With the sector contributing the most to the market's 71% decline from the 2014 peak, it's difficult to see how bank stock prices can decline much further in response to these developments.

Other reasonable assumptions that can be made are that telecom stocks could benefit from the increased need for broadband induced by the lockdown, while any moderation in consumption for soft drinks - whose local bottler accounts for the bulk of the consumer staples sector market capitalization in the equity market - should be limited. These are very early thoughts and much more data, on the economy and company specific, are needed before any meaningful analysis can be made. However, such data and analysis in the short term will play second fiddle to shifting expectations on the future direction of oil prices.

Forecasting the direction of oil prices, especially at critical junctures, is fraught with uncertainty, as subsequent prices have made a mockery of all predictions throughout recent history: from those calling for ever higher prices when "peak oil" was the consensus thinking, to those calling for ever lower prices when "lower for longer" became the consensus. However, analysing the supply-demand for oil, while equally fraught with uncertainty, it is possible to analyse a few broad trends to help frame expectations for the general direction of prices.

The effects of the lockdowns related to COVID-19 have been profound on the global demand for oil given that about 60% of consumption comes from transportation. The first contraction in demand was seen when China went into lockdown in January and expanded as the rest of the world followed suit in March. Current expectations call for a decline in April of up to 20 million barrels per day (mbbl/d) from initial world oil demand estimates of 101mbbl/d.

The known nature of the virus precludes a return to full normalcy when global lockdowns are expected to ease from mid-summer onwards. Combined with the unknown nature of the new normal as the world learns to deal with and ultimately contain the virus, the return to a pre-virus oil demand picture is unlikely within the next 12 months. But, in six to nine months demand for oil should recover from the extreme lows of April and trend upwards to a small drop from base-line demand by year end, as suggested by the chart below.

 

Global Oil Demand Impact from COVID-19

 

(Source: CNBC 26/03/2020 citing Goldman Sachs Investment Research, International Energy Agency, Bloomberg, Reuters, New York Times)

 

The supply-side of the equation is much harder to predict given the multitude of possibilities of producer reactions to low, yet extremely volatile oil prices in which a great deal of oil production becomes uneconomical. The International Energy Agency (IEA) estimates that about 3.8-5.0mbbl/d of global production is uneconomical at $25-30/bbl prices for Brent crude. The industry has responded to the severe price drop by cutting expenses and in particular capital spending plans with the IEA reporting a range of 20-30% in cuts to initial plans for 2020. It would be reasonable to conclude that these and other actions would lead to the removal of about 2-5mbbl/d from an initial supply estimate of 102mbbl/d for 2020. But these will take a few months to alter the supply-demand imbalance and as such all the excess supply will end up in storage.

Global crude storage capacity will likely be maxed out in the next few weeks, currently estimated at 63% capacity with an effective full capacity at 80%, which will force additional significant production cuts above and beyond the above mentioned 2-5mbbl/d - this time by economically viable crude producers. This will likely accelerate, or pre-empt, the currently discussed plans for a new round of coordinated production cuts by OPEC+, or OPEC++ if other countries such as the U.S. join.

All of the above will likely mean that oil prices will remain under pressure for the next 9 to 12 months, probably in a price range of $30-40/bbl for Brent crude. However, with a return to some sort of post-lockdown normalcy in early 2021, low oil prices should stimulate demand, and coupled with the massive worldwide fiscal stimuli to the global economy should begin to recover. Following a time-lag, as demand absorbs the stored supply, the supply-demand picture should be tilted in supply's favour, and oil prices will trend higher - likely to a price range of $45-55/bbl for Brent crude.

The outlook for Iraq, within this scenario, i.e. an average of $30-40/bbl for Brent crude over the next 12 months, is far from benign, but hardly bleak. As noted here in the past, the economic consequences from the continued political paralysis would be that no new budget will be passed, and thus the government will continue to implement the current spending parts of the 2019 budget. However, it will embark on dramatic cuts to investment spending plans and expenditures on goods and services, though it will maintain expenditures on salaries, pensions and social security. These measures could lead to annual expenditures of $69bn resulting in a cumulative 12-month budget deficit of $25bn-38bn. This can be comfortably funded by indirect monetary financing by the Central Bank of Iraq (CBI), with its foreign currency reserves of $67bn as of the end of 2019.

Beyond the next 12 months, Brent crude prices in a range of $45-55/bbl will remove much of the pressure on government finances, but the exact timing of the post-lockdown return to normal with the new level of oil prices means that Iraq cannot avoid embarking on an accelerated and significant set of economic reforms, previously agreed to with the IMF in the 2016 Stand-By Agreement (SBA) but abandoned when oil prices recovered in 2018. However, with an increasingly alienated population these reforms would not come about without meaningful political reforms.

As a measure to contain the outbreak of COVID-19, the government announced a one-week nationwide curfew, starting on March 16^th that was extended twice to April 11^th. Trading on the Iraq Stock Exchange (ISX) was suspended in response to these instructions and the market, as measured by Rabee Securities RSISX USD Index (RSISUSD), ended the month down 7.1%.

The concentrated selling in the few foreign favoured stocks that began in January continued into March. However, as in February, the list narrowed further, and turnover declined. Given the uncertain global economic outlook, this selling could continue when the market resumes trading. Nevertheless, as Iraq's equity market was discounting neither an economic nor a corporate earnings recovery, it's difficult to see why it should decline as other markets have elsewhere. Most global markets have had multi-year bull markets and would need to discount vastly different economic assumptions than those that led to their multi-year rises. This explains the better action by the ISX compared to other markets during the recent sell-off - the decline, at least until March 16^th, was less than other markets as can be seen from the chart below and arguably makes the risk-reward profile more attractive for the ISX versus these markets as portfolio allocations are rebalanced in the light of the changed global environment.

Trailing 12-months normalized returns for the RSISUSD Index vs MSCI World Index, MSCI Emerging Markets Index and MSCI Frontier Markets Index.

 

(Source: Bloomberg)
Please click here to download Ahmed Tabaqchali's full report in pdf format.

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.

[Mary B]

The financial advisor to the Prime Minister defines the duties of public finance to provide for the requirements of society segments

3 Hours ago

 

The financial advisor to the Prime Minister identified the appearance of Mohamed Saleh, the duties of the public finance to provide solutions to the segments that were affected by the imposition of the curfew and the health situation in the country.

Saleh said in a statement that public financial duties, in managing this stifling crisis and its challenges, will go towards recycling all possible financial flows to ensure the requirements of the recipient segment of government income with decent living, starting from small employees and middle-income government and ending with the segment of retirees and social welfare, in addition to providing support to the limited Income from those whose earnings were damaged by forced unemployment under the country's health embargo measures during the past weeks.

He explained that the national economy will make it necessary to assure life for all, provided that a transparent financial ruler indicates the high discipline in expenditures and the enjoyment of government monetary income with accurate justice without escaping, with the need to follow real financial governance characterized by fair societal participation in the management of financial resources in order to maintain the peace of life for all Categories.

 

https://altaghier.tv/2020/04/09/المستشار-المالي-لرئيس-الوزراء-يحدد-وا/