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External Borrowing .. Reducing The Value Of The Dinar .. Printing The Currency .. Reducing Salaries .. That Is, Ways To Overcome The Financial Crisis !


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External borrowing .. Reducing the value of the dinar .. Printing the currency .. Reducing salaries .. That is, ways to overcome the financial crisis

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17th May, 2020



Iraq suffers from an acute financial crisis due to the drop in oil prices, in light of the spread of the Corona virus, while the Iraqi government is studying with the competent authorities, possible solutions to overcome the crisis, including reducing the value of the Iraqi dinar. 

According to information, the options available to Prime Minister Mustafa Al-Kazemi are mostly difficult, but there are serious dialogues with economic advisers and experts, including external borrowing or the devaluation of the dinar.

Economists suggest going to reduce the value of the Iraqi dinar, stressing that it is the best solution available, noting that reducing the value of the Iraqi dinar will work to reduce the current value of the currency in half, indicating that it will be a substitute for the proposed proposal to reduce the salaries of employees in half, and in both cases, The result will be the same. 

The experts touched on a group of solutions, including offering state factories and public properties for investment or sale, and printing the currency. 

The government tends to fill the salary deficit, by relying on the cash reserve for a few months, while taking a series of unprecedented austerity measures at the state level.

Member of Parliament Ali Fayez said that the economic pressure on Iraq accumulated due to the closure of business and trade facilities and financial life due to the events that occurred on the oil level, in addition to the Corona pandemic, while the country suffers mainly from a structural defect represented in its dependence on oil only.

He added, that oil is the source of the entry of the US dollar into Iraq, which is the force behind the dinar, but its absence means that Iraq is unable to finance.

The economist Salam Semsem stated that the government will not be able to manipulate the salaries, and it is constitutionally and legally obliged to provide the salaries of its employees and workers in its sectors.

Semsem said, in an interview with Al-Masala, that cutting salaries or deducting them will lead to the wrath of the Iraqi street, which will not be silenced by cutting its livelihoods today, so the Iraqi government will resort to another option to bridge the financial deficit.

She added that the government will resort to a ploy, which economists know, which is to devalue the Iraqi dinar, and when the value is reduced, the per capita income will be halved, so an employee who has a salary of 600,000 dinars will actually receive 300,000, which would make him unable to secure his life requirements.

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Iraq is considering cutting the dinar as difficult options to face the financial crisis


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17th May, 2020

 

A source close to the office of the Iraqi Prime Minister revealed that the government is considering reducing the value of the dinar against foreign currencies, as part of measures to confront the financial crisis caused by the drop in oil prices and the repercussions of the spread of the new Corona virus. According to the newspaper, "The New Arab

The source said, according to the newspaper, "The options available to Prime Minister Mustafa Al-Kazemi are mostly difficult, but there are serious dialogues with advisers and economic experts, and during the past days, several options were reviewed to address the financial crisis, including external borrowing or the devaluation of the dinar

He added: "There are also other options, including offering state factories and public properties for investment or sale, and printing the currency, but these will be the last options

He continued: "All options presented have major problems in the long and medium term, but the alternative is the inability to pay the salaries." He pointed out that in the short term he will rely on the monetary reserve for a few months, while taking a series of austerity measures unprecedented at the state level

The current crisis is the biggest challenge for the new Prime Minister’s government, as Iraq is one of the “mono-economic” countries, because it relied on about 94% of oil sales revenue to provide salaries for employees and retirees of about 4 trillion dinars per month (about 3 billion dollars) at a time that did not reach Oil revenues have only about 1.4 billion dollars last April, according to official data

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Get out of the woods


Sunday May 17 2020


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Salem Mashkour

 

Iraq is in economic trouble, as well as political, not now but for decades. Economic sickness is confusing security, health and politics. We sell oil and employ hundreds of thousands of unemployed people every year to move to another type of unemployment that is disguised. There is no work they do, on the contrary, they may hinder work in government departments. The important thing is to take a salary at the end of the month, and it is not important to produce it. This in itself destroys the human personality and pushes it into more laziness and dependence. 

In a sick economy like an Iraqi, there are no real opportunities for people to work. The government provides an opportunity to obtain a salary through futile appointments, not productive jobs. The government apparatus is inflated and we sell oil as the only commodity for export. We distribute its revenues to millions of employees.
Now, as happened six years ago, the price of oil collapsed, so we lost our only source of money, and we, the land of two great Mesopotamia and fertile lands full of precious metals, have found ourselves looking for external loans to secure employee salaries.

The economy is the basis, and from there it is the beginning, and everyone is repeating this, but there are no practical steps yet. Reliance on selling oil is a sin whose results we are seeing now. The intended economy here is free and not held by the state like the socialist countries previously, but experience also demonstrated that the role of the state must remain in supervision, evaluation and control in order to ensure that the free economy does not turn into wild mafias that manipulate people's lives, strength and health.

Free economy means investment that is codified with facilities that enable it to achieve actual verification, and guarantees that guarantee its positive results. We have several models for countries without natural resources, but they flourished economically through investment. We have raised the banner of a free economy and investment since 2003, but our minds and hearts are still living in a managed economy whose components have disappeared with the disappearance of the central authoritarian regime and the substitution of a regime that exercises democracy in a way that is more than guaranteed. We lost the compass, and the investment remained just slogans and conferences. The reason is corruption and the absence of legislation that provides a real and safe environment for investment. Investors have moved away from the foundation or tried their fortunes and fled to mean the hour in which they believed our claims. 

The solution begins with changing our mentality and negative perception of the private sector, then strict laws and procedures that facilitate the work of this sector and attract investors, and prevent blackmailing them from politicians and gangs, and others that guarantee the rights of workers in the private sector. Thus, real job opportunities exist and the burden on the government apparatus is reduced.

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An Iraqi expert expects a big jump in oil prices in July

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17th May, 2020
 


Energy expert, Furat Al-Mousawi, expected, on Sunday, that the price of a barrel of oil will reach 40 dollars in next July.

Moussawi told "Shafaq News" that "oil prices are unstable and unstable, as they depend on several economic variables such as the increase in energy demand in the world as a result of easing the comprehensive ban and turning it into a partial ban, which led to the start of simple movement and commercial and industrial movement."

He added that "there are variables that contributed to the rise in oil prices and reaching $ 30 per barrel, which is an additional reduction in production by Saudi Arabia, equivalent to one million barrels per day, and also followed by Kuwait and the UAE as a contribution to the reduction, all of these matters led to an increase and improvement in oil prices."

Moussawi pointed out that "oil prices will improve and reach 40 dollars in the month of July with the improvement of the epidemiological situation in the world and the decrease in the incidence of Corona virus with increasing demand for energy."

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Finance and Health agree on the priority of spending allocation to face Corona

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17th May, 2020


Hassan Karim Al-Kaabi, First Vice-President of the House of Representatives, chaired the twelfth meeting of the Parliamentary Crisis Cell today, Sunday, 17 May 2020, in the presence of the Finance Ministers Ali Abdul Amir Allawi and the Minister of Health Dr. Hassan Al-Tamimi, Chairman of the Finance Committee, Haitham Al-Jubouri, and the Crisis Cell Rapporteur, Dr. Jawad al-Musawi and a number of representatives.

Al-Kaabi said during the meeting that the reason for hosting the Ministers of Finance and Health and the advanced staff in the two ministries is to find a solution to the acute shortage of medical and therapeutic supplies and treatments not only to confront the Corona pandemic, but because most health institutions, whether in Baghdad or the other provinces, have begun to lose their ability to secure their services Medical and therapeutic for citizens due to the lack of financial allocations, stressing that there are several segments that cannot be neglected to secure their treatments such as cancer, kidney deficiency, leukemia, and others.

The head of the cell parliamentary crisis agreed on a number of recommendations will be worked out during the next phase of which grants the Ministry of Health priority urgent in allocations exchange financial operations, and the granting of powers of the wider provinces." In turn said the finance minister said his ministry was granted health priority sector in terms of exchange allocations, whether governmental or grants and aid, stressing that the government has formed a cell economic crisis to discuss the repercussions of the financial crisis and raise their proposals to the Prime Minister will hold its first meeting on Monday. 

He also noted Health Minister Hassan al-Tamimi said today's meeting ended with opening a direct channel between the ministry of Finance granted and the Ministry of The priority in the allocation processes and completion of contracts to reduce delays will affect the nature of the reality of medical and health in our country, who lives a serious crisis represented pandemic Corona."


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Al-Kaabi demands that the Ministry of Health be given urgent priority in disbursing financial allocations

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17th May, 2020

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A cell for the economic crisis in the making, the compass toward compulsory savings and domestic loans

2020.05.17 - 22:29


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Baghdad - people  

 

The Parliamentary Economy and Investment Committee announced today, Sunday, the agreement to form a cell of an economic crisis to advance the economic reality of the country,noting that compulsory saving is one of the proposed solutions.  

Member of the Committee Ali Al-Lami told the official agency, followed by "NAS" (May 17, 2020), that "Iraq is suffering from a major economic crisis, especially after the collapse of oil prices as a result of the Corona epidemic, stressing the need to cause an economic, industrial and agricultural revolution in the country and support the private sector." .  

He added that "these measures need strong decisions by the Council of Ministers," noting that "the Committee on Economy and Investment, requested the formation of an economic crisis cell in order to re-study the Iraqi economy in full."  

He pointed out that "the meeting with the Prime Minister aimed at discussing the formation of this cell, announcing a decision to form a cell of an economic crisis to advance the economic reality in the country, especially since the financial situation and cash liquidity is very difficult."  

He pointed out that "compulsory saving for a certain percentage of the employees salaries is among the proposed solutions discussed by the Economic Authority for the Prime Minister in addition to resorting to internal borrowing."  

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Bank loan guarantees


Sunday May 17 2020

 

Mohammed Sharif Abu Maysam
 
 

Banks have an important role in the economic development process, as they rotate the monetary mass issued by the central bank, from deposits to loans and advances that contribute to the establishment and operation of small and medium enterprises and stimulate market movement through the flow of liquidity and increase the demand for goods and services and satisfy the needs of borrowers and the owners of granted projects. Which contributes to the circulation of funds between different craft and professional sectors and thus getting closer and more closer to the boom and boom in the economic cycle. 


However, what is noticeable in the process of granting loans and advances is to give priority to ensuring the recovery of the value of the loan over the achievement of the loan goal, even in specialized banks that were found in order to support economic sectors and not others. Real estate guarantees, personal guarantees, bills and legal undertakings, up to the letters of guarantee and securities in types of banking facilities. 

The problem here relates to the procedures followed in presenting these guarantees in a routine framework that may sometimes lead to the borrower giving up the loan, or perhaps resorting to the commenters, “they are the godfathers of corruption in the banking sector” who had a major role in passing counterfeit guarantees in many banks. This was reflected in the performance of these banks, as a result of the failure to accept guarantees unless a large package of routine procedures were implemented with the aim of reassuring and sparing employees the corruption trap, and thus increasing the procedural complications that were and still are repelling tools for a large spectrum of the public in its dealings with the banking sector.

With the entry of electronic payment tools and the emergence of smart cards dealings, those involved in the financial inclusion program resorted to the idea of localizing the salaries of employees with the aim of establishing electronic transactions and reducing cash transactions, and thus withdrawing the cash block to the banking field and encouraging the general public to deal with banks after the mechanization of all transactions and trades It was natural for banks to compete to attract employees to them, through tools that were the most important of which were providing loans to those who localize their salaries in the bank, by guaranteeing the monthly salary, as the bank guarantees deduction of the monthly installment before paying the salary, Not that some banks are still living routine atmosphere, despite the entry of technologies in their work, as some of them are required to provide real estate collateral, guarantees and pledges for the loan award . 

It seems that these banks, clinging to the obsession with guarantees, will lose many of their customers in the near term in an area where competition is increasing, as the coming months will witness an emigration of salaries that have resettled in some of these banks to others that work to satisfy and protect the customer, because they are aware that this customer represents the main nerve For her work.

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Budget transparency is a requirement of economic reform


Sunday May 17 2020

 

Baghdad / Al-Sabah
 
 

The state of weak indicators of budget transparency in Iraq is not due to the existence of legal difficulties or technical capabilities, but rather the lack of awareness of their importance, this is confirmed by Mudar Al-Sebahi, an expert in economic affairs, pointing to the importance of publishing information that pertains to economic political programs and the Iraqi Institute for Economic Reform since 2010 confirmed Through the studies presented and published articles and direct messages on the need for the Ministry of Finance to adopt the principle of transparency in preparing and implementing the federal budget.

Financial documents

Al-Sebahi added that "what is required to do is simply for the Ministry of Finance to publish financial information and documents, according to the Financial Management Law on the website of the Ministry, including a report before the preparation of the budget as an introductory statement of the budget that includes the presentation of the government's economic and tax policy goals in the medium and long term, and clarifies the expectations of revenues and expenditures A deficit or surplus and debt, and this report must be published at least a month before the submission of the draft budget. " 
 
Community layers
He pointed out the importance of "disclosing the budget proposal to the executive authority, which is the budget prepared by the Ministry of Finance and approved by the Council of Ministers and sent to the House of Representatives for the purpose of approval, as well as the approved budget, which is the budget approved by the House of Representatives and approved by the President of the Republic and published in the Official Gazette, as well as the citizens budget The subject of the public budget is a focus of attention not only economists, accountants and those interested in money and business affairs only, but the topic and because of its extreme importance it raises the interest of all segments of society, so governments issue a booklet called the citizens budget It included a simplified explanation of the general budget and spending trends, and in 2018 the Ministry of Finance produced the citizen budget in cooperation with the World Bank, but it is in the English language. 
 
 
He pointed out, "The necessity of viewing the monthly reports, where the monthly reports show the progress in implementing the budget, and include the amounts of revenues and expenditures in each month and in the period that passed from the year to the date of preparing the reports. The figures must be compared with what is expected of the monthly income and expenses, and must also Reports include information on government borrowing activity, as well as a review of the mid-year report that provides a comprehensive idea of budget implementation and budget performance for the current year, and must be issued within six weeks of the end of the first half of the fiscal year. This report includes a comprehensive discussion of assets and Government financial liabilities and non-financial assets and allowances of pensioners and the salaries of emergency, and the disclosure of the impact of any government decision, or any other circumstances that would leave a material impact on the budget. "
 
Auditing
He pointed out, "The inevitability of reviewing the end-of-year report, as it is the primary accountability document for the government, and must be subject to scrutiny by the highest audit institution, and the report shows the extent of commitment to the level of revenue and expenditures approved by Parliament in the budget and any amendment to the original budget during the year, and to submit On the formula that exactly matches the budget presentation formula, the report also includes documents related to non-financial performance and the goals of the actual results that were accomplished, the presentation of expenditures data in aggregate form and deduction of the allocated income and the costs of users clearly, and the presentation of spending data by entity Management, and a comprehensive discussion of the assets. " 
 
Accurate reporting 
It is also preferable to disclose the audit report issued by the Financial Supervision Bureau, as this report examines the integrity and completeness of the government's year-end accounts. " 
He continued, "Transparency alone is not sufficient to improve governance, and overall public participation is extremely important to achieving positive results related to increasing budget transparency and is an opportunity available to the public for meaningful participation in various stages of the budget preparation process in cooperation with the Ministry of Finance." 
The House of Representatives demanded that individuals from the public or civil society organizations be allowed to make a statement during the hearings of the budget proposal before its adoption, and to make their statement during the hearings to the audit report.

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China's New Currency ... How Does the Digital Yuan Affect the US Dollar?

- 6 Hours Ago
 
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The global financial architecture made a quantum leap with China testing its digital currency, the “digital yuan,” for the first time, after a research and development process that lasted at least five years.

President Xi Jinping has always stressed the urgent need to develop artificial intelligence and fifth generation technologies on a large scale, which he considered a new infrastructure.

The digital yuan is a new financial infrastructure in itself, and it has enormous geopolitical implications for China and the world at large, and most importantly, its ability to avoid any sanctions imposed by the United States.

The writer Faisal Ahmed - in a report published by the American "Modern Diplomatic" website - says that the digital currency differs from non-cash payments, similar to those that are paid through credit cards or applications. In such a case, the settlement is achieved immediately, unlike the non-monetary transactions in which the banks play the intermediary role.

Positive effects
The digital currency lags are means of communication between devices through which information and payments can be exchanged, thereby eliminating the usual dependence on banks.

China can also use the digital yuan in various activities from the stimulus program and development aid, to direct financial transfers and infrastructure investments such as the Belt and Road Initiative.
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A digital yuan would enhance China's global competitiveness and strong position in global negotiations alike.

This digital currency is expected to gain widespread acceptance in China, due to the mobile phone market sweeping in the country and its record of good financial integration.

These factors, along with the state-run system (i.e., the digital yuan), will contribute to broadening the grassroots base of the digital currency system, as locals are already accustomed to using applications such as "AliBay and WeChatBay" and are likely to credit this digital currency without hesitation.

The writer believes that the adoption of the digital yuan will have major impacts on the Chinese economy and people, as it helps to reduce costs and facilitate payments, and the People's Bank will be able to monitor payments and illegal abuses.

A digital yuan would help the government transfer any relief fund or direct stimulus programs to overcome the negative impact of Covid-19 on supply chains and livelihoods. Besides, the government seeks to exchange the salaries of government employees with this digital currency.

Currently, the US dollar is a strong currency that is absolutely popular in terms of international transactions, with more than 90% of foreign exchange market transactions, and this acceptance and confidence would give the United States a better negotiating position in global financial markets.

But the United States, in turn, has used this ability to apply economic sanctions to gain geopolitical advantages.

For example, the IFC infrastructure requires banks to direct all transactions in dollars globally across the United States, giving them real ability to unilaterally freeze transactions, yet there have been European calls for the development of an alternative payment system at the World Financial Communications Association Interbank also.

The author notes that the Chinese digital currency test is now a threat to American financial domination, since it provides an alternative to the dollar, and if adopted successfully, this digital currency will contribute to removing the global financial markets from the dollar-based system, and will also help the Beijing government to address any currency turmoil Politically motivated global.

Currently, the yuan occupies a very small portion of global payments and reserves, but as China is the world's largest exporter, it is likely to push for the global use of the digital yuan among its trading partners and in the Belt and Road Initiative.

As the Corona epidemic continues, the US financial infrastructure is exposed. For example, operational problems occurred at the level of transferring relief fund funds to their beneficiaries.

For this reason it is necessary to improve the financial technology infrastructure to boost economic activities and thus local growth. Indeed, the digital currency can provide more accuracy and transparency in such transactions, it can study specific sectors and provide selective relief packages to areas and populations most affected in times of crisis or natural disaster.

The author stressed that the adoption of the digital currency would provide a new perspective for public policy interventions in difficult times, and the emergence of the digital yuan will affect most economies, large and small, due to its historical dependence on the financial system that is based on the dollar.

Countries should prepare for this by switching to digital payments, breaching popular bases, financial inclusion, and gradually reducing their dependence on the dollar.

Source: Moderne diplomat

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1 hour ago, DinarThug said:

 

Economists suggest going to reduce the value of the Iraqi dinar, stressing that it is the best solution available, noting that reducing the value of the Iraqi dinar will work to reduce the current value of the currency in half,

 

Oh!  Aren't these the smartest people in the world?

What geniuses!

I never would have thought of such a brilliant solution.   :facepalm2:

Edited by Floridian
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                                                                                                           jeepguy

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2 hours ago, jeepguy said:

Start from  ZERO ... 

Oil and dinar at zero and rise accordingly .

Oil will be higher than dinar but would be a bench mark ...

Oil to 20 dollars , dinar to 20 cents then can ride with the demand...

 

Oil Has Gone Above $32 - So Now Hurry And Get The Dinar To A Dollar To Make Ur Shania Avatar Holler ! :o 

:D  :D  :D 

 

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Oil continues to recover from the corona's consequences with renewed hopes for a return to balance between supply and demand

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17th May, 2020

 

Oil markets recovered well last week, whose raw materials recorded gains and recovered from severe losses, with renewed hopes for a return to balance between supply and demand in a market with excess supply and declining demand due to the Corona pandemic

Over the course of trading last week, US light crude prices rose about 20% to record 3 consecutive weekly increases at $ 30 a barrel, the highest level for crude since mid-March

Oil prices gained momentum from some countries towards easing restrictions on air traffic imposed by the authorities to curb the spread of the pandemic, which raised hopes about recovering demand for jet fuel, one of the main engines of the global oil markets

Brent benchmark crude had a share of the gains last week, but at a lower pace than its US counterpart, with crude prices rising about 5% around $ 32.5 a barrel

One of the main factors in supporting oil markets last week was the voluntary reduction measures taken by many oil producing countries, such as Saudi Arabia, the UAE, and Kuwait

So, oil markets are catching their breath after a violent downturn since the beginning of the year against the backdrop of the pandemic, but the gains made by the oil markets remain hostage to the progress made in eliminating the Corona pandemic

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After reading the initial article , ooooh the price of oil is expected to rise so they'll be in a better position; all sounds great for them and stupid to me. IQD is still,  nearly 17 years later, worth less than 1/10 or a penny US. Your going to devalue it from there to draw in investors? Time to get your head out of Iran"s butt and breath some fresh air. Deal with the corrupt politicians, corrupt department and infrastructure managers,  corrupt policing agencies, gangs in your streets that all in their way blackmail the investors that have done business in Iraq and then forced them out with their corrupt ways. Let the people and the investors see transparently your arrest of politicians, the sphincters burning your crops, sucking the infrastructure funds dry. Pick a spot, hit it with a overwhelming investigative and prosecutorial force, including counter espionage and witness protection . Then expand from there. The first should be the gangs and infrastructure projects. Hit them with the whole legal backing you can. Build the infrastructure projects , port expansions, roads, electricity, Iraqi gas refineries, and go on from there. pick one of these and go on from there. Really, target the gangs, which will lead to the private militias, and onward.

 

 Devalue the IQD and not do these other things, you will simply be solidifying your position as the worlds least expensive expensive toilet paper .

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Here here New York Kevin  :twothumbs:

4 minutes ago, new york kevin said:

After reading the initial article , ooooh the price of oil is expected to rise so they'll be in a better position; all sounds great for them and stupid to me. IQD is still,  nearly 17 years later, worth less than 1/10 or a penny US. Your going to devalue it from there to draw in investors? Time to get your head out of Iran"s butt and breath some fresh air. Deal with the corrupt politicians, corrupt department and infrastructure managers,  corrupt policing agencies, gangs in your streets that all in their way blackmail the investors that have done business in Iraq and then forced them out with their corrupt ways. Let the people and the investors see transparently your arrest of politicians, the sphincters burning your crops, sucking the infrastructure funds dry. Pick a spot, hit it with a overwhelming investigative and prosecutorial force, including counter espionage and witness protection . Then expand from there. The first should be the gangs and infrastructure projects. Hit them with the whole legal backing you can. Build the infrastructure projects , port expansions, roads, electricity, Iraqi gas refineries, and go on from there. pick one of these and go on from there. Really, target the gangs, which will lead to the private militias, and onward.

 

 Devalue the IQD and not do these other things, you will simply be solidifying your position as the worlds least expensive expensive toilet paper .

 

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Source: The government is considering devaluing the dinar against foreign currencies

2020-05-17 | 11:38
Source: The government is considering devaluing the dinar against foreign currencies
 

An informed source revealed, on Sunday, that the government is considering reducing the value of the dinar against foreign currencies, indicating that this came in the framework of measures to confront the financial crisis caused by the decline in oil prices and the repercussions of the spread of the new Corona virus.

 
The source said that "the options available to Prime Minister Mustafa Al-Kazemi are mostly difficult, but there are serious dialogues with advisers and economic experts, and during the past few days, several options were presented to confront the financial crisis, including external borrowing or the devaluation of the dinar."
 
 
 
"There are also other options, including offering state factories and public properties for investment or sale, and printing the currency, but these will be the last options," he added.
 
He added that "all the options presented bear great problems in the long and medium term, but the alternative is the inability to pay the salaries," noting that "in the short term he will rely on the monetary reserve for a few months, while taking a series of austerity measures unprecedented at the state level."
 
 
The current crisis is considered the biggest challenge for the new Prime Minister’s government, as Iraq is one of the uneconomical countries, because it relied on about 94% of oil sales revenue to provide salaries of employees and retirees of about 4 trillion dinars per month (about 3 billion dollars) at a time when it did not reach Oil revenue was only about $ 1.4 billion last April, according to official data.
 
 
Edited by 6ly410
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